The Google Smart Home Play

Google's recent acquisition of smart-thermostat manufacturers Nest Labs may point to a desire to gain more access to our homes, take smart appliances to new heights and play in a nascent home energy management sector.
Published: Fri 24 Jan 2014

Google’s obsession with electricity and its management has just seen the acquisition of smart-thermostat manufacturer, Nest Labs. Google paid US$3.2 billion for the smart-thermostat manufacturer.

The Nest thermostat is designed to learn home-heating patterns. After a set period, the device memorises the user’s patterns and is then able to control the heating intelligently. In addition, the device attempts to save energy by only firing up the geyser (boiler) when you need it.

But it’s not only about the thermostat. Google loves analytics and views daily activities as "information problems" to be solved by machine learning and algorithms. A good example of this is Google’s search bar predictions. The company likes to anticipate your next move by drawing on existing data. Based on this, we can expect significant expansion in Google’s analytic service in the home via the thermostat technology.

With a Google-enabled smart home of the future, consumption can only become more sophisticated. But, Google still faces various challenges such as effective communication between devices, user-friendly technology providing easy to understand data, and security of consumption data.

Market expansion

Currently, Nest is catering solely to North America, specifically the US and Canada. There are plans to introduce the product to the UK soon. The acquisition has given Nest the opportunity to increase distribution at a far faster rate and accelerate the evolution of the company. There are now resources to hire more staff and invest in other products.

The products are still sold at a premium when compared with what the average person spends on such appliances. Google could help bring the price down if the goal is not to make hardware at a profit, but to increase the prevalence of smart appliances and promote energy efficiency worldwide. Google could be more interested in making sure Nest can reach more households before it starts introducing additional products.


Nest has been good at opening up device innovation and making connected objects. The only issue is that they haven't had an open application programming interface (API). If Nest and Google open up easy-to-use APIs to Nest devices, innovation will be encouraged.

Privacy and security threats

Privacy of personal data is becoming one of the increasingly sensitive cornerstones of our technological lives. As Google ventures in to a growing number of industries, Google’s actions toward data privacy will become key. Google will need to be careful not to be viewed as the all-powerful and unavoidable tech titan taking over every aspect of our lives.

Google is well-equipped to assist Nest with security threats to data. The company acquired the German security analytics software company Zynamics in 2011 and the Spanish malware scanning company VirusTotal in 2012. In addition to this, the spam filtering in Gmail is perhaps the most common security software globally.

The acquisition will prove to be advantageous over time as Google focuses on building non-differentiated infrastructure and Nest, on products and services. The acquisition will allow Nest to grow at a faster rate and help them to remain competitive in front of the coming wave of smart home products.