Google is reportedly considering combining Nest Labs, its home automation unit, with its hardware team, reported The Wall Street Journal.
Citing sources familiar with the talks, The Journal reported that the move would reverse a big part of Google’s move two years ago, which split up the company into different businesses under the Alphabet parent. The paper noted that if Nest and its 1,000 workers became part of Google, it would mean Alphabet is pulling back from its strategy to keep the core Google internet business separate from other units.
A former employee of the Nest unit told The Journal that it never made sense to separate Nest and Google’s hardware unit, as the two had overlaps in manufacturing and retail distribution. What’s more, the ex-worker said that at one point, both units were working on a software product that was similar in nature.
“The only surprising thing to me is that it’s taken this long,” one former Nest manager told the news publication. “If you think about it from a sales and marketing perspective, we are calling the same retailers.”
The move is aimed at taking on Amazon in the home automation device market, where the company has been enjoying brisk sales of its Alexa-powered Echo devices, which are beating out Google’s voice-activated speaker.
Nest makes internet-based thermostats, smoke detectors and cameras that work with both Google and Amazon’s voice-activated virtual assistants, noted the report. In 2014, Google spent $3.2 billion to acquire Nest. Since then, it has become a major player in the Internet of Things marketplace, where connected devices talk to each other. More recently, Nest has been slow to come out with new products, and in 2016 saw the departure of co-founder and CEO Tony Fadell.
Forrester analyst Frank Gillett told The Journal that integrating Nest into Google’s hardware unit could be what’s needed to spark that business. “The Nest team started fast, got acquired and then got distracted by leadership problems, and for whatever reason has had a not-so-exciting road map the past couple of years,” said the analyst in the report. “If nothing else, (an integration) has the potential to get that team jacked up and cranking again.”