Google announced today that it has acquired Nest for $3.2 billion, a smart home company founded by two former Apple employees, and suddenly became the most intelligent hardware company. Why is this deal worth $3.2 billion? Whether it’s worth it or not, I interviewed several domestic smart home owners and listened to their opinions. They are:
Vice President of Haier and General Manager of Advanced Technology R&D: Yip Wong
BroadLink CEO: Liu Zongru
Phantom Smart CEO: PG One
First of all, let’s talk about the background of Nest. It’s not easy for two founders who used to be Apple employees. One is Tony Fadell, the father of iPod, and the other is Matt Rogers, a former iPhone software engineer. They founded Nest in 2010, and it was not until 2011 that the first product, the Nest Thermostat thermostat, went on the market, which was a slow job.
At the beginning of 2013, it received an investment of $80 million in Series A, and the valuation at this time was already $800 million. At that time, this was a very surprising figure. At that time, their achievement was that the monthly shipment of Nest Thermostat was 40,000 ~ 50,000. Later, the smoke sensor product Nest Protect was just launched in December last year, and it hasn’t been listed for a long time. That is to say, there are only two products in Nest now, and the cumulative sales volume is about 1 million units.
Top left: smoke sensor Nest Protect
Bottom right: temperature and humidity sensor Nest Thermostat.
Why did Google buy Nest?
Liu Zongru, founder and CEO of BroadLink, believes that the acquisition of Nest is a step for Google to lay out smart homes, which is not only for Google, but also for chip manufacturers. There is nothing to play with mobile phones. The next step must be the Internet of Everything, and smart homes are the most grounded.
Moreover, as I summarized the smart hardware in 2013 in Hardware Re-invention, smart home is only a part of "smart home", including smart medical care and health monitoring, which can be classified as smart home.
Yip Wong, vice president of Haier/general manager of advanced technology research and development, summed up the three starting points of Google’s acquisition of Nest:
1. Access to user resources other than computers and mobile phones on the Internet. 2. Get data that Google can’t climb out on the Internet. 3. As a pioneer in exploring the business model of smart home and Internet of Things. Google’s shot also confirms the rise of smart home.
Wang Hao, the founder and CEO of Fantastic Intelligence, believes that "Google is playing the next big game, especially when you combine it with another recent acquisition of Google, the acquisition of Boston Dynamics, a bionic robot company." Last month, in December 2013, Google just bought the company for $3 billion.
Boston Dynamics is the most successful bionic robot company in the United States. It has developed many amazing robots such as "big dog" and "robot cat", and the US military has also purchased many robots developed by Boston Dynamics. Google’s recent intensive acquisition of robots and smart equipment companies shows that it has a clear picture of the future, and now it is only playing these moves.
What’s great about Nest?
If you start to understand Nest now, and find that its products are actually not complicated, Nest Thermostat can intelligently control the temperature and humidity at home, which can be controlled remotely, and can also communicate among multiple Nest Thermostats based on WiFi network.
Yip Wong believes that the advantage of Nest is to use the smallest products and the lowest entry threshold to break the monopoly of household appliances industry. Using the advantages of product design, user experience and cloud computing in the field of smart home and Internet of Things, we found the value praised by users in the field of smart home and set a good example for the industry.
Liu Zongru thinks that the most noteworthy thing about Nest is that it puts forward the concept of "self-learning function" and implements it. Nest Thermostat can automatically adjust the temperature and humidity to a comfortable setting according to your usage habits. As for the interconnection between products, there is nothing new, which is the direction that smart home products are considering. The smoke sensor Nest Protect introduced later is not too difficult, and the interconnection between smoke sensor and Nestmostat is somewhat far-fetched.
PG One thinks that the excellence of Nest is that it is a real intelligent device, without a platform or fancy products, but only a single product to solve practical problems. However, this single product has infinite imagination. If the intelligence is only the remote control of the mobile phone, it is absolutely wrong. It must be to make the equipment intelligent.
Nest is a real Internet product, which has all the functions of controlling air conditioning, and the data is uploaded to the Internet, which makes central air conditioning more possible.
Several people agree that Nest is a product suitable for the national conditions of the United States, which is difficult to popularize in China. Because American families have a high degree of acceptance of temperature and humidity regulators and smoke detectors, almost every family will install them, so there will be a great market. Including Canada and Europe, are also potential markets. Nest also has problems, and the price is not cheap. The price of $249 is more than 10 times that of the traditional temperature and humidity sensor, and the control terminal of the central air conditioner at home needs to be modified behind this small device, which cannot be bought and used immediately.
Is $3.2 billion worth it?
"The $3.2 billion acquisition of Nest is not worth so much money from any other company, but Nest is a suitable value if it is in the big picture of Google." PG One thinks it can sell for $3.2 billion, mainly because Nest can be used by Google. Only other resources in Google’s picture can reflect his value, which is different from traditional asset acquisition.
Haier Yip Wong also thinks that this transaction is worthwhile. Compared with Motorola’s merger and acquisition, the market result is more meaningful than the expected return in the future. At the same time, he believes that instead of incorporating Nest into the current organization and applying the current processes and values of the Internet, Google uses the resource potential of the current matrix to support this destructive innovation team’s learning and exploration of new markets.
Liu Zongru, on the other hand, can sell for $3.2 billion, mainly because the founder is so powerful that others can’t do it. Because Tony Fadell has the background of the father of iPod, its products are also considered to have Apple DNA in design and function.
"The last time I estimated $800 million in the A round, it was already sky-high." Liu Zongru said, "This is the difference between the United States and China. The whole venture capital industry has a higher recognition. Compared with the sales of more than one million sets of two products, this valuation is very high. In fact, we are the same. If we directly finance in the United States, we will have a higher valuation. " BroadLink has recently received investment from JD.COM Mall.
Smart home is good.
In addition to the acquisition of Nest by Google itself, it should be a great benefit to the smart home startup industry. Liu Zongru thinks it’s good for everyone who makes hardware, especially in the process of financing. "China’s VCs are all following the trend, and they need a reference of the Silicon Valley model in the United States." Liu Zongru said.
Wang Hao is more geeky, and Google’s acquisition of Nest also makes him feel very excited. "One day you see that everything in your home is connected to the Internet, and your life will be completely changed." He said. The smart lights, thermostats and air quality monitoring products launched by Fantastic Team are also a complete set of smart home products.
These people I communicated with are also the frontier participants of smart home in China. Yip Wong said that Haier is undergoing a platform transformation based on Internet thinking, which can be seen from the release of a series of products. Google’s acquisition of Nest confirms the importance of this market in the future world. Haier recently launched an air box product, the internal code name is "Xiao A", which turns the air housekeeper into an intelligent terminal, and at the same time opens the interface for external developers to enter the platform products based on this agreement. Each provides a better experience for different markets.
The intelligent remote controller, socket and other products launched by BroadLink, a Liu Zongru company, have been launched for one year, with a cumulative sales volume of more than 100,000 in 2013. Now, there are more than 500,000 overseas orders in 2014, and China hopes to deliver 30,000 units per month this year. "I hope the cumulative sales in 2014 will reach one million," Liu Zongru said.
In this wave of intelligent hardware, there are always some products that will become martyrs, and some products will really change the world. When smart bracelets and watches are flooding, does Google’s hand show that smart home is the key to the peak of this wave of intelligence? Smart bracelets and watches will become cannon fodder.