Vish_ram Posted January 14, 2014 Share Posted January 14, 2014 Google's strategy is to get involved when anyone or anything connects to internet. These nest devices will grow in complexity and need complex software. The platform of choice will be android. there were similar arguments when google bought youtube. I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. Link to comment Share on other sites More sharing options...
VAL9000 Posted January 14, 2014 Share Posted January 14, 2014 I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. It's not a core business today, but they are clearly headed in that direction. Motorola, Nest, Nexus, and Chromecast are all consumer-facing devices. I expect to see a lot more in line with the Android Everywhere school of thought. Anyway I will be sitting on the sidelines for a bit as I just culled my position in GOOG by 70% (now just a 15% position). ~105% gain over ~ 20 months. What to do with 60% cash. Hrmmm. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 Google's strategy is to get involved when anyone or anything connects to internet. These nest devices will grow in complexity and need complex software. The platform of choice will be android. there were similar arguments when google bought youtube. I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. And similar arguments when they bought Motorla too. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. It's the "throw crap at the wall and see what sticks strategy". Link to comment Share on other sites More sharing options...
txlaw Posted January 14, 2014 Share Posted January 14, 2014 I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. It's not a core business today, but they are clearly headed in that direction. Motorola, Nest, Nexus, and Chromecast are all consumer-facing devices. I expect to see a lot more in line with the Android Everywhere school of thought. Anyway I will be sitting on the sidelines for a bit as I just culled my position in GOOG by 70% (now just a 15% position). ~105% gain over ~ 20 months. What to do with 60% cash. Hrmmm. Smart man. I continue to kick myself for not holding my GOOG. Link to comment Share on other sites More sharing options...
txlaw Posted January 14, 2014 Share Posted January 14, 2014 Tony Fadell interview: http://www.theverge.com/2014/1/13/5305430/interview-tony-fadell-nest-google-acquisition Link to comment Share on other sites More sharing options...
txlaw Posted January 14, 2014 Share Posted January 14, 2014 I like this quote: Tony Fadell: For me, this isn’t about a financial transaction. It’s about the future and what we can do together, so I’m really excited about taking the vision. Because they really like the vision that we have and the product roadmap that we have and they can implement it. They’re going to allow us to — Nest can remain Nest. We need more capital, we always do, but when we have somebody who really understands the vision, it’s like, go. Link to comment Share on other sites More sharing options...
VAL9000 Posted January 14, 2014 Share Posted January 14, 2014 I've been following Nest for the last year or so and while they have cool technology, I don't see how their products have any relation to Google's core businesses. Seems like google just spending money because they can. It's not a core business today, but they are clearly headed in that direction. Motorola, Nest, Nexus, and Chromecast are all consumer-facing devices. I expect to see a lot more in line with the Android Everywhere school of thought. Anyway I will be sitting on the sidelines for a bit as I just culled my position in GOOG by 70% (now just a 15% position). ~105% gain over ~ 20 months. What to do with 60% cash. Hrmmm. Smart man. I continue to kick myself for not holding my GOOG. Yeah this way I will only kick myself at 70% of full force. Link to comment Share on other sites More sharing options...
VAL9000 Posted January 14, 2014 Share Posted January 14, 2014 Tony Fadell: For me, this isn’t about a financial transaction. It’s about the future and what we can do together Said the suddenly really, really rich guy. Link to comment Share on other sites More sharing options...
txlaw Posted January 14, 2014 Share Posted January 14, 2014 Tony Fadell: For me, this isn’t about a financial transaction. It’s about the future and what we can do together Said the suddenly really, really rich guy. Dude created the iPod. I'm pretty sure he was already rich before his most recent venture. It also appears he had multiple avenues to go in terms of monetizing his stake. Heck, with the crazy IPO market, he probably could have gone public and had his company valued at $10 billion or something insane like that. Link to comment Share on other sites More sharing options...
Palantir Posted January 14, 2014 Share Posted January 14, 2014 It's not a core business today, but they are clearly headed in that direction. Motorola, Nest, Nexus, and Chromecast are all consumer-facing devices. I expect to see a lot more in line with the Android Everywhere school of thought. Anyway I will be sitting on the sidelines for a bit as I just culled my position in GOOG by 70% (now just a 15% position). ~105% gain over ~ 20 months. What to do with 60% cash. Hrmmm. How do you expect them to monetize these services? Their strategy is going after the low end, which is fine, if it feeds into their search advertising business, but it's not obvious how that's going to happen in the future. Android Everywhere is good only if it actually makes money for Google. To me it sounds like, "oh these are really smart guys, they'll figure it out", but companies that built their business on one unique opportunity rarely suddenly shift their business model successfully. A case of empire building IMO. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 Tony Fadell: For me, this isn’t about a financial transaction. It’s about the future and what we can do together Said the suddenly really, really rich guy. Dude created the iPod. I'm pretty sure he was already rich before his most recent venture. It also appears he had multiple avenues to go in terms of monetizing his stake. Heck, with the crazy IPO market, he probably could have gone public and had his company valued at $10 billion or something insane like that. There is a theory that Nest sold out so that they could use Google's resources to protect themselves against the patent lawsuits filed against them. Txlaw, you're going to tell us that Google is going to commoditize and disrupt the IoT space? Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 http://news.cnet.com/8301-13579_3-57617164-37/why-apple-didnt-buy-nest/ In all fairness: 1, Google didn't pay $3.2B for Nest. Google ventures already owns a stake, so they paid themselves a part of the $3.2B 2, Google now has an Apple-calibre team. Nest is the only other company that I have seen in the computing space that gets users. This is valuable only: a, If employees stick around after Google has paid them enough money to retire their grandchildren b, If Google is able to integrate successfully without the usual politics, etc. c, If Google is able to leverage the team in other areas That said, this acquisition does not address any of their current strategic problems and actually goes against the ethos of Google. Possibly, Google may have acquired because: 1, They know decline is coming in their advertising business and they need to diversify fast. 2, They know that Apple is entering the home automation business and they need an equivalent. All in all, I can't think of another startup I would rather own. Link to comment Share on other sites More sharing options...
VAL9000 Posted January 14, 2014 Share Posted January 14, 2014 How do you expect them to monetize these services? Their strategy is going after the low end, which is fine, if it feeds into their search advertising business, but it's not obvious how that's going to happen in the future. Android Everywhere is good only if it actually makes money for Google. To me it sounds like, "oh these are really smart guys, they'll figure it out", but companies that built their business on one unique opportunity rarely suddenly shift their business model successfully. A case of empire building IMO. Advertising for use cases where it makes sense / fee-for-service where it doesn't. There's also hardware margin, but I think that hardware for Google will be a zero margin business. Yea it's empire building, but it's an information empire they are building. Google is filling in hardware niches for all kinds of activities to strengthen your commitment to their services. Glass and self-driving cars also fall into this category. Robotics capabilities are also on the way. If you use the stuff then great, Google can make money. If you don't, then, it's no big deal because it's a zero margin business. The more you use as a consumer, the better the overall Google experience will become. Everything Google does for you will revolve around "you" - meaning the "you" that Google knows. Link to comment Share on other sites More sharing options...
Palantir Posted January 14, 2014 Share Posted January 14, 2014 So how is Google going to profit off this? As you noted, if they are going to commoditize hardware then they will make money on what? Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 How do you expect them to monetize these services? Their strategy is going after the low end, which is fine, if it feeds into their search advertising business, but it's not obvious how that's going to happen in the future. Android Everywhere is good only if it actually makes money for Google. To me it sounds like, "oh these are really smart guys, they'll figure it out", but companies that built their business on one unique opportunity rarely suddenly shift their business model successfully. A case of empire building IMO. Advertising for use cases where it makes sense / fee-for-service where it doesn't. There's also hardware margin, but I think that hardware for Google will be a zero margin business. Yea it's empire building, but it's an information empire they are building. Google is filling in hardware niches for all kinds of activities to strengthen your commitment to their services. Glass and self-driving cars also fall into this category. Robotics capabilities are also on the way. If you use the stuff then great, Google can make money. If you don't, then, it's no big deal because it's a zero margin business. The more you use as a consumer, the better the overall Google experience will become. Everything Google does for you will revolve around "you" - meaning the "you" that Google knows. The fun part about watching Google is seeing how far people can behind over backwards to rationalize Google's actions. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 14, 2014 Share Posted January 14, 2014 It is easy to justify any action when the company's share price keeps going up. Link to comment Share on other sites More sharing options...
DCG Posted January 14, 2014 Share Posted January 14, 2014 So how is Google going to profit off this? As you noted, if they are going to commoditize hardware then they will make money on what? Buy an Android phone and get 10% off a thermostat! :P Link to comment Share on other sites More sharing options...
jeffmori7 Posted January 14, 2014 Share Posted January 14, 2014 So how is Google going to profit off this? As you noted, if they are going to commoditize hardware then they will make money on what? Buy an Android phone and get 10% off a thermostat! :P Or buy an Nest thermostat and get an Android phone ??? I still think it is a good buy, good product, with focus, a lot of possibility and a great team. I can't tell for the price though...what where Nest revenues and profits? I hope they will disclose Nest results if they keep them as a separated unit. I will continue to own my GOOG shares (bought at 350$in 2008) until I see an evidence of a really slower growth. They still manage to grow at 15-20% a year, so until that happens, I'm satisfied with my investment. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 So how is Google going to profit off this? As you noted, if they are going to commoditize hardware then they will make money on what? Buy an Android phone and get 10% off a thermostat! :P Or click on an ad and get a thermostat delivered by a drone for free. Link to comment Share on other sites More sharing options...
Palantir Posted January 14, 2014 Share Posted January 14, 2014 Maybe they can sell videos of you in your room on Youtube? Wait, forget I said that. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 14, 2014 Share Posted January 14, 2014 Google / Nest: open the doors, Hal http://www.ft.com/intl/cms/s/3/9f152888-7d38-11e3-a579-00144feabdc0.html#axzz2qIcZZaE0 Step one: open smartphone. Step two: turn on WiFi-enabled shredder with smartphone. Step three: shred models for Google’s gross margins. Google continues to go from super-high return, pure internet businesses into the capital-intensive business of making things. These things, it is hoped, will soon control their owners’ souls – or at least their data, if there is a difference. This may mean more growth for Google, but will take a toll on margins. Google may have paid too much for Nest Labs, maker of a thermostat that learns how warm you like your home (yes, you can turn it on with your smartphone). Still, most tech valuation is insane these days. The $3.2bn all-cash deal offered for Nest – more than 10 times sales, as inferred from shipments – could not buy Snapchat at recent valuations. Nest’s pricetag also includes a likely bounty for its chief executive, Tony Fadell, who fathered Apple’s iPod. But Nest offers Google more than that, and more than already tiresome “internet of things” hype, given other big Google acquisitions. The biggest to date, Motorola Mobility, also once baffled investors. Three years on, supermarkets are selling extremely cheap but well-designed Moto G handsets, tying consumers into Android software. This means low margins – but profits come in dollars, not percentages. The objection is that the home-security market is a tough target. Other producers (Honeywell looms large) can add WiFi capacity to their kit and write an app. But Nest offers swish product design and clever software – an edge, if talking smoke alarms end up as cheap as dumb beeping ones. Google may even get to collect (and sell advertising off) data on home-use. But in any case, gross margins of near 40 per cent are not in Google’s future. Nor are they in any of Apple’s likely next business lines (TV? Cars?). Adjust your model accordingly. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 Maybe they can sell videos of you in your room on Youtube? Wait, forget I said that. They can't, I don't own an Android device. :-* Link to comment Share on other sites More sharing options...
VAL9000 Posted January 14, 2014 Share Posted January 14, 2014 The fun part about watching Google is seeing how far people can behind over backwards to rationalize Google's actions. Fundamentally, you have to believe that these guys are making decisions for a good reason. The strategy may not work out, but deep down you can't consider these guys, who built a $380bn business in 15 years, to be stupid. They're not going to tell me the strategy, so I have to figure it out. Feel free to mock me for trying. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 14, 2014 Share Posted January 14, 2014 The fun part about watching Google is seeing how far people can behind over backwards to rationalize Google's actions. Fundamentally, you have to believe that these guys are making decisions for a good reason. The strategy may not work out, but deep down you can't consider these guys, who built a $380bn business in 15 years, to be stupid. They're not going to tell me the strategy, so I have to figure it out. Feel free to mock me for trying. There can be a heavy price to pay for assuming that people who had a certain result in the past will continue to do so in the future. RIM's management is not stupid either. Neither is Michael Dell. Nor Eddie Lampert. And I can point to many others. One thing I have learnt is that the more people succeed, the harder it is to keep in touch with reality. I have seen it in every company I have worked for. If you don't know Google's strategy, say it. Don't assume a strategy. BTW, world domination is not a strategy. It is a goal. Link to comment Share on other sites More sharing options...
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