Earlier this week, Google bought Nest, a connected devices company, for $3.2 billion. This might seem like an ungodly sum for a company that makes thermostats and smoke detectors, but it makes absolute sense. Nest’s products are beautifully designed, their team is overflowing with talent, and they were the first company to figure out what the “Internet of Things” means to consumers and deliver products that people actually want.
But in order to do this, Nest had to spend millions of dollars on R&D to build the basic infrastructure behind the product. The high cost made it impossible for anyone but the extremely well-capitalized to enter the market and create connected things.
Google’s huge $3.2 billion purchase of Nest can boost the giant company’s existing products and services right away, not to mention Nest’s expansion. But the most exciting aspects of the deal come when you think about where Google could be going in the long-term.
Nest could be just a starting point for more capable applications and new ones as well, but more importantly Google can make itself into a hub for the widening Internet of things (the movement to put sensors and connect everyday household items to the web) and possibly an even smarter dispenser of advertisements based on your data.
