Scared of using useful products
The recent Nest acquisition by Google caused quite a few waves on the internet. The interesting thing to me is that a lot of the talk is quite negative towards Google, especially people who refuse to forget Google is an advertsing company seem worried about the implications of this acquisition. The fact that people invited Nest into their homes and now have Google is something to think about…
I’ve found the Nest products to be very interesting from the start, and from the reports and reviews I’ve read they’re actually quite useful. Before the news broke about Google acquiring Nest I didn’t consider it even once that the Californian ad giant would be even remotely interested in getting their hand on Nest. The first place my mind went after I read the news on Twitter was what the average CPC for “energy” was1 . The data Google could get from Nest should be useful in targeting adds around that keyword. In the FAQ Nest quickly posted they stated the following:
Will Nest customer data be shared with Google?
Certainly Google has already done a lot of work in this area, from self-driving cars to Glass to any number of internal projects. But, especially in the consumer market, technology is not nearly enough. With Tony Fadell and his team, Google is getting some of the best product people on earth. Just as importantly – because product is not enough either – they are also getting an entire consumer operation, including customer support, channel expertise, retail partnerships, and all the other pieces that are critical to making a consumer device company successful.
I can’t image the Nest operation to be large enough to merit the 3.2 billion dollar price, but I also have problems with putting that price on an acqui-hire. Whatever may turn out to be the case the problem I have with this acquisition is the feeling that I can’t shake. The feeling that some useful products I’m using (or want to be using) might get acquired by a company that essentially still is an advertising company2 .
I’m using quite a few iHealth products to measure a few things regarding my health. I have measurements of my blood pressure, blood-oxigen levels, weight, activity and sleep patterns and more. I do this because it’s useful information I can use to monitor my own health. More importantly I can (choose to) provide this information to my physician during my yearly check-up. I have yearly check-ups due to heart disease running in the family and with the iHealth products I can provide a great amount of data points for about 80% of the tests they run on such a check. It’s great. It’s useful. It’s also scaring the crap out of me that Google might go out and buy the company for an insane amount of money. I just can’t shake the feeling that if that happens I would feel worried about the implications of Google getting their hands on that kind of data. They’ve tried before in this area. And trying again now. I know for a fact that the average CPC on the Dutch equivalent of Health Care insurance is really high, I image it’s the same for large parts of the world. The Nest acquisition got me thinking about this, and left me with an uneasy feeling.
Now that Google is buying companies that sell useful technology and do this while having a sound business model3 , where will they stop? And how long will it take before their ad income (growth) slows down to a point for Google to become desperate enough to start using all that valuable data they’ve collected in the meantime?
1: Turns out the average CPC is $4,33 with max CPC around $29.
2: Even if they’re in the process of diversifying their model I won’t view them any differently until their actually profit out of these new venues reach a substantial percentage of the total.
3: Consumer pays for the product, the consumer receives the product. Company profits. Nest wasn’t a dying company, Motorola was.