Foreign media CNET recently reported that Marwan Fawaz, CEO of smart home equipment manufacturer Nest, is about to step down with the reorganization of Google. The reorganized Nest will become a division of Google, responsible for Google’s "Home" smart speaker. Five months ago, Fawaz was responsible for the reorganization of Nest under Google.
If I heard it right, Nest is going to turn smart speakers upside down, and I don’t know who put forward this brain hole-opening reorganization thinking. Without a good thermostat, can the business of smart speakers bring a second spring to Nest?
Nest’s first spring: the "doomsday" carnival before the acquisition If the post-acquisition Nest is not satisfactory, then the pre-acquisition Nest felt a "doomsday" carnival in advance.
The industry all thinks that Nest opens a new door to the transformation of home automation, which is not an exaggeration. Because, before Nest, no one was curious about thermostats or other furniture equipment.
In 2010, former Apple engineers Tony Fadell and Matt Rogerss founded Nest, and released their first-generation Nest Thermostat thermostat in their first year of business. This thermostat integrates the advanced and cool technology elements of ipod, mobile phone and Internet, and can be connected with each other, remotely programmed and respond to the surrounding environment. Once it came out, it got a good response from the market: the market demand was huge, and the order speed showed no signs of slowing down.
For Nest, the first three years are three years of rapid development and great growth. Nest released two new products (Thermostat Thermostat and Protect smoke detector), updated one product (the second generation Thermostat thermostat), and sold more than 1 million products worldwide. In 2013, the market valuation of Nest, which was established only a few years ago, reached 800 million US dollars.
Let’s just say that the urgent market demand will soon make Nest a necessity for American families and become popular all over the world.
After people’s excitement reaches the highest point, reality will usually give them a fatal blow. So is Nest, which is at the peak of its development. Because of its great achievements in the household consumption market, Nest decided to develop more household products and enter the new smart home equipment market.
However, this ambition has not yet been realized, and the acquisition four years ago rewrote all the directions of the Nest story.
I thought that "breaking up" would make me happy, and Google slapped my face.
In 2013, Nest received $80 million in financing from Google Ventures, which was the beginning of the intersection between Nest and Google.
At the beginning of 2014, Google spent $3.2 billion to acquire Nest, a smart thermostat manufacturer that was once hailed as leading an exciting home automation revolution.
Before being acquired by Google, Nest once thought that Google would be its best umbrella. After all, it was supported by a company with a market value of over 100 billion dollars and the best engineers in the world, and no one thought that it would be far from success.
But this is not the case. Google does have the capital, talent and popularity to push Nest to the top, but because of the completely different business models, after the acquisition of Nest, Google integrated these two different business models as quickly and effectively as they imagined, which hindered the development momentum of Nest.
Therefore, one year after the acquisition of Nest, the company structure of Alphabet was reorganized. Alphabet believes that Nest belongs to "other bets" and should become a subsidiary with the same legal status as Google. As a result, Nest became an independent company and was listed as a model of other money-burning projects.
However, this project that burned the most money did not get the same result.
On the surface, Nest seems to be one of the most successful businesses of Alphabet, and new products have been launched one after another within three years after the reorganization. In addition to losing Google, the tough driving force behind it, similar to the problem when it was just acquired, Nest was only independent, but it failed to integrate with the business between Google.
The problems brought by Nest’s independence are: the founders both ran away — — Tony Fadell, founder and CEO of Nest, and Matt Rogers, co-founder, left in 2015 and early this year respectively. The prospect is not optimistic — — The industry believes that Google and Amazon are entering a strategic decisive period, and perhaps selling Nest is the best choice. Alphabet has also considered selling Nest to any company except Amazon. Obviously, under the leadership of Alphabet, the prospect of Nest is gloomy!
Fortunately, Google didn’t sell Nest and turned around at the last minute.
From thermostat to smart speaker, when will the second spring of Nest come?
After three years of independence, or three years of wandering, the unsatisfactory Nest was finally given an ultimatum by Google: Nest will return to the Google Home team and be responsible for Google’s "Home" smart speaker.
But this makes people feel a little embarrassed. Nest is going to cut the thermostat to make a speaker? But on closer inspection, it seems to make sense.
Less than half a year after it was acquired by Google, Nest acquired IP camera company Dropcam for $555 million in cash, and integrated its camera technology into Nest’s product line.
The effect of this acquisition is still quite obvious. After the acquisition of Dropcam, Nest successively launched Nescam, Nescam Outdoor and Nescam IQ security camera products. Although these cameras are expensive, most users of Nest said that Nest left competitors behind.
"Far behind" is obviously a high evaluation, but why do I think that the second spring of Nest has not yet arrived?
Nest will turn to the smart speaker market after the reorganization this year, but it has missed the best opportunity. In the year of acquiring Dropcam, Nest could and should have been able to develop products like Amazon Alexa, but they just continued to develop new cameras and never involved smart speaker products. Just one year, Amazon launched the smart speaker Echo.
Indeed, next to Google Nest, it has all the right technologies, top talents and a rich capital chain to increase the smart home business. However, it is precisely because of the misunderstanding of Dropcam that Nest should not last long on the road of smart speakers. To put it another way, according to Nest’s past experience, if Nest wants to upgrade the "Home" speaker, it should install a camera on the current "Home" speaker! It still sounds amazing.
However, as far as the current smart speaker market is concerned, Amazon has occupied an absolute leading position, and companies such as Apple are chasing after the smart speaker market. Nest will face a difficult situation, how to usher in the "second spring" under the situation of "having a strong enemy before chasing troops"? And Google is facing a $5 billion sky-high ticket issued by the European Union. As far as the current form is concerned, Google probably can’t invest too much money and energy in the reorganized Nest!
Perhaps, the worst ending is that Nest not only failed to usher in the "second spring", but was also given to Amazon by Google.
This should be the last scene that Google wants to see.