Most of our homes are still operated by dumb technology with clumsy on/off switches. There are really only a few mainstream success stories of the so-called “Internet of things,” the idea that plugging our offline worlds into the Internet will make our lives better.
Google just bought one of them, for $3.2 billion.
The company is Nest. It was founded when Tony Fadell, who led design teams for the iPod and the iPhone, left Apple in 2008 to build a better thermostat. The move might have led to snickering if the device wasn’t so cool. By now it should surprise no one that Google -- which has invested billions in renewable energy and infrastructure projects -- would want to own it. The question is, to what end?
The $250 Nest thermostat, which has the look and feel of a round iPhone, learns your habits and adjusts the temperature of your home to shave about 20 percent from electricity bills. Nest’s only other product, a smoke alarm, communicates with a human voice to make alerts informative, not ear splitting. Home improvement stores have built sections of connected devices around the Nest family, though everything else still feel like prototypes and knock-offs.
But the Nest isn’t just a pretty device with an Internet connection. It’s also the consumer interface to the world’s biggest machine: the U.S. power grid. The Nest is designed to transform the dumb, on/off grid in two ways. First, it gets consumers thinking about their energy habits; Nest users get visual feedback when they’re saving energy and receive monthly reports breaking down their energy use. More importantly, Nest is starting to talk back to grid operators.
Nest is working with utilities to help manage periods of peak demand, when power providers scramble to keep up with electricity needs. Nest's “Rush Hour Rewards” program pays consumers to automatically push some of their heating and cooling to non-peak hours. There’s also a seasonal savings program to slowly ease you into lower temperatures in the winter and warmer temperatures in the summer. Some utilities, grateful for any relief from the financially burdensome peak loads, will even subsidize the cost of a Nest.
The U.S. power grid is a dinosaur in need of an upgrade. Solar-power installations are making the problem worse. The U.S. set a quarterly record with 31,000 rooftop installations in the three months through Sept. 30. In October, solar was responsible for 72 percent of new power added. The sun can set during peak electricity hours, so the shift to solar means the U.S. will need energy storage systems, better grid infrastructure and more intuitive ways for consumers to manage power. Honeywell, a competitor to Nest, stepped up with a smart thermostat of its own.
Google has invested more than $1 billion in renewable energy, including solar fields and transmission lines to deliver energy from offshore wind farms along the U.S. Atlantic coast. As Google puts it on a fact sheet about its energy-gobbling data centers: "we're working to green the electricity supply as a whole -- not just for us, but for everyone.”
Apple and Google have been locked in battle to put devices in our pockets since Apple introduced the iPhone in 2007. The creator of the iPod now works for Google, and the big question that remains is whether the Nest deal was about acquiring Fadell’s design team -- which knows how to make beautiful, connected things -- or about rewiring the grid. You can be sure about one thing: Google didn’t just shell out $3.2 billion just so it can sell a thermostat and a smoke detector on Google Play.
A similar question could be asked of Fadell. It’s now clear that when he left Apple in 2008, it wasn’t simply because he wanted to work for himself. Was he motivated more by branching out to connected devices for the home, or by the chance to play a part in the world’s energy future?
Either way, the lead is now Google’s, and Fadell’s, to lose.