Despite a thousand new employees and half a billion dollars spent, Nest has no new products.
When Google acquired Nest in early 2014, all signals were “go” for growth and brand dominance. The expectation was that Google would develop new technology to strengthen Nest’s foothold and make it the premier platform for connection and control in the still nascent smart home market.
Certainly the list of devices and apps that are compatible with Nest from other smart home technology companies has grown since 2014, but Alphabet might be souring on Nest.
Nest’s spending binge, and lack of products
Inside Alphabet, opinions on Nest’s performance do not seem enthusiastic. Since its purchase by Google, Nest has grown from about 280 employees to approximately 1,200 today. Nest has spent more than half a billion dollars in acquisitions: $550 million on webcam manufacturer Dropcam plus an unspecified amount for smart home hub company Revolv. Dropcam’s co-founder Greg Duffy, who is leaving Nest, said Nest was given an unlimited budget.
Yet, despite a thousand new employees and half a billion dollars spent, Nest has no new products. The Nest Learning Thermostat and Nest Protect smoke detector aren’t new, though they have been updated, and the Nest Cam is a re-branded Dropcam. This has all been during a time when public awareness of smart home technology has grown — even if consumers aren’t exactly sure what it’s for, according to The Harris Poll.
Google/Alphabet is a company that develops technology and products on a world-class level. In 2015 Google was awarded 2,835 patents, putting it at number five on the list of the top tech companies, wrote Fortune. To put that in perspective, IBM won 7,355 patents during the same year, nabbing it the top spot for the 27th consecutive year.
Google is no slouch. It stands to reason that an important division with no new products coming to market would stand out within the company, and not in a positive way.
Google shuns the Nest division
It is also telling that the Nest division wasn’t involved in the development of Google Home, released to take on Amazon Echo as a premier home system voice control device. You’d think that Nest would develop Google Home, or at least be part of the progress, but it didn’t work out that way.
The viability of Nest as a brand is not in question.
Nest was also not involved with developing the Google OnHub home networking router. Significantly, OnHub even has some of the security features of a product code-named “Flintstone” that Nest had developed for three years before finally killing it.
Troubles with Nest
Morale at Nest has reportedly been slipping. In a meeting in November 2015, Tony Fadell stopped Nest co-founder Matt Rogers who was expressing concern about employees leaving the company. Fadell said those who left were from Google or Dropcam and that employees not happy with the way things were going should “step up” and not “take on a victim mentality,” adding that victims “are not long for the world,” according to The Information.
Nest didn’t gain consumer confidence in mid-2014 when the Nest Protect smoke detector was recalled, either. It was discovered that a feature called Wave, by which you could silence an alarm with a wave of your hand, could also be enabled by those waving for help during a fire. Nest put the smoke detector back on the market with the Wave feature disabled, which caused some to complain about false alarms that couldn’t be hushed.
In earlier 2016 when Nest announced it was going to shut down the servers for the Revolv smart home hub, which didn’t thrill Revolv hub owners, the company eventually decided to refund the Revolv purchase price to everyone who bought it.
The Nest name will live on
The new CEO of Nest is Marwan Fawaz who has a background in security systems and also was the leader of Motorola’s Home business when it was sold to Arris. Whether his role is to finally get the “Flintstone” security product to market or manage a transition of Nest to another home is up for speculation.
The viability of Nest as a brand is not in question. Nest’s brand recognition and communications connections with other smart home products mean it’s likely to continue as a major player. Whether or not it stays in the Google/Alphabet family, however, is less certain.
Does that mean you shouldn’t buy a Nest Thermostat? Not necessarily, the device connectivity and IFTTT (If This Then That) scripts using Nest aren’t going away soon. But with the current leadership turnover and mixed reports on Nest’s performance as a member of the Alphabet family, big changes or pivots could come for the brand. And uncertainty is never fun when you’re paying hundreds of dollars for a new home device.
Updated on 6-8-16 by Bruce Brown: Nest contacted Digital Trends by email after this article was originally posted. In the email, Nest characterized its time and performance as part of Google and Alphabet differently than presented in our story, but did not directly refute our story. A Nest representative wrote, “Since Nest began shipping products 4.5 years ago, Nest revenue has grown in excess of 50% year over year.” During the Alphabet, Inc. 2016 Annual Shareholder Meeting held today, June 8, 2016, Nest was mentioned just once, in reference to the growing number of retail outlets in which Nest products are sold.
Article originally published on 6-7-2016.
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