Final Nestination ⇥ fortune.com
Dan Primack and Leena Rao, Fortune:
Nest’s entire platform team will become part of Google, which also resides under the Alphabet umbrella, in order to create a unified Internet of things platform. It will be led by longtime Google executive Hiroshi Lockheimer, who currently serves as senior vice president of Android and who recently assumed more responsibility for “living room” products. The combined group also will continue to work on Google Home, a smart speaker rival to the Amazon Echo, while simultaneously fending off Amazon challenges elsewhere in the smart home.
Nest and Google are likely to pitch this as an obvious synergy, but it also plays into ongoing efforts to pare costs at smaller Alphabet units other than Google. By moving Nest software developers over to Google payroll, Nest’s financial situation would improve dramatically (so long as new Nest-branded products continue to be developed).
The rumour so far is that this is basically a backend restructuring. Instead of Nest being a separate entity under the Alphabet holding company, it will become a part of Google (again), which is vastly more profitable and will therefore be able to absorb the impact of fluctuating Nest performance.
Don’t be fooled, though: I’m certain that the end-game for this is to have a single brand for Google’s internet-of-things efforts. Whether that will be Google Home or Nest, I’m not sure, but there’s no reason for them to have both.
Couple of additional questions: first, if Lockheimer is becoming the leader of Google’s “living room” initiatives, what’s Rick Osterloh doing in that department now?
Second, with this restructuring to cushion some of Nest’s performance issues and the rumoured troubles at other Alphabet initiatives like Google X and Google Fiber, doesn’t that rather undermine the whole point of the Alphabet restructuring?