Wednesday, January 15, 2014

Google buys Nest for $3.2-billion

Google's latest billion-dollar bet is on the fully connected home – one in which every appliance, service and device talks to the Internet.
The search giant announced Monday it will spend $3.2-billion (U.S.) in cash to acquire Nest, a Palo Alto, Calif., startup that designs next-generation versions of everyday home tools.

Started in 2010, Nest has grown from a company that builds digital thermostats into a home automation firm, with more than 300 employees.
“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,” said Tony Fadell, the CEO of Nest, who will stay on to lead the company after the acquisition. “We’ve had great momentum, but this is a rocket ship.”
For all its side-projects and forays into social media and other arenas, Google still makes most of its money by acting as the middleman in everyday digital transactions – most importantly, search – and selling ads in the process. But in recent years the company has worked hard to expand the scope of those transactions, trying to usher in the era where all devices, not just computers, are Internet-connected.
Earlier this month, Google was a major presence at the International Consumer Electronics Show in Las Vegas – the industry's largest annual gathering – despite not having a booth. Instead, the company partnered with the likes of Audi and General Motors to promote the Open Automotive Alliance, a group dedicated to putting Google-powered computers on consumer vehicles to power everything from navigation software to Internet radio.
In effect, the Nest acquisition is another step in expanding the areas where Google can act as digital middleman. Nest's most well-known software, a digital thermostat, is designed to communicate with smartphones, allowing the user to program the device remotely. More recently, Nest unveiled a similarly designed carbon monoxide and fire alarm. Thanks to these devices, Google now has a head start on further home automation, and can more easily make the case that, if some appliances are already connected using the company's technology, all of them should be.
Prior to the acquisition, Google had already had a strong relationship with Nest. Google Ventures, the company's investment arm, helped lead two rounds of financing for the thermostat-maker.
In a statement, Google said the transaction is expected to close in the next few months, subject to regulatory approval.

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