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Google gobbles Wi-Fi thermostat maker Nest for $3.2 BEEELLION IN CASH

Internet of Things heats up as ad giant swallows its favorite home-sensor inventors

Internet Security Threat Report 2014

Nest Labs, which touts sensors and controllers for so-called "smart homes", has been bought by Google for $3.2bn in hard cash.

"Nest's founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family," gushed Google CEO Larry Page in a statement, heaping praise on the two former Apple engineers.

"They're already delivering amazing products you can buy right now – thermostats that save energy, and smoke and carbon-monoxide alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams!"

Nest, based in Palo Alto, California, started out nearly four years ago building "the Nest Learning Thermostat," a Wi-Fi-connected temperature sensor that allowed folks to program their heating systems using their computers and save energy. Since then the company has expanded into flogging a combination carbon-monoxide detector and "smart" smoke alarm, which phones you when your house is on fire.

That doesn’t sound like much for a firm now valued at more than three Instagrams, particularly when you're paying in cash. Internet king Google, which among other projects develops the Android mobile operating system and just bought a robotics firm, is obviously impressed with Nest's control software.

Nest's gear features rotary dials and glowing temperature readings; the products bring to mind Apple's objects of techno-lust, which have made Cupertino the most valuable company in the world. But although Nest's stuff looks pretty, the small biz has its fair share of problems – notably on the litigation front.

Honeywell, which has a huge business making (among other things) thermostat controls, sued Nest in 2012 for patent infringement. The corporate giant claims that Nest's designs violate its intellectual property by featuring "innovations" such as a rotating dial with an LED to indicate the temperature. Honeywell also claims the smart thermostat is its own idea. That lawsuit is still ongoing.

Nest has said that Honeywell, and others who are taking similar action, are trying to stifle market competition, and the startup has bought a patent war chest from Intellectual Ventures to beef up its defenses. But with Monday's deal, the firm will also get access to Google's patent portfolio and a team of experienced and hungry lawyers.

"We're thrilled to join Google. With their support, Nest will be even better placed to build simple, thoughtful devices that make life easier at home, and that have a positive impact on the world," said Nest CEO Tony Fadell.

Interestingly enough, Nest said in its announcement of the deal that Google had previously invested in the company, but to what extent was not revealed: "In May 2011, Google Ventures led our Series B round of financing, and in 2012, Series C. Time and time again, Googlers have shown themselves to be incredibly like-minded, supportive and as big of dreamers as we are."

The web advertising goliath said Nest will continue its operations as a separate company, and that it expects the deal to clear regulatory hurdles in the next few months. Will Nest users' home sensor data be shared with Google? The upstart's answer to that question in its FAQ isn't entirely clear. ®

Internet Security Threat Report 2014

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