Google’s bid for smart home dominance: What the $3.2bn Nest acquisition really means

Google’s bid for smart home dominance: What the $3.2bn Nest acquisition really means

The announcement yesterday that Google is to acquire Nest Labs for $3.2 billion (£1.9 billion) came as a surprise to many, with suggestions that Apple would have been the more obvious choice for the smart learning thermostat company.

Founded by two former Apple executives and home to many former Apple employees, it might have seemed logical that Nest would get swallowed up by the company it shares such a connection with. However, reported infighting and disillusion with his former company may well have been the reason behind Nest co-founder Tony Fadell going with Google.

Fadell’s history with Apple dates back to 2001 when he was hired as a contractor to work on the iPod. Within two months he was brought in by the tech giant to lead the creative design team of the product and by 2006 he was a senior vice president within the company.

But somewhere along the line things turned sour between Fadell and Apple. In 2008 the company let him go amid rumours that he was not getting along with Jony Ive, Apple’s lead hardware and software designer.

“Tony got canned,” Leander Kanhey writes in his new book, Jony Ive: The genius behind Apple’s greatest products. “He was paid off with his salary for a number of years plus so many millions to leave. Tony was canned because he was battling with Jony.

“He went to Steve so many times bitching about Jony, but Steve had such a tremendous amount of respect for Jony and their relationship that he sided with Jony not Tony.”

Ive was not the only senior Apple employee that Fadell fell out with. Former head of iOS Scott Forstall was told he “got what he deserved” by Fadell following his surprise departure from the company in 2012.

Such bitter remarks suggest the Fadell and Apple parted on less than amicable terms. Considering this, it comes as no surprise that when Fadell came up with the idea for a new type of thermostat, it was one of Apple’s main rivals that he went to.

“This decision wasn’t made on a whim – Google has been in the mix in some way or another for about three years of our almost four-year history,” Fadell said in a blogpost about the deal. “In fact, my first meeting with Google as a Nester was before we’d launched.”

Google’s financial support and long-standing interest in Nest meant it was the only real candidate for taking over the startup. And what is Apple’s loss is Google’s gain, in a deal that brings with it both an exciting product and an experienced team.

“I think [Google] bought a great productising team,” said Kevin McDonagh, CEO of Novoda. “They bought an amazing productising team. How many people are in Nest? Off that team they bought a wealth of industry experience and they’re going to help realise whatever the roadmap is for Nest and the rollout to actually make this product.”

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