Google Hatches New Plan, Acquires Nest To Organize Real World's Information

Google expanded its effort to connect with homes, cars and living rooms Monday on the news that it will pay $3.2 billion in cash for Nest Labs. The company makes Internet-connected home devices like thermostats and smoke alarms, controlled remotely by apps on smartphones.

The company, founded in 2010 by former Apple engineers Tony Fadell and Matt Rogers, will continue to operate independently under its own brand. Fadell will report to Google CEO Larry Page.

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

The move puts Google in a rare position to expand its cloud services into home automation to control specific locations and devices. It's what the industry touts as the Internet of Things.

"It's nice to connect with others on Facebook, but in the scheme of things, it's not that important," said Global Equities Research Managing Director Trip Chowdhry. "Google is entering a completely new space that will take them about two to three years to build. They are thinking big and bold, unlike some other tech companies."

Apple's focus to make a phone smaller and slimmer only gets the company a little further. "It's yesterday's strategy, Chowdhry said. "Google and Larry Page are changing the world" with focus areas like robotics, and connect homes and cars. "The company's pushing a computational system into the cloud," he said.

Nest Labs, a Google Ventures investment, could also benefit from Google's 6.3% investment interest in Himax Technologies, a fabless semiconductor manufacturer that designs, yet outsources the manufacturing of chips.

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