Finance

Google Puts Up $3.2B For Nest

Deal Could Turn Up Heat On MSOs And Other Service Providers That Are Expanding Into Smart Home Services 1/13/2014 5:38 PM Eastern

In a deal that could turn up the competitive heat on MSOs and other service providers that are expanding into home-automation services, Google on Monday said it agreed to buy Nest Labs, the maker of smart, connected thermostats and smoke/carbon monoxide alarms, for $3.2 billion in cash.

Nest will continue to operate under CEO Tony Fadell when the deal closes sometime in the “next few months,” Google said.

Founded in 2010, Nest has raised more than $230 million, with some of that coming in via Google, which led Nest’s Series B round in May 2011 and Series C in the following year. Nest employs more than 300 people and has a team of more than 25,000 “certified professionals who help install Nest in the U.S. and  Canada,” Fadell wrote in a blog post about the deal.

“Nest will continue to be Nest, with its own distinct brand identity,” Fadell wrote. "Google will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to go it alone. We've had great momentum, but this is a rocket ship. Google has the business resources, global scale, and platform reach to accelerate Nest growth across hardware, software, and services for the home globally."

The companies did not announce any product integration plans on Monday, but, in addition to retail tie-ins, one potential target for a Google/Nest combo is Google Fiber, the 1-Gig broadband and pay-TV platform that Google is rolling out in Kansas City and Provo, Utah, and will be deploying in Austin, Texas, later this year.

The Nest product line “obviously caught the attention of Google and I’m betting that there’s a lot of cool stuff we could do together,” noted Nest founder and VP of engineering Matt Rogers, who said Nest will continue to support iOS, Android and web browsers, and continue to sell products via retail in the U.S., Canada and the U.K.

The Google/Nest deal is coming together as momentum around as eco-savvy smart homes gather momentum at retail and within service provider strategies. Several major and mid-sized broadband service providers in North America, including Comcast, AT&T, Verizon, Time Warner Cable, Cox Communications, Rogers Communications and Mediacom Communications, among several others,  have launched home security and home automation products.

Some MSOs are starting to offer home security and automation products separately. Among recent examples, Comcast last year launched Xfinity Home Control, a service tier that supports video monitoring and remote thermostat controls without the home security component. Comcast has also launched EcoSaver, a cloud-based platform that, when paired with the Xfinity Home thermostat, is designed to help customers reduce energy use and utility bills.

Last month, iControl Networks, a smart home platform provider that counts TWC, Rogers, Cox and TWC among its customers, expanded its OpenHome Partner Program to device manufacturers that make products such as motion detectors, electrical switches, door locks and lights. Last summer, iControl introduced the FastTrack App Partner Program, an initiative that relies on a customized version of Google’s Android operating system.