October 6, 2014

Did Google’s Nest acquire Dropcam to better compete with Apple?

Roughly six months after being acquired in a $3.2 billion deal, the Learning Thermostat company and Google subsidiary Nest announced, in June, its intention to merge with Dropcam, developers of a wireless, high-definition surveillance camera that streams video to a user's computer, phone or tablet in real time.

"Our companies actually have a lot in common," Nest founder Matt Rogers wrote in a blog post when the acquisition was announced.

Nest acquired Dropcam for $555 million, and Google recently began implementing the additional capabilities it obtained as a result of the technology merger, integrating the Nest thermostat with Dropcam so users can choose to have the surveillance camera activate automatically when the thermostat is set to "away."

Quora contributor Jonathan Brill explains that Nest initiated the acquisition out of necessity, in order to strengthen what he considers to be technological and innovative weaknesses in an effort to dominate the "residential Internet of Things [IoT] market," which, according to Cisco, "will be worth $19 trillion over the next ten years."

In the IoT, the objects people interact with on a daily basis are able to transmit data with one another and their users.

Brill predicts Google's fiercest competitor in the quest for IoT market supremacy will be Apple, "because they respectively own the two largest mobile operating systems, and their smartphones are the logical control point for home automation products."

As is evidenced by the Nest-Dropcam merger, technology acquisitions can boost creative collaboration and lead to more innovative and integrated products and services. Acquiring another tech company is a common strategy for sharpening a pre-existing business's competitive edge. Time will tell whether Google or Apple wins the battle for residential IoT connectivity.