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On Google, Nest and Home Automation: ‘This Changes Everything’

Google's $3.2 billion acquisition of Nest Labs likely to have greater impact on home automation than Lowe's Iris, Comcast/Xfinity, ADT Pulse, ZigBee, Z-Wave, other smart-home initiatives, says CE Pro's Julie Jacobson.


Google’s acquisition of Nest in 2014. We will remember this milestone in home automation.

Google shows it is now serious about the smart home with its $3.2 billion acquisition of Nest Labs, maker of an Internet-of-Things thermostat, smoke/CO detector and no doubt other home automation devices in the future.

The search company has tried to get into the home automation business for many years, but failed in the past with such non-starters as Android@Home in 2011 and PowerMeter in 2009.

The former gave us a prototype connected light bulb; the latter gave us a dashboard to work with smart meters that never materialized.

The acquisition of Nest, I believe, will get Google into the game this time and will have a major impact on the home control market—more so than Lowe’s Iris, Staples Connect, ZigBee, Z-Wave, ADT Pulse, Vivint, Comcast/Xfinity, other cable companies powered by iControl, and any other initiative before it.

That’s my prediction, and I’ve never said such a thing in the 20 years I’ve been doing this.

How Smart is Nest?

Compared to what’s out there, the Nest learning thermostat really isn’t all that smart – at least it wasn’t at launch when it was in its own little silo.

It learns user behaviors and adjusts thermostats automatically to save energy, but anecdotally, everyone I know that has the device turns off the learning mode. Even so, I’ll go with Nest’s statistics that the thermostat is saving people lots of energy.

The sleek-looking puck from ex-Apple exec Tony Fadell has sold quite well. The “godfather of the iPod” told Forbes last month that the device was now in 1% of U.S. homes – about 1.1 million households.

RELATED: How Did Nest Get So Lucky?

He says as well that Nest is working with some 20 utilities to deliver Nest thermostats for demand-response and other energy-management initiatives.

Few realize that the Nest thermostat actually has an un-utilized ZigBee radio built in. Utilities love ZigBee at the meter, so maybe we’ll see some activity there.

Energy trials like Nest’s are responsible for the bulk sales of maybe millions of thermostats in the past, but no trial has ever progressed to mass-rollout status in the U.S.

This, no doubt, will change.

Since Nest’s launch in 2011, the company has made its inaugural product more interesting by opening up the API last year, enabling third parties to communicate with the thermostat for integration into entire ecosystems.

The first partner is Control4, maker of professionally-installed home automation systems, but throngs of DIY product makers are expected to follow suit (some have cracked the code already).

What this Means for Google & the Universe

In the 20 years I’ve been covering home automation, I’ve never said, “This changes everything.”

But this does.

Virtually every giant consumer-oriented tech company has tried to launch the platform for home control – the so-called HomeOS.

Microsoft has tried too many times to count, with its latest non-initiative being, well, HomeOS . Motorola Mobility (now Arris) tried with its 2010 acquisition of 4Home. AT&T has its own proprietary Digital Life platform built upon a product it acquired from Xanboo in 2010.

All of the major CE companies have tried at least once. Some, like LG and Samsung, have been successful in Asia, but never in the U.S., despite many attempts.

Philips’ Hue lighting control has momentum, but there is no indication the company has a bigger ecosystem in mind.

Cisco and Linksys have tried and tried again, starting in 2006.

Belkin seems to be doing OK with its Wemo Wi-Fi line, but Belkin isn’t really a big name in CE and won’t drive the industry.

Whirlpool and other major appliance lines keep trying. Ford, OnStar and other automotive players continue to plug away. Still, nothing.

So that brings us to Google, which I firmly believe will invest heavily in product development, ecosystem-building with partners, cloud services, marketing and, ultimately, deployment.

Lights, door locks, fitness products and other smart devices will roll out of the Nest machine. Automation apps will magically appear on Android devices. Google will incentivize cellular providers to sell automation devices and services in their stores.

And together, Google and Nest will change the face of automation forever.

Bold claims from a 20-year home-automation follower, reporter, advocate and skeptic!

Am I wrong?

Twenty and thirty years ago, utility demand-response trials and energy-management systems were thought to be the Trojan Horse for home automation. I never believed it once, not for a second. Crazy that the lowly thermostat may, in the end, have been the catalyst for mass-market home control.

Google Acquires Nest for $3.2 Billion (2014)
Nest Protect: A Smart, Talking Smoke & CO Alarm (2013)
Nest Opens API for Thermostat; Control4 is First Home Automation Partner (2013)
Microsoft Acquires Startup Home Automation Co. from Slingbox Founder (2013)
Microsoft Takes Another Stab at Home Automation, Launches Lab of Things (2013)
Motorola Sells Home Automation Group: What Will Verizon Do? (2012)
Google’s Big Home Automation Play: New Android OS, Wireless Protocol (2011)
Google Discontinues PowerMeter Energy Management Service (2011)
Microsoft Kills Hohm Energy Management: Whither Energy Dashboards? (2011)
Home Automation: Has Anything Changed in 15 Years?
Road to Home Automation Standards Paved with Good Intentions (2009)
Microsoft and Intel Promise Interoperability through New Home API (1998)
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Article Topics

News · Product News · Home Automation and Control · Control Systems · Energy Management · Nest · Google · Internet Of Things · Iot · All topics

About the Author

Julie Jacobson, Co-Founder, EH Publishing / Editor-at-large, CE Pro
Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Follow her on Twitter @juliejacobson. [More by Julie Jacobson]

22 Comments (displayed in order by date/time)

Posted by RyanE  on  01/14  at  11:38 AM

Billion is spelled with a *B*, Julie…

As in 3.2 Billion.


Posted by hmurchison  on  01/14  at  12:19 PM

The Nest acquisition via Google is very important and I love what it does for this burgeoning HA/IoT industry.

However there are plenty of pitfalls here.  Google has a trust issue.  They are still an advertising company with great web services.  They have failed to get into the home at scale because they take heavy handed approaches to dealing with media.  They rankled book publishers with Google Book Search, they drew the ire of the music publishers by warehousing music without getting their ok with Google Music. 

Content Providers have a hard time trusting Google because they view content as simply means to an end and that end is more effective targeted advertising.  This partially why Google TV has failed and other home properties.  Google must find a way to datamine for profit.

As excited as I am to see Nest have the financial backing they need I am not foolish enough to think that Home Automation can go mainstream without Redmond or Cupertino tossing their hat into the ring.  You can bunch Intel, Qualcomm, Cisco and plenty of hardware vendors but what’s going to define the user experience is the software and no companies can match Microsoft and Apple for software UX expertise.

Glad that Google is in but we need these other two giants to make a move.  Microsoft did acquire R2 Studios and looks like they may be adding some HA abilities to the Xbox (guessing as they are reporting to the Xbox division).  Exciting times.  We will see how things play out but one thing is clear.  Kansas is going bye bye toto.

Posted by Dan  on  01/14  at  02:22 PM

Also worth noting is that KitKat (Android 4.4) comes with native controls for IR blasting.  This is all very interesting and you can see how with this and now Nest, Google is really looking to disrupt the industry.

Posted by CCHH  on  01/14  at  02:24 PM

If Nest (now a.k.a. Google) chose to leverage an open API to encourage adoption ... what does that bode for all the other HA devices out there—from dimmers to door locks?

Given the new heavy-hitter in the room, anyone have a guess which other OEM’s are considering a similar strategy?

And, if you had a choice, what are the top three HA device/control companies that you would want to have API access to for tie-in and cross-platform extensibility?

Posted by Michael  on  01/14  at  03:03 PM

All these devices still need to communicate with each other.  WiFi/Bluetooth not the answer due to WiFi’s high power consumption and Bluetooth’s limited range.  And both protocols cannot mesh (atleast not yet).  Zigbee or Z-wave seem to be the answer.  Zigbee radios are currently inside Nest’s thermostats, but Zwave seems to be increasing its lead in most other HA gadgets.  Any ecosystem Google is thinking of developing has to start with a communication protocol that can mesh and use low power.  Sigma Designs Inc., a publicly traded company owns the IP for Z-wave and could be a very interesting next acquisition for Google.

Posted by Richard Stoerger  on  01/14  at  04:51 PM

Julie, love your take on this along with some of the other great comments.  That said, just because Nest is now Google Nest, doesn’t mean that they will really, really get it or for that matter know what to do with it.  Nest on its own is an extremely interesting experiment in home automation but will it flourish inside Google is a question yet to be answered. 

Nest just began breaking through with its long-thinking game plan and with but two products on the market, one can at best say that when it comes to home automation, Nest is still in the early stages – successful so far but not yet proven from an HA perspective.  It’s not like they have dozens of products in their eco-system and that is what gives me pause.  Will Nest inside Google be allowed to take the risks it needs to succeed as a home automation leader.  Here I am skeptical.

As an example of Google blunder, for those of us that loved Zagat, since it has been Googlelized, what was once a wonderful resource is now bland and plain.  The Zagat edge is gone along with tons of valuable data, so much so, that the site at least to me, is useless.  I don’t know why nor do I know what the game plan was but Google took over a recurring revenue service and dumped on longtime and loyal subscribers for the sake of advertising revenue, which in my opinion really marginalizes this type of sites integrity.  Will Nest suffer the same vanilla like fate?

Posted by eglideride  on  01/14  at  05:25 PM

Lutron- but that will never happen- unless Goggle buys them too!

Posted by Branden Pirot  on  01/14  at  05:54 PM

Wake me up when one of these platforms can integrate AV.

Posted by Dave  on  01/14  at  06:06 PM

In addition to the things raised above, Google are not known for being permanent in many areas—especially with APIs. Google weather API and Reader APi are recent examples. I’ll wait and see. If there’s actual autonomy for Nest, that’s a plus.

I hope Nest do continue to open up the API—but unless the devices allow for communication via LAN rather than WAN only, I see limited utility. As far as I know, remote control of the thermostat (and presumably the smoke detector) is lost as soon as soon as WAN goes down—breaking third-party automation.  Hopefully, this has or will soon be addressed. Maybe if they fire up the ZigBee radio…

Posted by murray the K  on  01/15  at  12:45 AM

i hate to say i told you so .. at CEDIA i thought his keynote was a con.  and now its proven.  it made zero sense for NEST to be interested in the custom channel.  they will sell more products at best buy in a month than all of CEDIA in a year and with far less effort. 

thus they have zero interest in supporting the traditional CEDIA channel.  anyone whose biz model is the 3,000 sq ft home better look at the music industry, adult video and stereo stores as to what their future holds.

thank goodness we specialize in larger residences but this only means an even greater migration of small firms making desperate bidding on estate homes.

Posted by Julie Jacobson  on  01/15  at  08:48 AM

Richard: ” just because Nest is now Google Nest, doesn’t mean that they will really, really get it or for that matter know what to do with it.  Nest on its own is an extremely interesting experiment in home automation” ...

Well said! I was just going out on a limb and suggesting they will make it happen. We shall see. Hopefully I can retire before proven wrong!

Posted by Jason Knott  on  01/15  at  08:50 AM

Adding to all of our own speculation (and let’s admit that we are all just speculating about the impact of this move),  IHS research analyst Omar Talpur says in a statement released today that the move by Google to buy Nest is largely an international play, not a domestic one.

He says, “Google’s venture into this market is likely to promote connected thermostats outside of North America which has developed much faster in comparison to other regions of the world.”

Posted by don bendell  on  01/15  at  10:02 AM

2 sku’s = $3.2 B

I don’t know what is more entertaining:
that Google paid that or Nest Labs actually thought they could pull it off. Either way its the biggest snow job of the last 20 years.

Will see

What would “Shark Tank” have done?

Posted by Julie Jacobson  on  01/15  at  10:22 AM

I couldn’t agree more, Don! Somewhere out there, the guys from Crestron, Control4, HAI, RCS and elsewhere are puking. I threw up a little myself!

Posted by Travisleo  on  01/15  at  01:07 PM

Actually, the guys from Control4 are pretty happy.  Have you seen their stock price in the last 48 hours since this was announced? 

This is a game-changer.  There is no doubt about it.  It’s not good for the CEDIA channel but if you haven’t figured it out, almost nothing is good for the CEDIA channel because it is an outdated model with much less relevance than 10 years ago.  This is yet another poke at companies like us to challenge ourselves to reinvent and stay relevant with today’s consumer.

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