Why Google’s Nest sees beyond connected homes and the Internet of Things

Google’s Nest Labs has become the poster boy for the Internet of Things with its Internet-connected thermostats, smoke alarms and cameras. But, as the company details to IoB, it is only just getting started.

Does time fly when you’re having fun, or when you’re busy? For Nest, and its co-founders Tony Fadell and Matt Rogers, it might be both.

Five years ago, the duo established Nest Labs, a company which has since been accelerating at break-neck speed with its collection of programmable, Internet-connected home automation products. Since 2010, the firm has launched a series of products, acquired start-ups, hired over 1,000 staff, relocated offices – oh, and been bought by Google for an eye-watering $3.2 billion.

The secret sauce to Nest’s success has been its desire to, in its words, “reinvent unloved but important home products.”

Nest Learning Thermostat, Nest Protect and Nest Cam enable users to set heating, check in-house cameras and smoke levels from their smartphone or another Wi-Fi device. Crucially, these devices can then learn how they’re used – and adapt accordingly. It is, in essence, the start of Machine-to-Machine (M2M) communication.

So, what is the secret to the company’s success and what are its plans for the future? Nest’s general manager for Europe, Lionel Paillet, spoke to Internet of Business ahead of our launch, where he gave an enlightening view of the company’s philosophy and business direction, as well as its unexpected upturn in fortunes in enterprise.

Connected home is where the heart is

“If you look at where we have come at for the last five years, our playground has really been the home. It’s very much our territory, that’s where we innovative, bring new products and core technology,” said Paillet.

“The idea is that in the consumer space, you shouldn’t have to deploy tons of skills or an IT team in the home to make it work. For us, it’s much more talking to customer, not as a geek or engineer, and making sure it just works so you don’t have to worry about the connectivity and all those sorts of things.”

It is clear for Paillet that Nest wants to be known more for connected home, and ‘intelligent assistants.’ This might be part of the Internet of Things, but he isn’t keen on the term.

“For us, IoT feels obsolete today. The name is probably a disservice to what industry is becoming. ‘Things’ don’t mean much in reality…a fridge will be by default connected and it will just be a fridge.

“This may be a transitional time where we call it the Internet of Things today, because that’s the path we must go through from non-connected to connected.”

Business focused – or not?

Paillet is keen to stress that Nest is a consumer-focused business, but is nonetheless aware of business interest in its products.

Laillet, and Nest founders Fadell and Rogers, Paillet previously worked at Apple, where they saw how the iPhone and iPad brought about the age of consumerization. The age-old-IT model of ‘push’ was replaced by ‘pull’ – and the consumer started deciding what devices they would be using, not the other way around. Could the same happen with Nest?

We’ve not historically been focused on that and we’re not going to be directly focused on B2B. The reason is we want to be great at what we do, and go after the consumer first.”

Yet while he says enterprise is more of a sales and marketing channel, Paillet cites adoption in insurance and energy, and greater interest from housing developers.

“We’ve had interest in the B2B space,” he said, citing Schneider and Barratt Homes in particular. “You could have Nest in building and make buildings more safe, and we already have builders integrating it into people’s homes. You could fit Nest into hospitality area, like a hotel or hospital…

“B2B will come but, either way of us…for us, it’s a question of focus right now.”

Energy providers can get a better view on energy usage, while insurers such as AXA, Allianz and American Family Insurance have been using the devices to adopt home insurance premiums through integrating Nest with insurance policy. No personal identifiable information (PII) is seen by enterprise entities, it’s simply a case of the provider telling if a product is on and working correctly.

Nest also has Rush Hour rewards and Safety Reward. The former sees US energy providers, which have to buy more energy for peak periods, offer Nest-using customers a nominal fee each year to lower their energy demands over that peak period (but by reducing heat in lead-up to this peak period). Safety Reward is the same for insurers, offering $50-100 if insurers can see that the sensor is working and on.

“These services always must have consumer value point, otherwise no-ones uses them,” adds Nest’s European PR, Billy Burnett.

Thread

One of the early challenges for Nest, and other providers in the emerging connected home space, has been around data standardization and protocols – essentially, the best ways for machines to communicate with each other.  Data privacy and security must also be considered.

Nest looked into the use of Zigbee and D-wave, but having found “not scaleable or secure enough”, went about created networking layer also integrating security end-to-end. The company created the low-power mesh wireless network Thread – and the Thread Alliance has since formed with Nest and partners including ARM, Samsung and Yale.

Nest products communicate over Wi-Fi, or Zigbee formats, but the company found that continuous Wi-Fi connectivity ate up battery life. Thread enables connected home products to do so and securely.

The future is more autonomous

The future for Nest is clear; the company is pushing to be more ingrained in the home, not only through its own products but through API integration with developers and other consumer products (Philips, Bosche and LG are just some of the 100 integrations available). The new Keyloss lock will come in 2016, and developers will surely be added to its 11,000-strong user base.

Paillet expects automation to improve through standards, interoperability and integration with other products –already Nest devices are able to stop oven and block ventilation when sensing a fire, and put a house into energy-saving mode when the user is away.

“It’s about products that do things for us as intelligent things without relying on you having to press a button.”