What the Google-Nest Deal Really Means

What the Google-Nest Deal Really Means


OK, last week the company that is trying to take over the world, Google, bought thermostat and smoke detector darling Nest, for $3.2 billion. Tech geeks immediately took to the keyboards declaring the game has been won. Some waxed euphorically. Others … well … nearly soiled their own nests.

Some are saying this changes everything, that it will change the face of home automation.

I think they are tad exuberant.

Google and Nest, the retro-cool thermostat that learns your habits with artificial intelligence and sets itself accordingly, are not going to take over home control and automation.

Granted, Google is huge and Nest is cool. But there are far too many other companies offering low-cost home control devices and thermostats that anyone can have in the home, creating a widely fragmented market.

The Data Play

Both Nest’s and Google’s plays are not about hardware and (necessarily) the devices in the home. It’s about data. Big Data and the collection of that data, which will also be a result of the Internet of Things.

Nest has already changed the game by partnering with utilities running smart grid programs to save Nest customers energy during peak usage times. This is done by turning down the AC as part of voluntary and reward-based demand response programs. The utility then can adjust its load with all of this data flowing into it.

Think Nest and Google have won? Other companies can do this as well.

When Nest opened its system up to partners to connect to it last fall, it required not a direct device-to-device connection but a cloud-based one, meaning the company will collect the data while controlling other devices or being controlled. Much energy-efficiency will be automated this way, by huge data mining companies, in the cloud (or Internet).

Plenty in the Field

Still think Nest and Google have won? Other companies can do this as well. Comcast—yes, the cable giant—has an EcoSaver option on its Xfinity Home connected home system that uses cloud-based software from EcoFactor to make micro-adjustments to a connected thermostat—thereby saving people money without affecting their comfort. It does this by using the thermostat as a sensor to determine the home’s HVAC system and thermal envelope performance and then optimizing the thermostat control. The tiny temperature corrections add up, like picking up nickels.

Last I checked, Comcast was a pretty big company as well.

At the recent Consumer Electronic Show (CES), we saw dozens of home control companies anxious to sell homebuilders and others wireless thermostats, lighting modules, door sensors, web cameras, doorbells and more, and some entire systems probably cost as much as a Nest thermostat.

And let’s not forget growing the growing, seemingly unstoppable force known as Alarm.com, which is infusing its back-end software into other connectivity systems to offer geo-location services, energy-efficiency automation and more, via cloud-based analytics.

Could Google/Nest and Alarm.com/All others square off for home control and energy efficiency supremacy? Maybe. Or maybe they’ll join forces, too. I don't even want to go there. It's too early yet.

Wild West Data

I can see Nest licensing its AI technology, perhaps, but data is the big play in energy efficiency—and it also could be the big player in home control and automation.

This space will become a very crowded, Wild West data free-for-all. You may want to start checking with homebuyers on how much data they want going out of their homes.

Google is also not without its failures. It pulled the plug, forgive the joke, on its PowerMeter energy management platform, and its Android@Home control platform never took off.

With the market for home automation and energy efficiency still so large and fragmented, Google and Nest won't be a bust. They may even bust out—but along with plenty of others.

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