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Comment by minimax | Hacker News Reader

"Google Inc. (NASDAQ: GOOG) announced today that it has entered into an agreement to buy Nest Labs, Inc. for $3.2 billion in cash."

Can that be right? $3.2 billion? That's a crazy huge sum.

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There were articles a week ago about them raising $150 million in a new round of funding, with a valuation of $2-3 billion. So this isn't out of nowhere. Also, they raised $80 million a year ago, at a valuation of $800 million. (Incidentally, Google Ventures led that funding round, so at least some of this purchase price is just Google moving money around internally.)

http://gigaom.com/2014/01/02/why-nest-might-need-another-hug...

Sounds like super-higher bubbly valuation to me. They were already valued at 70x their revenues a year ago at $800 million valuation:

http://www.bloomberg.com/video/how-much-is-the-thermostat-co...

They have paying customers. It matters.

Nest has customers who have paid it, it does not have paying customers. There is no ongoing fee despite every device Nest sells being connected to its servers 24/7/365. It takes no more than ~3 seconds for any changes you make on their web/mobile apps to reach the thermostat, so it has to be at least checking in with a server constantly.

Those servers could be paid for with some simple advertisements keyed to the information reported by the thermostat...

I don't think that a 24/7 network connection of a customer that just paid $249 for a thermostat is that much of an monetization issue for a company like Google. (for comparison: more than 1 billion Android devices are currently connected to their servers 24/7/365)

Not a lot of screen real estate for ads on a Nest...

Well in addition to the color LCD, they do have speakers so Google could do audio ads.

Also, Google+ checkins when you walk into your house and G+ status updates when you adjust your temperature would increase the G+ 'active user' count for them.

Also, I could definitely see myself buying Lord of the Rings in the Google Books store and reading it on the Nest.

This could provide the ideal way of monetizing this platform in the future.

Surely the updates are sent via some form of push. Polling on that scale would be obscene.

Yet that's what I believe it does. Every few seconds, Nest sends an HTTP POST to their servers with its serial number. If there are any commands waiting for that thermostat (change temperature initiated from an app for example), they get sent in response, otherwise the connection is closed.

That's the client pulling, not the server pushing. Pushing would be "when the owner makes a change on the website, notify the appropriate thermostat to change its settings". This would be way more efficient, but too many Nests aren't going to have suitable internet connections.

Perhaps you misread "yet" as "yes". I'm curious if there's a power issue as well. I don't know how fast wifi can turn on/off and reconnect to a network. Nest has to be low-power as its only power source is one of the tiny wires from the HVAC system and that doesn't supply enough to run the device offline, let alone online. It uses that wire to charge an internal battery instead.

I did make exactly that misreading; sorry!

My opinion of Nest just plummeted. That's absurdly wasteful.

That sounds a bit hyperbolic. I think you're overreacting. The difference between this and long-polling in terms of hardware required is pretty minimal. I run a web stats service that has to deal with similar kinds of data -- millions of sites "pinging" it with a new page view to record constantly -- with one crappy server. Nest doesn't even have to record anything in response to those pings, unlike my server, just compare to some in-memory table of which devices have commands waiting for them, so most connections can be immediately disposed of.

Given the setup, network and power requirements Nest operates under, this may well be the most efficient way it can be done. Or maybe it does do some kind of long-polling and the descriptions online are inaccurate. Either way, I doubt there's anything "absurdly wasteful" going on here. Poll vs push isn't melting polar ice caps.

Nope; if you have a device in people's houses you basically have to configure them to pull. NATs and other connectivity tricks mean they can reliably initiate communication with you but not the other way around.

I'm intimately familiar with the relevant issues. That the client initiates the connection does not make it "pull", you're confusing distinct issues. Push is almost always implemented with long-lived connections initiated by the client side which remain idle save for periodic keepalives until there is actual data to transmit.

http://en.wikipedia.org/wiki/Push_technology

Google already has massive server deployment around the world – the incremental cost of keeping some sockets open seems unlikely to noticeably increase load when they already have Android, Chrome, Google Talk, etc.

I do love their strategy where if you already own a Nest thermostat, buying the Nest Protect smoke detector makes your old product work better. Very clever.

And the realistic potential to be in every home around the world.

Helen of Troy which owns Kaz, which owns Honeywell (one of the largest businesses specific to Nest's thermostat space) has a market cap of $1.7bil - http://finance.yahoo.com/echarts?s=HELE - that's why this sounds crazy.

On the flip side, P&G is a $217bil business - so, not that crazy how big the market is and can be.

EDIT: As larrys points out, Honeywell is a $70bil biz.

Sounded odd to me so I checked it out.

HoT only appears to have the rights to certain Honeywell products and not the thermostats:

http://www.kaz.com/kaz/honeywell/

Edit: "Honeywell" that you are referring to has a market cap of almost 70 billion:

http://finance.yahoo.com/q?s=hon&ql=1

Touche! Good point.

Definitely brings more sense to the 3.2b price tag.

On top of that, think of what those guys still have under the hood. Google wants to be the everything of your life. Smartphones fill a part of that but smart devices are another big chunk; and Nest was the company that is undoubtely leading a revolution on the field.

This isn't a strategic move to eventually dominate the thermostat market. This is a strategic move to eventually dominate the 'everything you need' market.

Yeah but Nest's thermostats are to Honeywell's products what the iPhone was to Nokia's product line in 2007/2008.

HoT/Kaz only produce products for the Honeywell brand. They do not own Honeywell, which is a Fortune 100 company.

I like how this 1.7B publicly traded co has a wordpress engine running their site.

Go look at the Berkshire Hathaway website.

There's something to be said for knowing what value a website brings to your business and building it to the appropriate level.

$3000 per thermostat sold.

They sold a million Nests??

Well, they've definitely shipped over a million, can't speak to what's been sold. Though I expect that they've achieved that as well.

Oh really, that's impressive.

A lot better than paying $4b for Snapchat.

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