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Nest's new sales tack: Free thermostats

A deal with Electric Ireland opens a new channel for the Google-owned company's networked thermostats. Nest's CEO expects that it's the first of many such partnerships.

Nest Labs CEO and founder Tony Fadell announces a sales partnership with Electric Ireland at Web Summit in Dublin.
Nest Labs CEO and founder Tony Fadell says the partnership in Ireland is just the start. Stephen Shankland/CNET

DUBLIN, Ireland -- Google's Nest subsidiary on Tuesday announced the first partnership in a new sales strategy, a deal in which Irish citizens can get a free Nest thermostat by signing a two-year utility contract with Electric Ireland.

By signing a two-year contract with the utility company, "1.6 million households in Ireland now can get a free Nest," Nest Chief Executive Tony Fadell said at the Web Summit tech conference here. Ordinarily, Nest charges $250 for its smart thermostat, which is wired for remote control, interaction with other devices and automated actions for energy efficiency.

Detailed terms of the deal weren't announced. By subsidizing Nest thermostats, though, Electric Ireland can potentially attract more customers -- deregulation has opened up Ireland's electricity market over the past decade -- and reduce churn through a multi-year commitment.

Ireland is just the start. Nest will "bring it out to hopefully many more countries. This is a seminal event in Ireland [that] we think is going to change the world," he boasted.

The Nest Learning Thermostat and its similarly connected Nest Protect smoke detector are at the center of the home-automation market. Enthusiasts have been working on such technology for decades, but it's been hard to get the general public excited. A promotion from a utility, though, could bring Nest's technology in front of a much larger group of potential customers. And a price tag of zero has a certain appeal.

Nest's smart thermostat learns users' heating and cooling preferences over time. Lindsey Turrentine/CNET

Google clearly believes in Nest's promise, judging by the $3.2 billion price it paid for Nest in February. Fadell said Google co-founder Sergey Brin tried to acquire Nest earlier. Fadell had refused, but Google did invest before its eventual acquisition.

Google operates Nest as an independent subsidiary, with no exchange of customer data or ties to Google's advertising business.

"It's our job as Nest to earn the trust, to show we are doing the right things for data privacy and data security," Fadell said.

One thing the company does with the data is try to improve the Nest product itself. On Tuesday, it shipped a software update to its thermostats that increases efficiency. "With data collected over the last three years, we were able to eke out another 7 to 10 percent energy savings," Fadell said.

Fadell rose to prominence as a leader of the iPod project that was instrumental in the company's expansion beyond just making computers. Working for Google is very different, though not better or worse, he said.

"Google is 15 years old. Apple is 30 to 35 years old now. The cultures were created at very different times. Apple was created when we didn't have networks, we didn't have mobile phones. It had a much more hierarchical structure," Fadell said. "At Google, it was born out of a network culture. Everyone could talk to to everyone, and there was much more transparency."