Barry Ritholtz, Columnist

Google Plays Smart Defense by Buying Nest

If we look at some of the biggest tech errors of the past decade, we see a very specific risk arising to existing companies from new technologies.

January 22, 2014 at 12:46 PM UTC

By Barry Ritholtz

Barry Ritholtz is a former Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

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I have been thinking about Google's acquisition of Nest Labs last week for the eye-popping sum of $3.2 billion. There have been numerous criticisms of the acquisition in terms of cost, with some chatter of this as evidence of a bubble in Silicon Valley. Perhaps it is worth considering this from a different perspective.

If we look at some of the biggest tech errors of the past decade, we see a very specific risk arising to existing companies from new technologies. The two that come to mind are Blackberry ignoring the threat from touch-screen smart phones (Apple iPhone) and Microsoft ignoring the tablet as a threat to its basic Windows/PC business (Apple iPad).