Google acquires smart thermostats maker Nest Labs for $3.2 billion

Online search engine vendor Google will acquire Nest Labs, a maker of smart thermostats and smoke alarms, for $3.2 billion.

The deal signals the internet company’s intention to expand into a broader array of devices and bringing valuable hardware design expertise in-house.

Larry Page, CEO of Google, said: “Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family. They’re already delivering amazing products you can buy right now–thermostats that save energy and smoke/CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams”

Nest, which was co-founded by one of the creators of Apple’s iPod music player, will continue to operate as its own distinct brand, said Google in a statement.
Larry Page, CEO of Google
The deal is the second-largest in Google’s history, after the $12.5 billion acquisition of mobile phone maker Motorola.

“Nest Labs appears to be focused on thermostats and smoke alarms, but it’s not far-fetched to see Google expanding this technology into other devices over time. Home automation is one of the bigger opportunities when you talk about the Internet of everything and connecting everything. This acquisition furthers their strategy around that,” said Shyam Patil, an analyst at Wedbush.

Nest will continue to operate under the leadership of chief executive officer Tony Fadell – a former Apple executive who is referred to as the godfather of the iPod, Google said.

Nest is funded by Kleiner Perkins, Lightspeed Venture Partners, Google Ventures and Shasta Ventures among its investors.

The Palo Alto, California-based, company employed about 280 people as of October. It employs a large number of designers and engineers from Silicon Valley firms like Apple and Google.

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