Why did Google pay $3.2 billion for Nest Labs?

So Google has made yet another acquisition and has purchased Nest Labs for a cool 3.2 billion dollars. Now with so much money at stake, you know Nest is on to something big.

So what exactly does Nest do? Nest Labs, co-founded by iPod creator Tony Fadell and Matt Rogers, started off making thermostats. This concept may sound alien in India, but in the US and most Western countries, a big deal is made about overall home energy use. A thermostat controls temperature, and can be used to adjust heating or cooling depending on the air temperature, thus potentially saving energy.

The Nest Learning Thermostat acts like a modern front-end for this purpose; it automatically adjusts itself or can be manipulated using the touchscreen interface. It also connects to the Internet using Wi-Fi so it can automatically download updates.

Last year, the company launched Nest Protect, a $129 smoke and carbon monoxide detector, which is naturally more than just that description. Most smoke detectors will beep to alert you of fumes or smoke, but Protect beeps and directs home owners to the exact source of the smoke/flames. And best of all its energy effective. The device requires just six AA batteries and can last years on them, even though each unit has to be replaced every seven years. What’s more, it syncs with the Nest Thermostat (if one is around) to let it change temperature more accurately. Just like the Thermostat, it looks nothing like a smoke detector and could be easily mistaken for a speaker.

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Both devices can now also be controlled using a smartphone app, which alerts home owners of any fire damage or smoke leak in the house even when they are away.

According to Nest, 1 billion kWh of energy has been saved to date because of using the Learning Thermostat and over 50 million Nest Protects have been sold since their launch in October. That’s a remarkable figure whichever way you look at it and to think the products are not yet available outside the US and Canada. Now that Google has backed it up with cash and no doubt resources, Nest may finally be ready for a big international splash.