Apple Will Regret Not Acquiring Nest

I’ve had some time to digest the big news in tech this week — Google’s monster acquisition of Nest for $3.2 billion — and no matter how many times I think about it, I come to the same conclusion: Missing out on Nest will become Apple’s biggest regret of the decade.

I’ve been a big fan of Nest since I first got to play with its innovative thermostat, several months before its official release. Sarah Kessler, the reporter at Mashable who eventually wrote the launch story, and I were both incredibly impressed by the detail Tony Fadell and his team put into the design and intuitive UI of the device.

Fadell is an alum of Apple, and the original designer of the iPod, so the first question everyone seemed to ask was, “Why didn’t Apple acquire Nest?” From what I’ve heard, Apple never made any serious bid for Nest, even when it was clear Google was closing in on the deal.

I get why Google acquired Nest and Apple didn’t. Google specializes in moonshots. It isn’t afraid to expand into wearable computers, robotics, and life extension. Apple, on the other hand, doesn’t acquire new products — it acquires the technology it needs to improve its existing pipeline. That’s why you see Apple acquire semiconductor companies and Google acquire Boston Dynamics.

But in this case, I think Apple made a mistake, for two simple reasons:

1) Google is far more dangerous with Nest: Google isn’t particularly adept yet at building consumer hardware, despite its acquisition of Motorola. The new Moto X phones are great, but they still don’t beat the iPhone. Nest, however, is incredibly adept at designing consumer products. I suspect Nest’s existing products — the thermostat and smoke detector — are about to get a big boost, but I also believe that you will see Nest’s influence in everything from Google Glass to future products for the home.

A Google fridge? A Google watch? A Google security system? These are no longer out of the realm of possibility.

Sometimes offense means playing the best defense. Apple handed Google multiple avenues for growth and a dangerously talented team of hardware designers. Apple will regret letting Google steal away that talent.

2) Nest could have presented Apple with new avenues for growth: Apple is under pressure for not launching new product lines and driving up growth. Nest, by every measure, is and has been growing. With Apple’s distribution, it could have boosted Nest’s product lines considerably while lowering manufacturing costs. And unlike 99% of the products on the market, Nest products actually look and feel like Apple products.

If there was a company they could have integrated well into Apple, it was Nest.

Apple will be fine, of course. It’ll launch a new product line this year (a watch or a TV) and it’ll be a hit. But Google grows as a threat every single year. Right now, Larry Page looks like the visionary who is leaving Tim Cook in the dust.

Google now has a dangerous weapon it can use against Apple. Apple will regret not doing more to disarm Google.

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