Internet giant Google is set to shake up the market for heating, cooling and air-conditioning (HVAC) following its $3.2 billion acquisition of thermostat and smoke/Co alarm manufacturer Nest Inc.
In a statement released on Monday (US time), the internet giant said it had entered into an agreement to buy Nest Labs for $3.2 billion in cash.
The transaction, which represents Google's second biggest ever acquistion behind its $9.4 billion takeover of Motorola Mobility in 2012, will see Nest continue to operate with its own brands under the leadership of existing Chief Executive Officer Tony Fadell, who together with Matt Rogers founded the company in 2010.
Google Chief Executive Officer Larry Page welcomed the acquisition, saying Nest was already delivering high quality products and would provide Google with the chance to bring improved experiences to more homes and families across the world.
Fadell, meanwhile, says the acquisition will put the company in a better position to build simple household devices to make home life easier.
“This is a momentous day for me, for Matt and for all the Nest family” he said.
Describing remote access and control thermostats as ‘arguably the most hyped trend impacting the HVAC market’ IHS analyst Omar Talpur says Google’s venture into the market is likely to fuel interest in connected thermostats beyond the United States.
He says the entry of Nest Labs and EcoBee as well as new products from Honeywell and Venstar have driven a surge in popularity of connected thermostats in recent years notwithstanding that the technology had already been available for some time.
“Google’s venture into this market is likely to promote connected thermostats outside of North America which has developed much faster in comparison to other regions of the world” Talpur said, adding that the market in the Americas was estimated to have a value of $US190 billion in 2013.
“With smartphone and tablet popularity increasing, consumers are demanding the ability to connect with and control their home equipment from their mobile devices.”
The transaction, which remains subject to regulatory approval, is expected to be completed within a few months.