SAN FRANCISCO — Google says it has acquired Nest, the maker of highly styled digital smoke alarms and thermostats, for $3.2 billion in cash.
Nest, based in Palo Alto, Calif., has generated lots of buzz and sterling reviews for its aesthetic design approach to common everyday home appliances often ignored by consumers.
Since its launch in 2011, the Nest Learning Thermostat has been a consistent best seller. The recently unfurled Protect (Smoke + CO Alarm) has landed rave reviews.
The acquisition thrusts Google squarely into multiple markets: search, email, smartphones, PCs, tablets and – now – the home. Nest, in essence, puts Google in a prime position to cash in on the fledgling "The Internet of things" -- a concept in which all digital devices in one's home are interconnected in some manner for maximum sharing of data.
Google's acquisition "affirms the growing strategic importance of the idea of the connected home," says Forrester analyst Frank Gillett. "It also shows that Google increasingly believes in hardware-software solutions, such as Nest has built, rather than just building operating systems for other manufacturers to implement in smartphones, Chromebooks and TVs."
Nest CEO Tony Fadell, who at Apple helped design the iPhone and iPod before he started Nest in 2010, will continue to run Nest.
"We're thrilled to join Google," Fadell, 44, said in a statement. "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 said Fadell and his Nest co-founder Matt Rogers had built a "tremendous team that we are excited to welcome into the Google family."
Nest has snatched away talent from Apple, Fadell's former employer. But analysts says that Apple would seem an unlikely suitor for Nest. "It's a bit out of the mainstream for Apple if you see them as a home entertainment versus home automation company," says Gartner analyst Van Baker
The acquisition takes Google into a market that it, too, hasn't yet explored, giving it a chance further drive its software and services into homes, says Baker. "If you look at it as a home automation play, that is a very much up-and-coming area."
The deal also promises to open up development around the home, assuming Google moves Nest's platform to an open-source software model. "Google will open up the somewhat closed approach that Nest used to date, to better integrate with interoperable smart home solutions," says Gillett.