Company / division: Nest
Nest Unveils Cheaper, Slightly Less Capable Thermostat E (Aug 31, 2017)
Nest unveiled its first new thermostat product in two years today in the form of the Thermostat E, a cheaper ($169 vs $249) and slightly less capable alternative to its core product line. The functionality is very similar, with only a slight reduction in compatibility with HVAC systems (Nest says 85% versus 95%) and one other minor missing feature relative to its core product. But the new thermostat is also redesigned, with a much lighter and arguably less distinctive look, apparently intended to blend in better to light colored walls and rooms rather than sticking out as an intentional piece of striking design like its first product in the category. Though the price of the original thermostat has certainly been a sticking point for some, especially those who need several units – the reality is that price is only one of many factors holding back the smart home. Far more important in many ways is the fact that most people find installing and managing these things intimidating and therefore managed services rather than DIY solutions are going to be the key for the vast majority of users, and Nest really isn’t doing anything in that direction. Meanwhile, Nest’s slow pace of new product introductions continues: it has three product lines, none of them newer than 2014, and its core thermostat and Protect products haven’t been updated in two years (see this image for an overview of its product launch history). The camera products have received most of the attention in the last couple of years, but there’s been no new organic product category from Nest since 2013. (See the Smart Home is Stuck narrative linked below for more context on all this)
Nest Launches Smarter Security Camera for Inside Homes (May 31, 2017)
This isn’t the worst example yet of an IoT / smart home vulnerability, but it’s bad enough, given that it allows burglars to defeat a security system if they happen to know how. More worrying, it appears the researcher who discovered the vulnerability shared findings with Nest back in October, but Nest didn’t notify customers or push out a patch until now, when it says it has a fix rolling out to customers soon. The more of these devices we have in our homes, the more potential points of vulnerability there will be for hacking of one kind or another, and makers of both systems and ecosystems need to bake really tight security in from the get-go to prevent as many of them as possible.
via The Register
There are several interesting elements here – a cheaper Nest thermostat, a thermostat with the power to control the temperature in individual rooms, and a home security system. Bringing the price down could certainly help drive adoption – $250 is a little steep for a single thermostat, but it really adds up when you have several (as we do in our home). Of course, one of the reasons why you might have several Nests installed is to control the temperature in different rooms more effectively – we have a number of different zones for just this reason, and no smart thermostat I’ve seen can manage more than one zone at once. Of course, this might also require a professional HVAC technician to create some new zones in your home – I can’t imagine how it would work without those changes. However, all that said, I think the security system is potentially the most interesting thing here, because it opens the door to the kind of service model I think is key to the future of the smart home (see the narrative attached to this post). When Nest’s new CEO was installed, I pointed out that he comes from a services background and would be an appropriate leader to drive a transition from a retail model to a services model – I’m very curious to see if we see a move in this direction when this hardware launches. That could drive much stronger growth in Nest’s business, but it would likely be heavily reliant on partnerships, which is the other important part of such a shift.
Nest adds automatic door detection and animated push notifications for subscribers – VentureBeat (Feb 14, 2017)
This is fairly minor news from Nest, but that seems to be the only kind of news it’s capable of making these days. Other than a new outdoor camera in the middle of last year, it’s mostly just refreshed existing hardware over the last couple of years, and there hasn’t been a completely new hardware category for several years. However, these software and machine learning-based enhancements do show the value of a smart device – hardware already in market just got more functional thanks to a software update. It’s not clear from the coverage here whether Nest is leveraging any Google expertise or whether it’s building the necessary technology in house, but one hopes it’s the former.
Another departure from Apple who now shows up elsewhere, this time Nest, itself the subject of recent executive departures. Matsuoka has a long history at Google/Alphabet, and was only at Apple for a brief time – it sounds like the role there just wasn’t a good fit, and perhaps Tony Fadell’s departure at Nest reassured her that the sometimes toxic culture there is changing for the better. In and of itself, not an enormously significant departure from Apple, but obviously now part of a recent string of departures, something that’s worth watching for any signs there’s anything more going on than the usual turnover of talented people on the hunt for the next challenge.
Alphabet’s smart home brand Nest expands to Germany, Austria, Italy, Spain – TechCrunch (Jan 23, 2017)
Nest has appeared somewhat stuck over the last couple of years – though there have been updates to some of its existing products, there’s been nothing brand new or particularly notable, and it seems committed mostly to maxing out its addressable market with existing products. That’s confirmed by this report of expansion into new countries in Europe, which is one of the few levers left to the company based on its current business model and products. I continue to feel very strongly that the future of home automation is services, and Nest has no direct play there for now, though its new CEO is well suited to pursue such a strategy. In the meantime, all it can do is attempt to saturate the addressable market for retail, DIY purchases of smoke detectors, thermostats, and cameras, which is largely limited to early adopters and tinkerers. That’s not a great long-term strategy for Nest, and until something changes in its business model, its future doesn’t seem all that bright.
Google Uses Its Search Engine to Hawk Its Products – WSJ (Jan 19, 2017)
This is a really fantastic bit of a analysis commissioned by the Wall Street Journal. It found that for 91% of searches relating to top consumer electronics categories, a Google or Nest product was in the top ad slot above the results, and in 43% it had the top two slots. This is Google competing with its own advertisers, and Google apparently was so taken aback by the analysis that it tweaked its strategy when the WSJ spoke to Google about it, and the numbers are now much lower. Google’s hardware push therefore not only puts it in conflict with its OEMs, but also with its biggest customers – advertisers. I’m intrigued to know how other big consumer electronics brands feel about this, but the challenge of course is that they have few alternatives – Google dominates search, and so it also has a dominant position in pitching its own products. There’s a close analogy here to Amazon’s hawking of its hardware on Amazon.com, but competitors know what they’re getting into there to a greater extent.