The Internet Of Things Is Out Of The Nest

by , Jan 15, 2014, 7:55 AM
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Observers yesterday were pondering why Google “wants a $3.2 billion thermostat?” as Lex's Robert Armstrong asked Financial Times reporter Joseph Cotterill about the company’s purchase of Nest Labs Monday — knowing full well that his answer would delve into the huge potential of “The Internet of Things.” 

Cotterill responds with two cautionary words: “Internet fridge” circa 1998. 

“Samsung and LG would sell you these refrigerators which would tell you when your milk was running out, as if you were somehow incapable of looking into [it] yourself,” Cotterill reminds us. “And so that kinda really bombed.”

The difference today is that the market is much bigger and wider and smarter than it was when those devices were introduced.

“The networking giant Cisco predicts a world where 50 billion devices could be connected to the Internet by 2020,” writes Avi Itzkovitch in the September issue of Ux Magazine. “Collectively, this Internet of Things will be able to provide cloud-enabled experiences that could profoundly change many aspects of everyday life, both in and out of the home.”

Not that the Internet Fridge has gone away over the years, of course. If you’ve got a spare 15Gs or so, you might be interested in the forthcoming LG model you can use to “watch TV, listen to MP3 music, take and store digital photos, make a video phone call, use the fridge as a message board or surf the web,” as Mike Hanlon tells us in gizmag.

But the real future for devices such as the Internet Fridge, as Itzkovitch makes clear, is not just not as something that tells us what we can already see for ourselves (or see on other devices for that matter). “Similar to Nest, a thermostat that learns household users and their use patterns, the smart fridge of the future will also learn. This is what will make it smart,” Itzkovitch writes.

So there is a reason why that thermostat is called the Nest Learning Thermostat.  Chief among them, perhaps, is the fact that “it programs itself so you don’t have to.” Which means less energy consumption, which means lower fuel bills.

And the people who have been toiling to create these smart machines see yesterday’s huge outlay by Google as validation of the financial viability of the concept.

“If you thought that the ‘Internet of things’ was a geeky and niche industry aimed only at early adopters, Google's got 3.2 billion reasons you should see it as an industry primed for massive and widespread growth,” writes CNET’s Daniel Terdiman.

“When we first showed up two years ago, people were like, 'thermostats, poo-poo,' and they didn't even talk about connected homes or the Internet of things,” Nest CEO Tony Fadell, who led the Apple team that created the iPod, tells Terdiman. “We changed the landscape, and made them top of mind. When it comes to the Internet of things, we can take a large piece of credit for kick-starting that. What we're doing [with the Google deal] is we're changing the landscape yet again.”

To be sure, there are — and will be — privacy concerns, as Darrell Etherington covers in TechCrunch, although Nest asserts that it “takes privacy seriously.”

In pointing out that many consumer categories are crossing into the Internet of Things, Business Insider’s Marcelo Ballve writes that it’s not as “esoteric” as it may seem.

“IoT devices will contain three ingredients: An Internet connection, either in the device itself or a base station; a sensor to collect incoming data; and a processor, because just like any computing device, an IoT gadget will have a chip that parses information,” he reports.

And as simple as that seems, the implications are as big as … well, just about anything you’ve seen come down the Internet Superpike in the last few decades. 

“Once you’ve used Nest’s products, it’s a lot harder to think of the Internet of Things — also known as the Internet of Everything — as a mere tiresome buzzword,” opines Time’s “Technologizer,” Harry McCracken. “It’s an epoch-shifting development that’s going to change the world at least as much as the PC, web and smartphone did in their day.”

And if that seems a tad pie-in-the-sky flighty to you, consider this from BGR’s Chris Ciaccia: “The Internet of Things is expected to be a $14.4 trillion opportunity over the next decade for companies that participate in it,” according to that Cisco presentation by Rob Lloyd and Joseph Bradley from June 2013 that Itzkovitch also referenced. 

That’s $14.4 trillion in “net profit.” I need something smarter than I am to explain just how much money that really is but I’m smart enough to know that just a sliver of that would go a long way in boosting next year’s marketing budget.

1 comment on "The Internet Of Things Is Out Of The Nest".

  1. Kevin Killion from Stone House Systems, Inc.
    commented on: January 15, 2014 at 3:11 p.m.
    Nest is intriguing in what it does NOT do. It's real purty, that's a given. But it does little more than any other thermostat, as far as I can tell, but at a higher cost. The big deal is that it "learns" your pattern of heat requirements so that you don't have to struggle to set that up yourself on your trusty ol' Honeywell. So, instead of just making the Honeywell user interface simpler, the Nest has a few IQ points to figure out the schedule itself. Yawn. But it does NOT do anything really smart, like add the fan control into what should be scheduled, or add a wi-fi enabled remote module to pick up temps at other locations in the house (upstairs bedroom, for example) and use different modules at different times of day. Now THAT would be smart. I don't see how Nest is worth a couple hundred bucks for a home, much less $3.2 billion.

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