The hot IoT news this weekend was Nest’s acquisition of DropCam for $555M. Compared with the multi-billion dollar hardware deals this year so far, $555M seems small but in my mind incredibly large for a connected home market that’s still far from reaching the mass market. Google surely is betting big in anticipation for future growth by shedding out $3.2B for Nest and DropCam.
1. Better orchestration of connected home products
When Nest’s smoke/carbon monoxide sensor detects carbon monoxide, the thermostat can turn the furnace, the possible source of the toxic gas, off. This is a clear value proposition that can be offered by making home devices work together. Nest also has a feature called “Auto-away” that automatically turns down heating/cooling after the thermostat learns the living pattern of the family. It’s natural to think DropCam will be included here. When the Auto-Away mode is on and the camera detects motion around the house, it could aggressively send alarms to smartphones but otherwise wave it away or send a softer notification. This is just one example but I’m sure folks at Nest have a lot of interesting ideas brewing in their minds.
2. Introduction of incentives to give data to 3rd parties and allow control of devices
Nest is currently working with utility companies to provide an incentive plan where the customer gets a free thermostat or rebates in exchange for opting-in to allow utility companies to access usage data and the right to control the thermostat (the customer can over ride it anytime). This is actually a great idea that allows utility companies to control peak demand. Assuming every household has a Nest and utility companies can switch half of them on and off alternately, it can theoretically reduce the peak demand to half.
But how can this apply to DropCam? Not clear to me right now but there is a company in the Retail O2O space called Placemeter that’s doing an interesting incentive scheme. It pays merchants up to $50/month to put an old iPhone facing outside on their storefront to allow the company to get real-time view of how busy the streets and the surrounding stores are. It’s a crowd-sourced street analytics service.
Will Google do something similar? Not sure whether they will or will be allowed to, but having an installed-base of millions of connected devices in the home will give them a lot of strategic options in the future.
Check here and scroll down to “IoT Home” to see more companies in the connected home space!