A new report from The Wall Street Journal claims that Google wants to absorb Nest into its hardware division, due to increased competition from Amazon. Google still didn’t make any concrete decisions and remains in the process of considering a reunion with Nest which it spun off in 2015 following its restructuring that saw it adopt a holding company structure and incorporate itself under Alphabet’s umbrella.
While the close proximity of two moves may be interpreted as a lack of long-term corporate strategy on Alphabet’s part, insiders claim the decision was prompted by Amazon’s recent push into the home security market with the launch of the Cloud Cam and related services such as Amazon Key.
A merger would also remove Nest from Alphabet’s Other Bets, a classification the conglomerate uses to label its high-risk business endeavors that are yet to become profitable and are usually just a hole in its accounting books.
Speaking to former Nest employees, the report notes how overlap between the two companies extends into development, manufacturing, and retail distribution. Meanwhile, as of late, Nest and Google have been working together on development and manufacturing.
The report also contains quotes from former Nest staff, which generally believe that the 2015 separation was a mistake.
One former Nest manager said, “The only surprising thing to me is that it’s taken this long. If you think about it from a sales and marketing perspective, we are calling the same retailers.” The WSJ also notes that the supply chain for both companies were combined last year, moving 100 Nest employees to Google.
However, Nest still has its own legal, marketing, and public-relations teams. Nest remains Google’s second largest acquisition to date, with the Internet juggernaut paying $3.2 billion for the Palo Alto-based startup in 2014. This merger would help Google better compete in the smart home against competitors like Amazon. The shopping retailer and Nest both recently launched home security systems, including cameras.
Meanwhile, Google Assistant is making its way into Nest products, with an upcoming update adding Assistant to the Nest Cam IQ, while another integration will soon allow the Nest Hello doorbell to announce who’s at the door over Google Home speakers.