Google Betting Big On IoT With Nest Deal

by Sohini Bagchi    Jan 15, 2014


What’s creating waves in the technology world currently is Google’s buyout of Nest Labs at a sum of $3.2 billion with the apparent aim to digitize the homes. However, it’s not only smarter homes that Google is looking at in the long run. With the recent buyout, the Internet giant is actually betting big on Internet of Things (IoT) believe experts. This means, the initiative will help Google to further explore futuristic technologies, including robots and self-driving cars, and other “smart devices,” which will be controlled through apps and websites, and can feed data into the cloud.

The ‘smarter’ move

Nest has a huge market share of the nascent smart thermostats segment and recently began selling smart smoke detectors. Forrester Research analyst Frank Gillett foresees Google offering a suite of smart home products, including locks, door bells, baby monitors and humidity monitors, each packed with sensors to capture information and a Wi-Fi chip to relay the data, says a WSJ report.

However, making thermostats is only a fraction of interest in this acquisition, believe experts. Google is eyeing at the broader market of ‘connectivity’ as it is evident that a growing amount of the world’s information will come from physical objects, including home and smart appliances in the days to come. All devices will eventually communicate with one another, connect with the smartphone and also with the wider web

Analysts believe the Internet of Things (IOT) will create a huge revolution by 2020, with over 80 billion things or objects likely to be connected to the Internet. “The Internet of Things is a strategically important market that will accelerate fast and will drive both revenue and cost efficiencies. It will create greater economic value for all organizations, and for the global economy,” says Peter Sondergaard, Senior VP at Gartner and to be successful in this category can undoubtedly make a company like Google even more profitable.

(Read: For Internet of Things, 2020 will be a revolutionary year!)

Going past its rivals?

Currently companies that make smart appliances, inclusing Qualcomm, Cisco, Ericsson and Samsung are already looking at the frameworks that govern how appliances and devices can interact with each other in the most sophisticated manner. Until now, though, none of those appliances were made by Google. Therefore, analysts believe Google would not want to miss the opportunity and very closely wants to be a part of that conversation.

According to many, Google didn’t just buy a thermostat and a smoke detector for $3.5 billion. It bought a team of ingenious designers, led by Tony Fadell, the former Apple executive known as one of the leading creators of the iPod, according to a report in The Verge. Fadell himself will report directly to CEO Larry Page. “I set out to build this vision over the last decade, [and] we’re only three and a half years into this. I’m ready to go the whole way,” he said in an interview.

Beyond IoT

According to technology enthusiasts, Google was always interested in Internet of Things and the recent indicates that it is getting even more serious in this area. According tech analyst Galen Gruman, Google has been invested in the Internet of things long before the term was invented. Google certainly started as a search-engine company that made money from ads but it slowly diversified its business, partly to profit from its advertising initiatives and also to expand its horizon.

Google bought smartphone maker Motorola Mobility in August 2011, smartwatch developer Wimm Labs in summer 2012 and bought military robot maker Boston Dynamics in late 2013. Google’s self-driving car efforts fits in this group and now the recent acquisition of Nest.

Google also realized that Apple was serious about its iOS in the Car effort. So last week Google announced its Open Automotive Alliance for Android to lure leading automakers. The Nest deal is also a part of the same game. All these clearly indicate that Google has plans much beyond IoT and is planning to build an ecosystem to connect and automate our day to day lives.

(Also read: Companies step up effort on ‘Internet of Things’)