Google Inc took its biggest step to go deeper into consumers' homes, announcing a $3.2 billion (1.9 billion pounds) deal to buy smart thermostat and smoke alarm-maker Nest Labs Inc, scooping up a promising line of products and a prized design team led by the "godfather" of the iPod.
Nest will continue to operate as its own distinct brand after the all-cash deal closes, Google said on Monday.
The deal is the second largest in Google's history after the $12.5 billion acquisition of mobile phone maker Motorola in 2012.
The Nest acquisition gives Google a stepping stone into an important new market at a time when consumer appliances and Internet services are increasingly merging.
"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," he said.
With the acquisition, Google gets Tony Fadell, a well-connected and well-respected Silicon Valley entrepreneur credited with creating Apple Inc's iconic iPod music player, along with co-founder Matt Rogers and a host of talented engineers and designers.
According to a search on professional network LinkedIn, roughly 100 of Nest's 300 employees have worked at Apple in the past.
Google, the world's largest online search engine, is increasingly expanding into new markets, with efforts ranging from a high-speed Internet access business to advanced research on self-driving cars and robotics.
But while Google's engineering expertise has generated major advances in technology, the company has at times struggled to create hardware products that resonate with consumers as much as Apple's products do.
The consumer experience of Nest's products "is Apple-like and it gives Google that," said Pat Moorhead, an analyst at Moor Insights and Strategy.
Fadell said the deal with Google was the culmination of "countless" discussions that began in the summer of 2013.
"It took us months to get comfortable that they are going to bring to the table the things we need for scale and to realize our decade-long vision and that they really truly respected what we did," he said.
While Fadell's expertise in mobile products could be a boon to Google and its money-losing Motorola smartphone division, he stressed that his focus was on home automation products.
"That was one thing I was very clear about. I said ‘Larry, I have already built all kind of mobile products, I have done all those things. I am not here to build those,'" Fadell said, referring to Google CEO Larry Page.
Source: Reuters
