MOUNTAIN VIEW, Calif. — On Jan. 13, Google Inc. announced it had entered into an agreement to buy smart thermostat manufacturer Nest Labs Inc. for $3.2 billion in cash.

Nest, which launched in 2011 and now employs more than 300 people while also partnering with more than 25,000 certified installers, aims to reinvent unloved but important devices in the home, such as thermostats and smoke alarms. The Nest Learning Thermostat has been a best-seller among smart home thermostats, and the recently launched Protect — a Wi-Fi-connected smoke and carbon monoxide alarm — has received favorable reviews.

“Nest’s founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family,” said Larry Page, CEO of Google. “They’re already delivering amazing products you can buy right now — thermostats that save energy and smoke-carbon monoxide alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams.”

Tony Fadell, cofounder and CEO of Nest, wrote in his blog that the partnership with Google “will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to go it alone. We’ve had great momentum, but this is a rocket ship.”

Matt Rogers, cofounder and vice president of engineering at Nest, added in his blog that the customer will continue to be Nest’s focus.

“We’re looking forward to continuing our great partnership and remain devoted to [the customer] above all else,” Rogers said. “We know you entrust your homes and information to us, and [we] are committed to protecting that the same way we’ve always done.”

In a research note from Omar Talpur, market Analyst at IHS, Talpur called remote-access “arguably the most hyped trend impacting the HVAC market currently.” He added that the news of the acquisition, which is Google’s second largest after its $9.4 billion acquisition of Motorola Mobility in 2012, “is likely to help further fuel interest in the growth in the connected thermostat market, which was worth an estimated $190 million in the Americas in 2013.”

“We’re thrilled to join Google,” Fadell said in a press release. “With their support, Nest will be even better placed to build simple, thoughtful devices that make life easier at home, and that has a positive impact on the world.”

Rogers said Nest’s product line has definitely caught Google’s attention, though the company did not have any specific information to share about future product possibilities. In the meantime, Nest said its product support and warranties will remain unchanged, and Nest will continue to operate under the leadership of Tony Fadell and with its own distinct brand identity.

“Google has the business resources, global scale, and platform reach to accelerate Nest’s growth across hardware, software, and services for the home globally,” Fadell said, adding that Nest’s and Google’s company visions are well aligned. “At Nest, we use the phrase ‘welcome home’ a lot because our products make our homes a little brighter, a little warmer, a little more welcoming. We feel the same way about this new partnership stage of our company.”

Publication date: 1/27/2014

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