Google on Monday announced that it will purchase smart thermostat and smoke alarm maker Nest for $3.2 billion in cash, adding to the growing number of ways in which it can monitor and learn about its users. Nest, a startup cofounded by ex-Apple executive Tony Fadell, is a Silicon Valley darling whose home-technology products can be controlled by smartphone.
"Nest's founders have built a tremendous team that we are excited to welcome into the Google family," Google CEO Larry Page said in a prepared statement. "They're already delivering amazing products you can buy right now, thermostats that save energy and smoke/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."
According to Mr. Fadell, that latter bit is indeed why Nest signed up with Google: It had been attempting to secure $2 billion in funding to achieve its next stage of growth when Google made its offer. With Google, Nest can continue to operate as an essentially independent entity, but one that is no longer constrained by financial issues.
"We're thrilled to join Google," a statement from Fadell notes. "With their support, Nest will be even better placed to build simple, thoughtful devices that make life easier at home, and that have a positive impact on the world."
Nest is the second-biggest Google acquisition, after Motorola Mobility, which Google bought in 2012 for $13 billion. Mr. Fadell played a key role in the development of the original iPod at Apple, while the other Nest co-founder, Matt Rogers, is also a former Apple engineer. The company's products are often compared with those of Apple, probably because they're expensive, exclusive, and artfully designed.
Likewise, Google's interest in Nest isn't hard to fathom. Nest's devices learn more about their users over time and begin automating the device's behavior to meet the customer's usage patterns. They are essentially learning sensors, an ideal product for a company that makes money through increasingly customized ads by surreptitiously learning more about its customers.
Nest also gives Google some Apple-like magic, with a key ex-Apple executive and a hardware product line, albeit an esoteric one, that is popular in affluent, tech-laden households.