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It would be a bit of “Johnny come lately” if I were to tell you that Google (NASDAQ:GOOG) is acquiring Nest Labs. Unless you have been living under a rock and been fracked out of house and home today, you already know that the search engine monster has paid $3.2 billion for a caviar that many think may not be beluga. Google’s share price continues its nearly constant upward trend with minor fluctuations in either direction. Google closed yesterday at 1149, down a miniscule three cents.
(In case you are wondering about my opening two sentences, I am preparing for the first annual ADVFN Mixed Metaphor Challenge. I’m not sure when it is being held, but I shall be prepared.)
I have learned that jumping on stories immediately is not always the best. Sometimes its better to sit back until at least some of the dust settles – especially with a story of this magnitude. Now that a few days have passed, most of the opinions are in and, although I have not quantified them, it appears that the majority has either yawned or mocked the deal as preposterous. What is Nest, after all, but a thermostat manufacturer? Sure, it manufactures “smart” thermostats, but how big a deal is that for a company like Google that deals in information technology?
Actually, it is a very big deal. Because we take Google for granted, we forget that it is a behemoth of incredible proportions, with an appetite to match. A company that offers access to information must first be a company that has access to information. A company that has access to information controls information. The more information it controls, the more powerful it becomes. I personally believe that the acquisition of Nest is an insight into Google’s trek toward becoming the most powerful entity on earth.
Let’s step back and take a look at Nest. A leisurely browsing of its website will convince you that it is a producer and purveyor of “smart” thermostats and smoke alarms. There is no question about the superiority of their products. I’m considering ordering a smoke/CO2 alarm myself. The real question is, however, not what they do, but what they are capable of doing, especially under the control of Google.
The Nest product is far beyond programmable. It is also far beyond mobile-accessible. It learns. Compare Nest products to intuitive typing on late model smartphones as opposed to what intuitive typing was on “old” smartphones. Intuitive used to mean something closer to spell check. Now, I rarely ever type a complete word on my Windows phone. It knows – or at least correctly anticipates – what I am going to type. It’s a great time saver, but it sure is scary. Nest products operate similarly.
But that is now. What is Google capable of doing with Nest technology? Let’s start with this thought: If you can control your thermostat from a remote location, who else can? If you believe the answer is “No one,” you should crawl back under that rock, because you are not going to believe what is coming nest … I mean, next.
Nest’s real value may be in the intellectual property that Google acquires along with the operations. “Nest has been granted 40 patents, has acquired 60 and has filed for more than 200 more, according to spokeswoman Kate Brinks. In September, Nest cut a deal with Intellectual Ventures, one of the largest aggregators of patents, that gives it access to more than 40,000 patents for defensive purposes.”
George Orwell was not wrong. He was just off by 30 years or so. You may laugh at me now, but don’t be surprised if, in just a few years, you will be required to have smart technology in your home. Smart meters are already being installed, and even required, by some governmental agencies. Why not every other device? Most people will buy the concept because of the convenience, but your entire life will be open to whomever is collecting the data from your home, your mobile devices (including your car), and your PC (if they still exist). Your privacy is determined by the amount of personal information you are able to control and protect. Google protects their privacy behind thousands of meters of razor wire, yet, all the while, positioning itself to sneak inside your home and invade your privacy.
Should you invest in Google? That’s up to you. My question is, “Do you have a spare room under that rock?” The behemoth is hungry and it wants to be fed.
