Google’s acquisition of Nest Labs is being touted as a sign that it’s serious about putting itself at the center of the Internet of Things, a potential $19 trillion market of opportunity for all kinds of connected devices from the thermostats and smoke alarms that Nest makes today to the smartwatches and other wearable tech of the not-so-distant future.
But dig a little deeper and it’s also clear that Google is taking its cue from the strategy that has made its former partner-turned-rival Apple AAPL -1.67% such a success. That strategy: Create your own devices to sell software and services. Between Nest and Motorola Mobility , the smartphone maker it acquired in 2011, Google has now spent $15.7 billion on hardware companies. Unsurprisingly, Motorola and Nest are Google’s most expensive acquisitions.
As for Nest, Google’s acquisition “is — almost literally — a foot in the door for the search-engine giant, giving Google another path into the homes of users, alongside computers and smartphones,” says Brian Proffitt, a technology expert and adjunct instructor of management in the University of Notre Dame’s Mendoza College of Business, “For the immediate future, Google will likely use the Nest family of products as a hub for a home’s Internet of Things. You might not think that a thermostat as a potential hub for an interconnected web of devices in the home, but it’s ubiquity makes it an ideal candidate… especially since energy management is one job an Internet of Things can do that will have immediate impact on consumers’ lives.”