Today Google and Nest launched the Thread Group – a new wireless network for home automation. It’s not the first and it won’t be the last, but it has some important names behind it. The big two are Google and Nest, not least because Nest’s products may already be using it. But others in the consortium are interesting. ARM is there. Today they power most of our mobile phones, providing the IP behind the processors in billions of chips. But they have a vision of being the microprocessor architecture of choice for the Internet of Things. They processors will be smaller, cheaper and lower powered, but will provide the first opportunity for chip vendors to think about trillions. ARM’s inclusion in the group is an obvious step in their process of acquisition and investment in IoT companies.
Samsung are there (aren’t they always), but so are some very large names in home automation, such as Big Ass Fans and Chubb. And what must be worrying the ZigBee community is that Freescale and Silicon Labs complete the list of founder members.
The important point here is that Thread is not ZigBee. It works in the same spectrum and can use the same chips. It is also a mesh network. But it is not compatible. As the Thread technology backgrounder says, they looked at other radio standards and found them lacking, so they started working on a new wireless mesh protocol. To put it more crudely, it’s Google and Nest saying “ZigBee doesn’t work”.
Today Apple announced their purchase of Beats Electronics for a spectacular $3 billion. It’s left many industry analysts scratching their heads. Although a little shy of the original, anticipated $3.2 billion price tag, it’s surprising how close it is to the amount that Google paid to acquire Nest earlier in the year. So what’s behind the new $3 billion price point?
There are some interesting similarities in the two acquired companies. Both were started for similar reasons – their founders were exasperated with the quality of products which were currently on the market. In the case of Nest, Tony Fadell wanted to design thermostats and other household products which were intuitive and worked, whereas at Beats, Dr Dre was exasperated that expensive music players and smartphones shipped with low quality earbuds which cost less than $1 and failed to reproduce the music. (The Register has a nice opinion piece on whether they succeeded.) Both companies have produced high profile, high end products to address these deficiencies along with very high media profiles for themselves and their founders in industries which have historically had little branding.
You can normally expect CES to set the technobabble agenda for the first few months of any year, but this year, despite the hubbub about Wearable Devices, Home Automation and the Internet of Things, CES played second fiddle to the much bigger announcement of Google paying $3.2bn for Nest. On the face of it, it’s an outrageous amount to pay for a hardware company. The announcement a few weeks later that they were selling off Motorola Mobility for around the same amount made it look like some giant game of cards.
The initial reaction to the Nest acquisition from many commentators was that this just validated their view that CES was heralding the start of the Home Automation market. Long term players, like Control4, saw their share price rocket overnight. Most start-ups in this space have been complaining that their VCs dedicated their next board to persuading the CEO to redesign their business plan in the hope of emulating the Nest sale. On the other side, doomsayers predicted the demise of anyone else in the field as the Mountain View leviathan would take over Home Automation.
Most of what has been written feels like a knee-jerk reaction. What surprised me most was the speed with which Google rushed to say that it would not be using the data from Nest’s thermostats. That announcement came too quickly to be a reaction to media speculation about the data behemoth’s new-found ability to learn even more about users. It made no sense given Nest’s purchase value. It was like a top restaurant hiring Heston Blumenthal and then saying they were only employing him to go out and collect their lunchtime sandwiches. Google is about data. Why pay $3.2bn and then throw the associated data opportunity away? It implies that there’s a lot more behind this acquisition.
Or will it main Bluetooth? Or Wi-Fi? Or maybe Z-Wave? Or any of the multitude of other short range wireless standards. It’s a question that was raised last week when Google did a keynote presentation on Android@Home at their I/O Conference where they announced a wireless light bulb which could be turned on and off from a mobile phone. The technical details are very sketchy – much of it coming from Lighting Sciences Group, who did the accompanying demonstration. It’s unclear whether it’s a new radio, a new protocol, a new standard or even what frequency it’s running at. But you don’t expect the absence of little details like that to stop speculation.
The greatest level of speculation has come from the smart energy industry, who are suggesting that ZigBee could be the main casualty. Jesse Best at Smart Grid News asks whether this will take away ZigBee’s momentum. And there’s an interesting range of comments about that on his site about that, which are worth reading. Throughout the industry, Google’s announcement is making people question whether they’ve made the right choice?
I’m not sure that anything Google does will displace ZigBee from its place in smart meters. That’s actually quite a closed market, as most utilities don’t really want to share that data with consumer devices. Where it is a threat is in home automation. Home Automation is still a very nascent market and Bluetooth, Wi-Fi and ZigBee are all pitching to own it. The reason I think they are at risk is because of what Google can bring, which is an API (Application Programming Interface). Google has succeeded in areas like mapping because it makes it easy for developers to access and mash up data. In contrast, wireless standards shy away from making their stacks easy to use, particularly for embedded designs. If Google can make it easy, thousands of garage and backroom developers will take it and innovate with it, and the existing standards may all find themselves left behind.