I have been thinking about Google’s acquisition of Next Lab’s last week for the eye-popping sum of $3.2 billion dollars. There have been numerous criticisms of the acquisition in terms of cost, with some chatter of this as evidence of a bubble in Silicon Valley. Perhaps it is worth considering this from a different perspective.

If we look at some of the biggest tech errors of the past decade, we see a very specific risk arising from new technologies to existing companies. The two that come to mind are Blackberry ignoring the threat from touch screen smart phones (Apple iPhone) and Microsoft ignoring the tablet as a threat to their basic Windows/PC business (Apple iPad).

Note that Google’s Android acquisition allowed the company to be stay competitive with Apple’s disruptive technologies – even as the two previous leaders fell dramatically from their prior number one spots. Android phones are ahead in market share (but not profitability) versus the iPhone; Android tablets are the default alternative to iPads. Blackberry saw its market share plummet. Microsoft is encountering a seismic shift in PC sales.

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Category: M&A, Technology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Google’s Nest Labs Acquisition is a Smart Defensive Move”

  1. davebarnes says:

    And, you completely ignored the privacy issues with this deal.
    No one cares about the financial aspects.
    Many people care about Google getting their grubby paws on data from the Nest devices.

    • Not sure I fully understand the privacy issue regarding Nest Thermostats

      • maumad says:

        Barry, I have bad gut feeling like Dave Barnes too. I think he is looking ahead in future. Consider these devices are going to be a part of “internet of things” and start relaying my home presence data to Google. They already know so much about us with their BS “don’t be evil meme”. I am also afraid that they are going to have more devices coming up for example for refrigerator, water heater, washing machine etc. I am okay as long as they don’t “collect” data for AI purposes and invade my privacy in pretext of improving efficiency. HTH understanding the concerns we share.

        As far as competition is concerned, I think it is excellent acquisition. Nest Thermostats and such devices are going to be future. Possibilities are endless. The next one I really want to see if something for my refrigerator which will tell me something is going to get wasted soon and I have to pay attention.

  2. Zephos says:

    I agree that there may be an instant where Google wants to step ahead of present times to avoid Blackberry fate, however still think paying $3.2 is a bit too much.

  3. BenE says:

    Nest would integrate really well with Google Now which is getting to be one of the core piece of Android. Google Now already knows not only when I’m at work and when I’m on vacation but at what time I usually leave for work and other places.

    I know this because it already suggests navigation routes just before the usual times I leave home. Those in urban areas are even warned of traffic jams and suggested alternative routes and earlier departure times.

    Google could use this information to adjust the thermostat settings based on what it knows about my habits. If Google Now detects I’m coming home early, the house temperature could adjust preemptively.

    The nest could also do things like trigger Google Now alerts if it detected unusual motion in my home while every cohabitants are detected to be away.

  4. RC says:

    Google’s Android acquisition was for $50 million. Paying $3 billion for a consumer electronic device is wildly excessive in my view.
    Silicon Valley is in a bubble, a sure bubble – but in fluff sectors such as “social”. Mark my words, 2nd quarter 2015 this bubble bursts and the sky high valuations of all things “social” comes back down to earth.

    There is no way DropBox is worth more than $10 billion. Their technology is what CS grad program’s minor project.

  5. RC says:

    And obviously when I went to graduate school in engineering I did not learn how to write well :-)

  6. jbmoore61 says:

    I thought the whole point of Android was to dominate mobile search. Google noticed that iPhone users used Google more than PC users and that the mobile market was even more search intensive. So what if they don’t make that much on Android smartphone licenses. As Robert X. Cringely noted, Google is an advertising firm more than a tech firm in many respects. They dominate mobile search thanks to both the iPhone and their own Android. Very astute.

    As far as privacy, Google’s business model is like the NSA’s, total surveillance of electronic communications. For Google, it surveils their customers via their servers, for the NSA, it surveils the Internet backbone and datacenters. The NSA just piggy-backed on Google’s business by sniffing their datacenter interconnects. The Constitution does not protect us from Google and other corporations’ surveillance because such surveillance is voluntary as part of the terms of service. It is supposed to protect us from governmental intrusion into our private affairs. But, Google doesn’t yet run the Justice system, the government does. The US government manages American society and is more powerful than any single corporation. The government is being weakened by business oligarchs. It is to be seen where the fragmentation of governmental power leads, or who ultimately controls the government.

  7. wtcombs says:

    This is further evidence to me, at least, that Google is systematically taking over the world one increment at a time. To this I would like to say I, for one, welcome our new geeky overlords.

  8. schulkie21 says:

    The Nest is decent in some aspects, but I would rather have a home automation system that doesn’t invade my privacy like the Webee http://igg.me/at/webee-smart-home-automation/x/5944165 or the EmoSPARK http://igg.me/at/emospark/x/5944165

  9. curmudgeon2000 says:

    Once again In your haste to bash Microsoft, you ignore the facts of history. Microsoft attempted to
    introduce tablet computers fully ten years before the introduction of the iPad. They didn’t get it
    right, and the devices (primarily the Pocket PC 2000 and the Microsoft Tablet PC) weren’t successful,
    but to say that Microsoft “ignored” the tablet PC is flat out wrong. Lots of tablet computers, many of
    them pen-based, have been introduced since the very early 1990s.

    • Many people tried to introduce tablets and smart mobile devices. Look at Apple’s Newton — a disaster.

      The difference is that Apple kept at it, and eventually got it right with the iPhone. Mister Softee did not — at least not until long after Apple perfected the iPad.