The Information published an article this week cataloging problems at Alphabet’s Nest division. The company was acquired in 2014 for roughly $3.2 billion, with high hopes that it would give Google/Alphabet an edge in the smart home market.
Perhaps more interesting than the many problems identified in the piece is the following paragraph about Google working on a competitor to Amazon Echo:
Separately, Nest asked to be included in a secret Google project to create a competitor to Amazon’s Echo, a voice-controlled personal assistant device. But the Google executive in charge of the project, which has not been reported on publicly until now, said Nest would not be involved in its development, according to a person with knowledge of the discussion.
Amazon’s Echo personal assistant has been a surprise hit for the company. Amazon hasn’t released sales figures, but there’s considerable data and speculation from third parties that argue it has sold very well. That’s also indicated by Amazon’s release of two additional products in the Echo line: a smart home hub and a portable speaker, both powered by virtual assistant Alexa.
Google has all the technology to produce a viable competitor to Echo/Alexa. More interesting would be to see how Google handles search results and whether it integrates advertising into any spoken feedback. For example, Echo reads back Yelp content when someone asks for local business information.
As “search” diversifies and fragments across devices and new user interfaces, such as Echo, it will be interesting to see how Google responds and seeks to protect its ad-supported business model. Recent research from MindMeld indicates that voice search and voice assistant usage started to grow significantly in the past year.
Another interesting insight from The Information article is that Google (and not Nest) is the entity working on the product. This either reflects its importance to search or a loss of confidence in Nest.