Buying out connected home device maker Nest for $3.2 billion in hard cash, Google has put its money on the Internet of Things or Thingternet. It has paid a huge premium on a company valued at $2 billion, and it’s a sound gamble. Couple the IoT with the rise of big data and peer-to-peer, always-on, always-connected computing over IPv6 and you have the makings of a boom which is almost already happening. Google’s expression of interest can only accelerate what was upon us anyway. In short, if you know people who are building fiddly little machines which have RFID or their own IP addresses and can talk to each other across the internet, invest hand over fist and become incredibly rich in about five years. The word is that such devices, ranging from coffee makers to baggage trackers, will number in the billions by 2020. Google is buying in early to ensure that most of them run Android. It is a huge market, ranging from just-in-time global inventory management to refrigerators which know precisely how much beer they contain and can order electronically as needed.
With Nest, Google has chosen to invest first in the intelligent home. Back in 2011, executive chairman Eric Schmidt had indicated an interest in home automation, a theme that reappeared in his 2013 book, The New Digital Age. The idea of the intelligent home, whose Venetian blinds adjust automatically to ambient light, and whose climate control can be triggered by residents well before they get home, has been the stuff of science fiction for half a century. But it was traditionally conceived as a centrally controlled facility on the lines of the client-server model. Schmidt introduced a crucial change: in his automated home, devices talk to each other and to external services—directly, not through a central server, not with human oversight.
Google had invested first in the Open Automotive Alliance and Sebastian Thrun’s driverless car. Now, with the Nest acquisition, it is taking a position in the homes and offices which that car will commute between. The company’s flagship product is a net-connected thermostat which saves the