With Nest, Google homes in on smart-home blueprint

Commentary: Nest Labs' purchase of Dropcam may signal a future in which parent Google tries to balance licensing technology for and participating in the smart-home market.

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Nest aims to allay concerns that Dropcam will turn your video feed into a Google data feed

Nest Labs has made room for another fledgling in its family: Dropcam, maker of video camera systems for home monitoring. And the Google-owned Nest has been vocal in letting folks know that it's making the $555 million purchase, revealed Friday, on its own without help from the largesse of its parent.

This seems like an unusual bit of corporate finance trivia to promote. Why would Nest do so? On the one hand, it may be to allay anxieties about privacy, a particular concern when it comes to cameras in the home; the leap to Big Brotherhood is a short one. Smart-home specialist Nest has assured customers that it will retain a privacy policy independent of Google's. Dropcam will fall under that privacy policy.

The other issue, however, may be to reassure potential partners worried about the possibility of a Google equivalent to Apple's HomeKit, coming this fall with iOS 8. Google's long had an interest in automating homes (and cars); an earlier lighting automation initiative launched at the Google I/O developer conference a few years back fell flat. (This year's Google I/O kicks off Wednesday.)

Nest plans to incorporate Dropcam into its line of home automation products, including its smart Nest Learning Thermostat and Nest Protect smoke detector.

But a launch into the smart home raises old issues for Google, which like Microsoft has dual ambitions of both licensing its standards to other companies and competing with those companies with its own vision (see its Surface tablet) of how hardware should be done. In handsets, of course, Google has experimented with several models -- the Nexus co-branding that has included hardware brands on the device but little else of their influence, the Motorola patent-mining and abandonment, and the Google editions of popular Android smartphones such as the HTC One.

The impending Internet of Things, which opens up intelligence and connectivity to whole categories of products that have traditionally had neither (from thermostats and smoke detectors to refrigerators and other appliances), would seem to have even broader licensing potential. Apple, for example, has chosen to partner rather than to enter the home automation market with a device, at least for now. But because this is a new market, there are no established partners with which to create conflict as there were with Android handsets, only opportunity cost.

One way to try to bridge the gap would be through Nest, which could be Google's first-party effort into the smart home. Nest's public proclamation that it -- rather than Google -- is acquiring Dropcam could be to stem concerns of a buying spree focused on smart-home companies like the kind we've seen Google's robotics group embark on. There would be a wall between Nest and Google, which would treat Nest as another licensee.

Of course, that's similar to the short-lived arrangement Google espoused with Motorola, which raises the question of whether Google dumped the smartphone maker at a significant loss because it couldn't manage competing or because the company that's developing a self-driving car could not figure out a way to keep Motorola's poor performance dragging down its financials.

Nest is free of such legacy. If Google, via the smart-thermostat pioneer, is again to try straddling the line, it faces similar kinds of challenges that Microsoft has see with the Surface and is gearing up for with its devices group acquired from Nokia. But in Google's case, it wouldn't be so much about trying to win market share in maturing categories as about capturing a key part of one about to explode.

 

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