) recently announced that it has entered into a definitive
agreement to acquire home automation startup, Nest for $3.2
billion in cash. However, Nest will continue its operations as a
distinct brand even after the closure of the deal.
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Nest Labs is a home automation company headquartered in Palo
Alto, Calif., that designs and manufactures sensor-driven,
Wi-Fi-enabled, self-learning, programmable thermostats and smoke
detectors. It was co-founded by former
) engineers Tony Fadell and Matt Rogers in 2010.
This deal happens to be the second largest deal in Google's
history after the 2012 acquisition of Motorola. The Nest
acquisition will provide Google an entry into the consumer
appliances industry and that too at a time when consumer
appliances and Internet services are getting interconnected.
Additionally, the aforesaid deal is also expected to provide a
boost to Google's profitability going forward.
This deal will prove beneficial to Nest too since its business
activities are based on algorithms and Google knows how to write
them. Additionally, Nest's association with Google is expected to
expand its brand name.
This, however, is not Google's first attempt to make its presence
felt in the smart home market. A similar effort was initiated by
Google in 2009 when it unveiled the PowerMeter service, which
enabled users to monitor home electricity consumption through the
web. However, Google shut it down in 2011 as it received a tepid
Following the announcement, platforms like
) were abuzz with people expressing concerns about the privacy
implications of the deal as Google collects a lot of personal
data about its users' online habits. However, Nest's executives
claimed that Google takes privacy issues very seriously.
Google, the world's largest online search engine, is increasingly
extending its foothold into new markets, with efforts ranging
from a high-speed Internet access business to advanced research
on self-driving cars and robotics.
Currently, Google has a Zacks Rank # 2 (Buy).