Google’s acquisition of Nest, the company that makes thermostats and smoke and carbon-monoxide detectors "smart," has some broader implications for mobile platforms, Google and its competitors, and by extension, the ad-marketing business.
For the past few years, television has been the cornerstone of the “connected” home, but Nest, with its ability to adjust a home’s thermostat by learning your heating and cooling patterns and detecting human or animal movement inside the home to optimize energy use, is an example of the advances (or encroachment) into the field of “smart” living.
The $3.2 billion-dollar acquisition also signals that the term “mobile” has far larger potential than that offered so far from just handsets and tablets. Google's purchase of Nest really takes the physical-digital world convergence and “Internet of Things” concept to the next level. Both Google and Nest have been successful by making easy-to-use products that use human behavior to fill a need and deliver real value through technology-based solutions whether this happens online, on your phone or tablet, in your home or simply in your life.
A Google-Nest connected home could help rapidly expand this concept and make it more accessible to mainstream America. Just think, Google has nearly eliminated the need for buying GPS tracking devices by creating Google Maps because a) we need solutions – in this case, directions b) we’re a mobile-centric culture, and c) we love things that are free.
Those same human truths apply to the connected home: Energy and safety solutions, mobile access and control, and affordability. Add Nest’s truly amazing products to Google’s technology mission and massive scale, and the result is bound to deliver a more affordable connected home solution, potentially funded through an advertising-retail based platform.
Every company in every industry is in the race to own a piece of the new, broader mobile landscape, and if they aren’t, they should be. But there are challenges as well as opportunities. The connected home is one place where mobile fits in so seamlessly and where no one brand has really won this space. Perhaps no single brand ever will. But to some, technology is intimidating, fragmented, complex or unnecessary. Consider the smart refrigerator or how long it has taken internet-connected TVs to become mainstream.
But just as Apple has done so well before, Nest finally brings to Google a simple, beautifully designed product that provides real value in the growing world of mobile-based “smart” homes. The real challenge for Google will be in making Nest accessible beyond an affluent or tech-savvy audience. Nest is great if you're willing to pay $249 for a thermostat, but Google has built its brand largely on the concept of “free.” It's a big hurdle for this billion-dollar investment to leap.
As for the ad-marketing implications, this deal provides more opportunity for Google’s mobile-paid search business. The more connected we are, the more data we share, which leads to more opportunities for Google paid-search ads. With Nest, Google now has the potential to know when you're home and what you're doing to deliver relevant mobile ads.
How might this work? A Nest system knows I’m away from home for several days while six inches of snow falls on Minneapolis. I receive a Google Alert about the weather via my Nest app and an ad from a local snow removal service to clear my driveway and sidewalk. Click, buy, done. No more asking for favors from the neighbors.
While it's great for Google, Nest, the local business and me, data privacy is a growing concern. Google and Nest will need to tread lightly and provide tiered options to consumers regarding how much data they want to share. Still, this could be the watershed moment that not only brings the “smart” home to the masses but be the game-changer that elevates mobile beyond the device.