Nest's acquisition of Dropcam all about building a smart home stack

Google, which owns Nest, wants to play a big role in the automated home. Dropcam fills in a missing element in the smart home stack.


Nest's $555 million acquisition of Dropcam, a cloud-based home monitoring service, is about building a smart home stack as competition from established rivals looms.

CNET's Smart Home coverage

Google's reach expands into your home more via $3.2 billion Nest acquisition

Google, which owns Nest, wants to play a big role in the automated home. There's a lot of data to mine and perhaps enough people opt-in to Google's plans to even surface advertising. Dropcam will operate under Nest's privacy policy, which doesn't allow data to be passed to its parent Google without a customer's permission. Nest reiterated that the company is about hardware not ads.

In a blog post, Matt Rogers, founder of Nest and head of engineering, said that customers were asking for Nest and Dropcam to be better integrated. Acquiring Dropcam was a quick way to integrate products.

Rogers said:

Eventually, the plan is for us to work together to reinvent products that will help shape the future of the conscious home and bring our shared vision to more and more people around the world. For now though, not much will change. Dropcam products will still be sold online and in stores. And Dropcam customers will still continue to use their Dropcam accounts.

Left unsaid is that Nest needs ways to tie technologies together to automate, monitor and manage homes from many points. Thermostats and smoke alarms only go so far. Dropcam will fill a void. Google's role is ultimately to better connect those home tech tools to its devices, cloud and potentially robots---with customer permission of course.

Add it up and the company that controls the home stack wins. There's a reason that Apple is playing ball, appliance companies are all in the act and companies like Samsung and Panasonic are pitching smart home gear as consumers bridge their lives with work.

What's interesting to watch is not how the technology companies are duking it out as much as how the current home players retool. Consider Honeywell's smart thermostat, which may not be as intuitive as Nest, but is certainly a contender, according to CNET. Isn't there a scenario where your heating system and central air conditioning unit comes with a home automation and monitoring kit? Honeywell already has a home stack that just comes from a different direction?

Meanwhile, telecom players like Verizon, AT&T and Comcast already have an entry point to the home via broadband access. It's no surprise that home monitoring and security services have quickly followed from those giants.

Ultimately, what company wins the smart home stack may be the one that garners the most trust. Nest is filling in a few blanks with Dropcam. Nest---and its well-heeled advertising giant parent---will likely go shopping again.