Google has splashed out $3.2bn in a deal to buy Nest Labs, a firm that has set out to try and improve everyday items around the home such as smoke alarms and thermostats. The move is a step deeper into the nascent industry of the 'internet of things'.
Under the terms of the deal, Google will acquire the services of Tony Fadell, who worked at Apple until 2008 and was known as the ‘father of the iPod’ for his work on the revolutionary product.
The deal clearly positions Google as being ready for the new era of the 'connected home' or the internet of things, and in a statement Google chief executive Larry Page said the deal would help Google move into new areas that are ripe for innovation.
“Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family,” he said.
“They’re already delivering amazing products you can buy right now – thermostats that save energy, and smoke and CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams.”
Nest will remain under Fadell's leadership once the acquisition is completed and he touted the move as an ideal next step for Nest Labs, as well as the connected homes/ internet of things industry as a whole. In an interview with CNBC, Fadell said:
"When it comes to the internet of things, we can take a large piece of credit for kick-starting that. What we're doing [with the Google deal] is we're changing the landscape yet again...[Google] is a major corporation saying, 'We believe in these products," and we want to help them succeed even further."
Forrester analyst Frank Gillett said the deal proved that the idea of the connected home was taking off and that Google was keen to take control of the entire product ecosystem.
"It shows that Google increasingly believes in hardware and software solutions, such as Nest has built, rather than just building operating systems for other manufacturers to implement in smartphones, Chromebooks, and TVs,” he said.
“Google will open up the somewhat closed approach that Nest used to date, to better integrate with interoperable smart home solutions that have entered the market in the last year.”
The deal is subject to the normal regulatory oversights and is expected to be closed in the next few months, according to Google.
This article was originally published on V3.
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March 19, 2014