Long Past ‘One Trick Pony,’ Google’s Now a Products Company

Nest thermostatCertain research analysts used to be fond of saying that Google was a “one trick pony” — meaning the company had its highly successful search business and nothing else. That hasn’t been true for a very long time.

A very long time.

While the $3.2 billion purchase today of groovy home appliance maker Nest was a shocker, it’s a clear launching pad for the Google “connected home” and makes a lot of sense for Mountain View. The price was very high nonetheless.

Yet Google wouldn’t have paid this much money if the company didn’t see a very big opportunity with Nest and a potential pipeline of connected appliances in the home. The company had raised nearly $200 million and had a $2 billion valuation. In that context the price isn’t quite as outrageous as it initially seemed.

(Read Om Malik’s interview with Nest CEO Tony Fadell on why he sold. Also see Fadell’s own extensive discussion in a blog post. Hint: it’s about infrastructure and scale.)

Google is a products company now. Let’s review all the products (and services) that the company makes or has others make for it:

  • Nexus devices (phones, tablets)
  • Motorola Mobility (phones)
  • Chromecast (and probably set-top boxes soon)
  • Previously a streaming media player (Nexus Q, now defunct)
  • Google TV (largely defunct, being reinvented)
  • Google Fiber (ISP three cities)
  • Nest smart home appliances
  • Google’s providing WiFi to Starbucks (replacing AT&T)
  • Chromebook and Chromebook Pixel
  • Robots
  • Driverless cars
  • Open Automotive Alliance: Android as connected car OS.
  • Google Glass
  • Impending Google smartwatch
  • Youtube (now that it’s widely available on TVs and tablets and not just online it’s a kind of “real world” product)
  • Many of these products are sold in Google branded store-within-a store environments in third party retailers and occasionally in Google’s own (pop-up) stores. (My bet is that Google stores are coming eventually)

By pushing into hardware and products — into “real world” objects and experiences — Google strengthens its brand and ensures its survival. If it had simply remained an internet or “software” company its future would be less certain. But the company is insinuating itself into more and more areas and routines in our daily lives.

We can debate whether the Nest acquisition is creepy or makes Google more big brother-like. Putting aside the price (which is hard to do, I know) it was a smart move and part of a long process of “diversification” by Google away from total reliance upon and identification with search.

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8 Responses to “Long Past ‘One Trick Pony,’ Google’s Now a Products Company”

  1. Matt Marko says at

    Interesting acquisition to be sure, and very surprising to me, even before the seeing the ridiculous price tag. It’s easy to see the potential market and opportunity with connected home, but I question the brand positioning fit.  Nest is a super-premium (and premium priced) product in contrast to most all other Google products, and in contrast to Nest’s competing devices.  In that sense – non-withstanding Page’s personal relationship with Fadell) Nest would’ve seemed a better fit for Apple, and either the Honeywell or 3M smart device division would’ve been better fit acquisitions for Google (…not that those were necessarily options).  (Full disclosure: I am mostly a Google fan but not a fan of Nest.)

  2. Greg Sterling says at

    I agree that the Nest-Apple fit would have been “culturally” better and perhaps more consistent wit h Apple’s product positioning. But Google wanted Fadell and Rodgers as well for future product development. 

  3. Matt Marko says at

    Yep.  A heck of a “signing bonus” to pay for talent!

  4. Greg says at

    Indeed

  5. Terry Wall says at

    Greg, here’s the problem/challenge for Google: They have never shown an interest in the customer, whether AdWords customers (the ones they’ve had the longest) or Android users (I actually own several ‘Droid devices). And now they’re acquiring even more retail-type businesses. Without a very real and dramatic adoption of serious customer service sensibilities–NOW, these consumer-oriented business acquisitions could be an epic fail! Guess I’ll keep my “old school” thermostat for a little while longer!

    My $0.02

  6. Greg Sterling says at

    Yes, involves a culture shift for them. It’s not impossible but challenging. 

  7. Currumbin Builders says at

    I just don’t get it. I understand how creating Android was integral for Google, that mobile was always going to be a big big thing and that they needed to ensure that Google Search was part of that. However, where does this product strategy come into their “moat theory”? Do they feel threatened by other product companies out there? 

    Ah… it just him me! Google needs to ensure there remains free and open access to the internet. They feel threatened by Cable Companies and Telephone Companies that are continually looking to overcome “net neutrality” and control what traffic goes through their pipes. 

    So, one “nest strategy” could be to create a global wireless network for the internet. Every home buy a “nest” and share free internet. Every home has access to super high speed internet for free. Also, enable Android phones to hook into this network for free. That way the Cable Companies and Telephone Companies become obsolete.

    OK. Now the price Google paid for Nest looks super super cheap!

  8. Greg Sterling says at

    I’m not sure that Nest is part of a global access strategy but agree with the larger point about ensuring access against the gatekeepers is right — hence fiber, loon (http://www.google.com/loon/), etc. 

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