Transfer Pricing Associates

The Internet is not Enough for Google

post Tuesday January 21, 2014

Tags: apple, google, motorola, nest


The increase of the shares of Google Inc. on Monday the 13th of January was caused by the $3.2 billion acquisition of Nest Labs Inc. by the huge tech enterprise. The deal was the second biggest one in the history of Google after the 12.5 billion dollar take-over of Motorola in 2012. This is an important step for Google into a new market, in a time where internet and consumers are increasingly fusing. Furthermore, home automation is an important opportunity technology companies, such as Google, can gain from right now.

The first thermostat of Nest Labs gained a big audience. It was a round and metal device which showed the temperature of any room in the house. Also, the color of the thermostat adapted to the temperature of the walls and it could also track the usage of power of consumers. That way the device could automatically set the right temperature in the house.

Although Nest Labs Inc mainly focuses on smart thermostats and smoke alarms, Google wants to ‘invade’ into the homes of consumers and will most likely expand this technology over time. Ironically, Nest Labs Inc. is led by the co-creator of the iconic Ipod of Apple Inc, Tony Fadell. Due to his history with the Ipod, Fadell is a well-respected engineer in Silicon Valley.

Striking is that about one third of the employees of Nest Labs has a history with Apple. Even though Google has made huge and important improvements in its technologies, it often struggles to create hardware that resonates with the consumers, while the products of Apple are generally loved by a big audience.

There has been a discussion going around on the Internet about why Apple did not buy Nest Labs, especially when so many of its employees are former Apple people. Some people think that Fadell could not get along well with Jony Ive, the current lead designer of Apple. While others speculate that Fadell left Apple on bad terms and that is why he wanted to join Google in the first place. Anyway, it is obvious that Apple missed out on a chance to buy a company with good hardware and software for the future.[1]

In 2009, Fadell met co-founder of Google Sergey Brin at a TED-conference where he showed Brin a prototype of his thermostat. Apparently, Sergey Brin was impressed and made an investment in the invention of Fadell. In that same year Google also launched the PowerMeter-service, which enabled consumers to check their usage of electricity via Internet. The company wanted to gain more influence in the smart home market, but PowerMeter shut down in 2011 due to low usage of the service by consumers.

The investment of Google in Motorola is heading for a loss, while the expertise of Tony Fadell in the mobile industry could be a huge boost for Google. However, Fadell emphasized that he merely want to focus on the home automation products. He says that the mobile industry is history for him, since he has already done so much for Apple. Fadell merged with Google to build on his vision of smart home products and not to continue on the things that he has done in the past.

Some people on Twitter were concerned about the privacy issues of Google’s new deal. The company is notorious about their huge knowledge on the internet behavior of people and now they will even have information on the power bill of your own house. It is very logical that people think that way, but Tony Fadell ensured that Google takes their privacy policies very seriously and that Nest Labs will not change their terms of service.

Source: reutersbusinessinsider
Image courtesy of PANPOTE /
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