Following this week’s announcement that title="google buys nest for $3.2 billion">Google has agreed to purchase connected home device maker Nest for $3.2 billion there has been a lot of speculation about whether Google can be trusted with our home data. The smarter approach, to me, is represented by a Taipai-based tech commentator named Ben Thompson who wrote about Google’s New Business Model on has blog. He refers to nest as the “second-leg for the Google stool… arriving just in time,” as the “growth rate in Internet penetration is set to peak in 2016.” Google has been able to confidently move into any business that drives internet use since its ad business benefits from a large share of that traffic. With that growth curve flattening, Thompson explains, Google needs to look elsewhere.
The connected home is a good place to start. There are many innovations that can save families time, money and energy that can be implemented through small connected devices controlled and monitored by smartphones. Driverless cars, robots, the smart home, all of these things are connected in Google’s future.
But, according to a report by security-as-a-service provider Proofpoint, the Internet of Things (IoT) has just experienced its first global cyber attack. “The global attack campaign involved more than 750,000 malicious email communications coming from more than 100,000 everyday consumer gadgets such as home-networking routers, connected multi-media centers, televisions and at least one refrigerator that had been compromised and used as a platform to launch attacks” the company announced yesterday in a press release. Getting spammed by your refrigerator is a laughable concept, but it points to a serious potential problem.
Google is in fact well positioned to help Nest with the inevitable security threats. The company acquired the German security analytics software company Zynamics in 2011 and the Spanish malware scanning company VirusTotal in 2012. And most people don’t think of it this way, but the spam filtering in Gmail (one of Google’s signature accomplishments in machine learning) is perhaps the most prevalent security software on the planet.
When I think about the differences between Apple and Google it seems to me that Apple excels in the device in your hand and Google in the network that connects them all. Apple’s attempts at big data and synchronization (Apple Maps and iCloud in particular) have fallen short of the equivalent Google efforts. So buying Nest is really a way for Google to buy that piece of Apple DNA that they cannot synthesize themselves.
For Nest co-founders Tony Fadell (CEO) and Matt Rogers (VP of Engineering), both former Apple employees, acquisition by Google gives them access to these network strengths that Apple could not provide. Besides, Apple is not in the business of diversifying as Google is. Cupertino’s acquisitions are all focused on things that can make their existing products better or, in the rare case like the forthcoming iWatch, of setting up a major new line. Apple, for example built the software for iBeacons but hasn’t produced hardware for any standalone devices to make use of it.
Counterintuitively, the announcement of a coordinated cyber attack originating in the IoT may be good news for Nest as it is acquired by Google. Security is not top of mind for consumers when it comes to smart home adoption—convenience and return on investment are—but it can be an irritant, a wrench in the gears that creates confusion and doubt. Nest’s product design makes the smart home easy to use and Google can make their connectivity easy and secure. This could be a winning combination.
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