Internet giant buys thermostat maker

20 January 2014

Google Inc., the global web search and advertising giant, last week signed a deal to buy the innovative thermostat maker Nest Labs for $3.2bn in cash.

The deal, Google’s second-biggest ever acquisition, is the internet company’s first step out of the realm of electronic bits and bytes and into the ‘real’ world of bricks and mortar.

Only four years old, Nest Labs, based in California’s Silicon Valley, has developed a wi-fi connected thermostat that in 12 days ‘learns’ the habits of a building’s occupants and takes over control of heating and cooling to save energy.

The acquisition of Nest, whose ‘Learning Thermostat’ was reportedly selling at a rate of up to 50,000 per month last year, will be seen as a definitive move by Google into the ‘smart’ building sector.

Comprising building service automation and controls, this sector is forecast to be worth billions in the coming years.

Google’s new acquisition, Nest Labs, has developed a wi-fi connected thermostat that ‘learns’ the habits of a building’s occupants

Announcing the deal, Google heaped praise on Nest Labs, saying that since its launch in 2011 the Learning Thermostat has been a "consistent best seller", while its recently launched Protect (Smoke + CO Alarm) has had "rave reviews".

"Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family," said Google CEO Larry Page.

"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 fulfil their dreams!"

Nest CEO Tony Faddell, a former Apple executive and credited as ‘one of the fathers of the iPod’, said: "We’re thrilled to join Google. 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."

Google CEO Larry Page, centre, with Nest founders Tony Faddell, right and Matt Rogers, left (Nest Labs)

Google has been involved with Nest Labs for some time, with Google Ventures leading the rounds of financing in the firm in 2011 and in 2012.

Writing on the Nest website, Tony Faddell said: "Time and time again, Googlers have shown themselves to be incredibly like-minded, supportive and as big of dreamers as we are. I know that joining Google will be an easy transition because we’re partnering with a company that gets what we do and who we are at Nest -and wants us to stay that way."

He added: "Google has the business resources, global scale and platform reach to accelerate Nest growth across hardware, software and services for the home globally."

In February 2012 building automation giant Honeywell filed a patent infringement lawsuit against Nest Labs alleging infringement of seven Honeywell patents related to its thermostat technology. The court battle continues.

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