Google is bringing gadget maker Nest back under its control as the search giant battles rivals Amazon and Apple in the rapidly expanding smart home market. A big part of the change: Making it easier to add Google’s artificial intelligence technology and Assistant — a digital helper that competes against Amazon’s Alexa and Apple’s Siri — into new Nest products.
The world’s largest search engine has staked its future on building Google smarts into devices beyond smartphones. On Wednesday, Google said Nest was part of its plans and would no longer operate as a separate division that lived in the outer orbit of parent company Alphabet’s “Other Bets” group of projects.
Instead, Nest rejoins the Google mothership — the part of Alphabet that houses search, YouTube, Android mobile software and other moneymakers. Nest, acquired by Google in 2014, had been operating outside of Google, the only profitable division of Alphabet, for the past three years.
Under the new org structure, Nest CEO Marwan Fawaz reports to Google’s hardware chief, Rick Osterloh, a former Motorola executive who took charge of all Google’s consumer devices in 2016. That includes Google Home smart speakers, Pixel smartphones and Chromecast streaming devices.
“All of Google’s investments in machine learning and AI, they can very clearly benefit Nest products. It just makes sense to be developing them together,” Osterloh said in an interview Tuesday, which included Fawaz and took place in a meeting room designed to look like a home, complete with a kitchen and a washer-dryer setup. “It’s the natural thing to evolve to.”
Nest’s brand, known for its 2011 internet-connected thermostat, isn’t going anywhere, Osterloh and Fawaz said. In fact, the two drilled home the message that the reunion of the teams will “supercharge Nest’s mission,” as Fawaz put it. They used the word “supercharge” at least five times during our 40-minute interview at Nest headquarters in Palo Alto, California.
Fawaz said Nest has shipped more than 11 million products since its first thermostat went on sale in 2011. Since it’s been part of “Other Bets,” Alphabet doesn’t call out how much money Nest makes or loses.
The biggest change: Making Google’s AI technology a staple in future Nest products. I asked if that means making every new Nest device an access point for the Google Assistant. That integration is “core to the strategy,” said Fawaz, but nothing is set in stone. Nest has already begun building the Assistant into devices like its Nest Cam IQ indoor camera.
Nest and Google have already plotted out and finalized their hardware roadmaps for 2018, but in the next two years, they’ll start co-developing products. Google also plans to offer more bundled packages for Nest and Google devices, like one deal last year that paired Nest products over $100 with a free Google Home Mini. Fawaz said people could also eventually use their Google accounts with their Nest app.
One thing that isn’t changing: Nest, which won’t say how many employees it has, will keep its offices in Palo Alto, instead of moving to the Googleplex in nearby Mountain View.
