Google’s Purchase of Nest Opens Home to New Analytics Use Cases

by   |   January 21, 2014 1:15 pm   |   2 Comments

A Nest thermostat. Observers cite the data-driven opportunities, and potential privacy concerns, of connecting Nest with Google's business.

A Nest thermostat. Observers cite the data-driven opportunities, and potential privacy concerns, of connecting Nest with Google’s business.

Google’s acquisition of Nest, a company known for its networked thermostats, shines a bright light on the potential of connected devices in the home and will likely catalyze new discussions about the appropriate use of personal data.

The Web search giant announced January 13 that it would spend $3.2 billion to gain control of Nest, which makes a sleek thermostat and smoke detector that connect to home networks and can be remotely controlled over the Internet.

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Founded by former Apple engineers, Nest is planning to make more smart home products, using its expertise in consumer electronics design, software, and machine learning.

The move gives Google entry into the home with a line of well-received hardware products and validates the notion that the Internet of Things will be a source of innovation and growth in the technology industry in the future.

Google’s sudden entry into smart home technology also underscores the importance of data and analytics. As the company that seeks to organize the world’s information, Google has emphatically expanded the types of Internet-connected devices it surveys beyond computers and smart phones to cars, robots and eyeglasses. With Nest, Google now has new types of devices through which it can offer the data-driven services it’s known for.

At the same time, the deal has stirred worries among people who feel that Google already collects a large amount of personal information through computers, smart phones, and its Chromecast streaming media device. Although Nest said it doesn’t intend to change its privacy policy, Google’s practice is to combine data from its existing services to create profiles of its customers. It’s easy to imagine how occupancy sensors from a thermostat, for instance, could reveal significant personal information, such as when people are home or not.

“It’s a Catch-22 problem. The way the Internet of Things is going to be appealing is when it becomes seamless and completely integrated into all the other data sources that you have,” says Sara M. Watson, a fellow at the Berkman Center for Internet and Society at Harvard University, who studies how technology is blurring the lines between the physical and virtual. “The problem with all this technology is that we’re adding all this functionality but that requires a lot of trust in those companies that handle that data.”

Smart Home Potential
Google hasn’t said what it intends to do with Nest, but Nest has already shown that it intends to enhance its current products with data-related services.

Last year, the company introduced Nest Energy Services, which allows consumers to sign up for utilities’ demand response programs to lower electricity use during peak times by raising thermostat settings, particularly very hot days in the summer when power generators struggle to meet demand. The Nest app allows people to opt into these programs in a more user-friendly way than most current utility demand response programs, which typically rely on one-way thermostats or air conditioner controllers.

Behind the scenes, Nest analyzes home energy trends and takes steps to minimize discomfort caused by raising the temperature setting, such as pre-cooling the house or selectively controlling the fan and air conditioner compressor. It can also report the percentage of people who participate in these programs back to utilities, which have struggled to sign on more participants in the past.

Connecting the Data Dots

Observers say the Google acquisition of Nest opens up opportunities to gather sensor data and create new services in the home, including:

• Energy conservation advice

• Automated energy efficiency services

• Mood-based lighting changes

• Security alarms sensitive to irregular behavior patterns

• Applications related to other devices, such as garage door openers, baby monitors, light bulbs and home appliances

For Google, this is another go at providing energy-related services. In 2009, Google introduced Power Meter, an application that collected data from smart meters to show consumers how much electricity they used over time and how usage compared to other periods. The product was scrapped two years later because it had limited uptake. Nest showed that cloud-based analytics can make a huge difference in how effective online tools can be.

“Looking at energy usage today versus yesterday (as PowerMeter did) does not help me make decisions because it doesn’t tell me what to do to save energy. Now Google has the missing piece—the thermostat,” says Daniel Obodoski, co-author of  “The Silent Intelligence,” a book about the Internet of Things. “Google can provide much more rich information to consumers, which is what Nest started.”

Google could offer a number of energy-related services, either itself or through utility partners. Using HVAC performance information and home efficiency profiles, Google could offer personalized recommendations on how to maximize home comfort or alert consumers when a heating or cooling system needs maintenance, according to Ron Chebra, the managing director of consultancy Utility Subject Matter Experts, who wrote about the possibilities in Smart Grid News.

In the future, Google could coordinate multiple smart devices within a home and fundamentally change how people interact with technology, says Obodoski, who interviewed the head of Google’s experimental lab Google X for his book. “It’s a different type of communication between humans and their environment. It’s not like you have to go around and program devices. The things around you sense your moods and can predict what you’re going to do next,” he says.

For example, the lights can dim automatically when the home entertainment system turns on. Or a smart security alarm can use its sensor to discriminate between a homeowner versus a potential intruder and use predictive modeling to recognize irregular behavior in a house, Obodoski says.

Privacy Frontier
Because it often sets industry direction, Google’s move into the smart home will likely accelerate the pace of development around smart home technology. People who work in home control and automation expect developers will begin to look more seriously at creating applications that use data from everyday objects, such as security cameras, smoke detectors, baby monitors, appliances, and even light bulbs.

“These are all basically sensor platforms for temperature, occupancy, and a lot of other things. Now all of a sudden, you have a lot more granularity of what’s happening across the house and across the technology platform so you can start making the house smarter,” says Mike Harris, the CEO of Zonoff, a software company for connected home applications. For example, the sensor in a garage door opener can gauge the temperature and, if it knows the family is at home, it can open the door for cooling rather than run a fan, which would save energy.

Often, consumers purchase home control technology for security or the convenience of being able to remotely control the homes lights and thermostat. But the market requires businesses to create compelling services with data to drive adoption, says Harris. “The biggest challenge with home control and automation platforms isn’t how powerful and capable the hardware is. It’s making consumers aware of what they can do,” he says. “The analytics will be around extending the relationship with consumers, rather than starting it, and showing consumers how to grow the system and use more features.”

These types of home control features, though, open up a new set of questions around privacy and what consumers find acceptable use of personal information. With Internet-connected game machines and ubiquitous smart phones, technology providers already have a huge amount of information on people’s movements. As more everyday devices get connected in the home, though, they open up new frontiers in our digital lifestyles.

“When all the digital information was on the Web, it was more contained and didn’t feel like encroachment. Now that it’s the world of physical devices, it’s much more personalized and graspable,” says Watson.

On the day acquisition was announced, Nest said that it does not intend to change its privacy policy, which is to collect data only to enhance development of the product. Even if that remains the policy under Google, the issues around appropriate use of data in the smart home are not going away. Google’s large competitors and a host of startups are actively developing products and services, capitalizing on lower cost hardware and the growth of connected gadgets. Whether there will be any pushback against data collection from sensors still remains to be seen.

“I think the larger thing that’s going to happen is that we’re going to start demanding more visibility and legibility of data trails. Until now, there hasn’t been enough of a demand for that mostly because it’s been happening in the background,” says Watson, the technology researcher. “Encroachment into the physical world is where it gets more complicated.”

Martin LaMonica is a technology journalist in the Boston area. Follow him on Twitter @mlamonica.








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2 Comments

  1. Elias Schulkin
    Posted January 21, 2014 at 3:53 pm | Permalink

    The Nest is decent in some aspects, but I would rather have a home automation system that doesn’t invade my privacy like the Webee http://igg.me/at/webee-smart-home-automation/x/5944165 or the EmoSPARK http://igg.me/at/emospark/x/5944165

  2. Aidan Muller
    Posted January 22, 2014 at 1:04 pm | Permalink

    Good post. The privacy issue is an interesting one here – it is one of, if not the, frontline issue of 2014. Recent history shows privacy has a price – and people will forfeit privacy if they feel the reward is worth it. Where exactly that balance lies will depend on the amount of trust consumers extend to the company in question, and to the sector in general. And since the smart grid is at the intersection of the technology and energy sectors – respectively the most trusted and one of the least trusted sectors according to the latest Edelman Trust barometer – it may depend on how individual companies position themselves. The companies that thrive will be those that make transparency and integrity a key component of their armoury.

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