This could already count as the acquisition of the year .
It’s more obvious what Google gets from the Nest acquisition. I’d like to consider what Nest, besides the payout, gets as a company, brand and product suite. My two cent ..
a. Market penetration - Google has the power to subsidise as well as create channels for Nest’s products to be installed in a large majority of median-income US households, in under a year.
Allowing them to …
b. Gain real world, massive scale behavioural data & usage patterns for analysis, in order to adapt or evolve the core offering for (currently non-existing) market segments, first in terms of software and user experience, then potentially hardware, positioning those propositions at various price points.
And, in parallel …
And finally …
d. Allow Nest to fight its potentially many IP battles looming on the horizon starting with incumbents such as Honeywell, who’d prefer their traditional business & product models were not disrupted in a hurry.
What’s harder for Nest to get, but should like to (almost certainly) have …
a. Perception as a benign brand (it is sitting in your home and around your kids, after all): With privacy concerns mounting globally across connected consumer segments, I’m not very sure that being a smart Google Gadget in the home that also learns about you all the time scores high points in the ‘benign’ category. Ads sneaking up on you at home is another real concern. Nest has a fabulously benign perception built into its product and brand, which I am not sure is going to be augmented much by a very visible association with Google.
b. My real concern : Nest sustaining as a creative product design powerhouse at its core, not overwhelmed or torn apart by the pressures of Google’s range of ambitions. On the contrary, I hope Nest has a cross-over cultural and aesthetic effect in to Google’s products, which is obviously a key acquisition asset for the latter.
On a side note : in an era where services that are essentially smartphone apps have sold for a billion, I wonder if 3.2 billion for Nest is not a massive undervaluation. I mean, we are talking about a double whammy of unprecedented proportions here: the key to Google’s foray into the internet-of-things space AND a disruptive step forward toward the smart grid that shifts more control towards the consumer. So top marks to Google for landing that number.
(P.S: the all-cash deal is really, really interesting.)