Google plus Nest: Imagine the possibilities

Google’s huge $3.2 billion purchase of Nest can boost the giant company’s existing products and services right away, not to mention Nest’s expansion. But the most exciting aspects of the deal come when you think about where Google could be going in the long-term.

Nest could be just a starting point for more capable applications and new ones as well, but more importantly Google can make itself into a hub for the widening Internet of things (the movement to put sensors and connect everyday household items to the web) and possibly an even smarter dispenser of advertisements based on your data.

Technology analysts whom VentureBeat has reached out to have been pointing to all of these possibilities and more.

But a little problem stands in the way of Google galloping into the most adventurous of technology providers. It’s about the Nest data. Google might not be able to get it — at least not right now.

“Our Nest privacy policy clearly limits the use of the customer information we gather to improving Nest’s products and services,” Nest founder and chief executive Tony Fadell told the BBC yesterday. “The terms of service are not going to change.”

But even if those words carry the ring of certainty, expecting Google to keep that promise might be shortsighted. As my colleague Ricardo Bilton wrote earlier today, “It would be absurdly naïve to hold Nest’s entire future to the comments it’s making on the day of its acquisition.”

So there’s room to shamelessly speculate about where Google might be heading. And we reporters and analysts can do that. But at the moment, the deal can yield some immediate perks, aside from just helping Nest grow.

Short-term gains

For starters, picking up Nest provides Google with software and hardware skills that could help it make better inroads inside people’s homes. That notion was on the mind of technology analyst Patrick Moorhead of Moor Insights & Strategy. Moorhead elaborated on his thoughts in an email to VentureBeat:

“… [U]p to this point, [Google] have been pretty much of a failure getting into the home in any nonmobile way. There were the many iterations of Google TV and the much maligned Nexus Q, which was discontinued before it actually shipped. Nest immediately gives Google a quality consumer experience that is second only to Apple, which can help them in all elements of the connected home. Imagine the Nest experience on security systems, garage doors, door locks, energy management, and even music and TV. Google couldn’t create it themselves, and isn’t making a lot of headroom with Motorola, but [it has] with Nest.”

Moorhead also figured Google’s legions of data scientists could help Nest figure out how to make better use all the info its devices collect. “Nest was way over its head on big data,” he wrote to VentureBeat. “I would venture to say that Google has more data scientists than Nest’s employees and contractors combined. Data is one thing, but to find the related patterns between them and take suggested actions are a very different matter.”

On top of that, Google has a rising public cloud business, having made its Infrastructure-as-a-Service (IaaS) product, Google Compute Engine, generally available last month. Nest has pushed data from its devices up to Amazon.com’s widely used public cloud, Amazon Web Services. Amazon has no shortage of room for the data, but Google should be able to handle the info flow from Nest just fine, too. So at the very least, Google will be able to steal a hot business off a big competitor’s customer list.

But the real fun starts when you imagine Fadell’s firm stance on data privacy slowly eroding.

That (advertising) thing you do

First, think about advertising. “We generate revenues primarily by delivering relevant, cost-effective online advertising in our Google segment,” the company wrote in its latest earnings statement, referring to one of the two categories of revenue Google breaks out: advertising and other nonadvertising lines of business as well as the considerably smaller Motorola Mobile division, which contains mobile devices that came from Google’s Motorola acquisition. In other words — advertising is still a huge business for Google.

Angela McIntyre, a Gartner analyst who covers the connected home and wearable devices, thinks the Nest deal could help Google’s ad business.

“Hardware products are almost a means to an end, to be able to sell information that leads to better advertisements and spots themselves, of course, on Google search and potentially new services for homeowners,” McIntyre said in an interview with VentureBeat.

Nest data could help advertisers and marketers learn more about people who own Nests — and perhaps just people in general.

“Having a product such as the Nest will enable them [Google] to have new insights about consumers and their energy usage and daily living patterns,” McIntyre said. “Because the Nest itself learns about people — whether they’re home, what are their hours — it could tell what types of rooms they’re in and potentially sensors in there could be able to tell activities of what a person is doing during the day. And that information could be of interest to a broad range of marketers as one a group of folks that could be interested in that.”

So Googlers have got to be scratching their heads right now to think about how they could improve ad targeting with Nest data — assuming they can get their hands on it.

And data from Nest could also be layered on top of other data Google has. Cloud computing Larry Carvalho of RobustCloud envisions Google gaining data it can use to sweeten its maps.

“Google has a huge cartography lead over competitors with detailed and up to date maps. Just last week they used benefit to enroll Audi, GM, Honda & Hyundai on the Android platform in cars. Overlaying location information from Nest with energy and security can help Google with a broader platform to finally make a smarter home a reality.”

And information on when customers are home, device battery levels, energy savings, temperature, humidity, light, and the presence of smoke or carbon monoxide at home eventually could get pushed from Nest’s data collection other Google services and devices. Google’s Android mobile devices (and iOS devices too, surely) could show it right alongside data about calendar appointments, restaurant recommendations, and other information gleaned from a Google user’s digital exhaust.

Then Google could conceivably data from all Nest devices in a city, state, country, or the world, even, anonymous and show information in aggregate. Maybe even Google could build some algorithms to display trends in comfortable home temperatures, for instance.

This data could appear in a new standalone Google desktop application, with dashboards, reminders, and other useful features. And Google could figure out a way to integrate the data with its all-powerful search engine to help it further transform from a directory of information into a platform for data. And while Nest can broadcast its data to it, new devices from Google and even other companies could all connect in, too.

“Google is one of the forerunners” in the race to become a central point for many connected devices, McIntyre said, and highly visible devices like Nest thermostats and smoke detectors could be a nice stake in the ground.

From there, Google could build software to autonomously take action based on all the data coming in. This is really the sort of applied artificial intelligence at Google’s core. Data from Nest and other connected devices could be foundational technology for such services.

The common term for this is an intelligent agent or virtual assistant, which can learn from all of the new data becoming available to it and then recommend what people can do in the future. It might even be able to set up appointments or make purchases. Google could be interested in making those sorts of enhancements to existing services like Google Now.

Clearly, the deal is exciting. Now, if only Google brass can talk Fadell into backing down on his no-Nest-data-for-Google position. …