Some stunning Silicon Valley news to kick of the week: former Apple executive Tony Fadell's Nest announced Monday that Google has acquired the company for US$3.2 billion. In cash. What's extra curious is that Nest claims that the company will remain a separate venture and that customer data won't be shared, which begs the question of why Google would want the thermostat maker.
This has all the makings of serious intrigue. For one thing, there's the price tag for the deal. US$3.2 billion is a lot of money, even for Silicon Valley—even for Google. Walt Mossberg's new venture, Re/code, reported earlier in January that Nest was close to closing a $150 million round of funding in a deal that would have valued the company at $2 billion, but even that is a valuation based on potential, not it products and sales.
Then there's fit. It's doubtful that Google CEO Larry Page looked at its product line of search engine, creeper glasses, email service, driverless cars, and social networking ghost towns and said, "Man, what we really need is thermostats and carbon monoxide detectors."
I could easily see where Google would want to add what temperature I keep my house at to its remarkable profiles on we, the product, but Nest itself said:
Things could change, of course, but that's a pretty straight-forward commitment to protecting customer data.
Then there's personnel. Google's main target for this acquisition could have been Tony Fadell and Nest's other talented employees, including Matt Rogers, the company's founder and vice president of engineering.
Nest has done some really cool things with what used to be very humdrum home appliances—the thermostat and smoke and carbon monoxide detectors—and the people that made that happen would be very valuable to any company, including Google and another little-known Silicon Valley firm called Apple.
Speaking of Apple, Re/code reported that Google was the only serious bidder for Nest, and that "Apple wasn't in the mix." This, despite the fact that Apple liked the company's products enough to sell them in its brick and mortar Apple Store locations.
It remains to be seen if that relationship continues.
Image made with help from Shutterstock.