Cupertino is going to rue letting the smart-home device maker slip into Google’s hands.
Alex Salkever January 15, 2014
Google surprised the tech world Monday with its $3.2 billion acquisition of smart-thermostat maker Nest. Given that Nest was founded by former Apple executive Tony Fadell, who designed the iPod, lots of people had assumed the company would eventually get snapped up by Cupertino. But some press reports suggest that Apple wasn’t even in the bidding.
Here are three reasons Apple may regret passing on the deal.
1. The Data
Google sees clearly that data acquisition platforms are the future of technology. Our technology will be more aware of us and our needs. Anyone who has tracked the iteration of Google Search has watched this happen over time. And anyone who compares Google Search five years ago to Google Search today clearly sees the value of using data—personal, location-specific, temporal, environmental—to dictate information sharing and selection.
The Nest is essentially a giant distributed data network. Yes, it is a bunch of point specific devices. But over time, the Nest, which is basically a nifty design on top of a sensor platform, will provide huge volumes of information about how people live, their habits, their wants, their needs. It taps directly into the Google Now zeitgeist, which is, frankly, happening now.
2. The Design Team
If for not other reason than as a defensive play, Apple should have kept Tony Fadell out of Larry Page’s hands. Apple has a ton of capital. Nest was going to be a tremendous hit, almost certainly profitable as an acquisition even at a high multiple. It already is, arguably, the biggest success story of the Internet-enabled hardware and home electronics.
So why didn’t Tim Cook cough up a few billion and keep Tony Fadell in the fold, affording Apple access to one of the best product minds in the world who is now focused on one of the fastest growing product markets (smart phone sales are, of course, slowing). Why let him go to Google where his product design expertise and his, for lack of a better word, Jobsyness, could provide a fearless leader to a team that has struggled to deliver truly compelling product design?
3. Skate To The Space, Not To The Puck
Apple has basically failed to break out of the computing box. The iPhone, the IPad, the various laptops and desktops, all are flavors of dedicated computers.
That’s well and good, but there is a much bigger story outside of computers and in the world of functional things connected to the Internet. They are more task-specific devices. They are varied. They may not have as much platform gravity as computers. But they are critical and they are becoming ubiquitous.
Apple is nowhere in that market. The AppleTV is the closest thing it’s come to an Internet of Things appliance, but it hasn’t been a breakout success compared to the iPad or the IPhones.
Skating to the space is hard when the entire rink is one giant white space as the future unfolds before our eyes. Google is skating to the space. Often, the space will likely remain just that. But sometimes they may get there right when the puck does, and that’s what Apple needs to worry about.
The Empty Nest
None of this is to say that Apple is doomed or that Apple has been dealt a severe blow. To the contrary, this deal may actually serve to wake Apple up enough to get it moving in the right direction (and I don’t mean an iWatch). Shocks to the system are good.
The fact that Google not only scooped up Nest Labs but also 100 former Apple employees is also of consequence. And certainly the Nest buy has resonated through the thick walls of the Mac fortress in Cupertino.