Published On: Tue, Jan 14th, 2014

The Google Boys Pay Out $3.2 Billion To Buy Nest Labs

The deal marks the second largest acquisition in the search engine giant’s history.

Serge Brin and Larry Page have never been afraid to take calculated risks when it comes to delving into their considerable “acquisition war chest”. However, this time around Messrs. Brin and Page have changed the rules of the game slightly through taking a step out of the computer hardware and software business and into the conventional domestic consumer market.

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 Nest Labs co-founders  Tony Fadell and Matt Rogers

They have taken this fundamental step through their acquisition of  Nest Labs, best known for their smoke alarm-maker and smart thermostat line of products.

What may have been particularly appealing to Google about Nest Labs, is the highly talented design team headed up by Tony Fadell. Faddell, who co-founded Nest Labs with Matt Rogers, is generally credited with creating the  iPod music player for Apple.

The Nest Labs acquisition at $3.2 billion, while significant,   is still only a quarter of Google’s largest  buyout, the $12.5 billion they paid for Motorola in 2012.

While industry onlookers agree that the acquisition of Motorola deal market and industry milestone being it was  Google’s first major foray out of algorithms and into  hardware, their purchase of Nest Labs takes them into an entirely new market sector.

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Larry Page and Sergey Brin / Getty

Nest Labs, or Nest as they are known to the domestic consumer, almost instantly caught the attention of the market with the release of their first thermostat, which was particularly eye-catching as well as being highly effective. Its  round, brushed-metal design, dominated by an aesthetically pleasing convex glass screen capable of not only displaying temperature, but also changing its color to blend in with the background that it has been attached to.

Nest Thermostats are highly efficient and  capable of tracking peaks of usage and employing information that it  gathers data to automatically set the ideal room temperature only fluctuating basis.

Following the success of the Nest Thermostats, the company expanded its range of connected appliances with the launch of Nest Protect, which is a Wi-Fi-enabled interconnected fire alarm with an integrated carbon monoxide detector.

Industry observers have pointed out that Google may be as much interested in  the design team at Nest as their products, as the search engine giant’s have often been observed to be struggling to keep up with Apple as far as hardware products are concerned.

It is worthy of note that around one third of Nest’s design team spent some time working with Apple, at some time or another, with Tony Fadell being a former senior vice president of the company, and leading member of the creative team behind that developed the original iPod and iPhone.

Celebrating the deal, which is due to become official in the next two months pending regulatory approval,  Google chief Larry Page stated that have built a tremendous team which are welcome  additions to the Google family.

According to a spokesperson from Google, Nest Labs will continue to operate as its own distinct brand even after it officially comes under the Google wing.

Nest Labs first began operating in 2011, with Google Ventures being one of its original investors.

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