Can Software Drive Investors to Google's Nest?

The big news this week in cleantech came from Google's (NASDAQ: GOOGL  ) $3.2 billion acquisition of Nest. I have been discussing the potential for Google to ramp up a presence in energy home management since October and pointed out that Nest's model was a concept Google could find interest in -- yet the news was exciting nevertheless for a sector that was deemed to have crashed. So now that a million and one stories about the actual deal have been published, I thought I would try to anticipate what may come next for Google now that Nest is part of the family. 

For one, I believe Google sees amazing talent in Tony Fadell, designer of the iPod, and will look for him to do what he does best: design consumer products, maybe even a new Android phone that tops his own creations. Secondly, Google seems very interested in learning devices that result in better efficiency. In fact, Google has backed privately held Swell, an app considered the Pandora of talk radio, which learns your news and audio stream preferences. The tech giant also made a very small investment (just over $1 million) in start-up Building Robotics in November. This move basically helped Google gain a foot into the commercial office building world through Building Robotics' Comfy app that lets humans regulate temperatures zones. As usage grows, the Comfy app learns and helps buildings become more efficient with energy distribution and monitoring that relies on humans rather than sensors so maintenance costs can be minimized. 

I could see how the Comfy software could be integrated into a more comprehensive future Nest consumer product line, which could possibly even lead to a larger stake in Building Robotics by Google since there may be a middle ground between man and machine when it comes to energy management systems, especially in larger building environments where people have varied temperature preferences.

Additionally, Google may be thinking the learned behavior market may someday converge with gesture technology, especially in robotics, an area where Google made a bunch of acquisitions last year, most notably through the acquisition of Boston Dynamics, developer of BigDog, Cheetah and WildCat robots. That last point may have helped justify the high valuation Nest received -- maybe Nest software can give those freakish robots more of a brain. Ultimately Google could be looking to bring companies like Flutter (gesture recognition technology it acquired in 2013), Nest, and even Building Robotics together to focus on next generation robotics and consumer products from smart TV's, doorbells, home appliances and other products that encompass the Internet of things. Stay tuned! 

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