UPDATE 4-Google gains entry to home and prized team with $3.2 bln Nest deal

Mon Jan 13, 2014 8:14pm EST
 
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By Alexei Oreskovic and Poornima Gupta

SAN FRANCISCO Jan 13 (Reuters) - Google Inc took its biggest step to go deeper into consumers' homes, announcing a $3.2 billion deal to buy smart thermostat and smoke alarm-maker Nest Labs Inc, scooping up a promising line of products and a prized design team led by the "godfather" of the iPod.

Nest will continue to operate as its own distinct brand after the all-cash deal closes, Google said on Monday.

The deal is the second largest in Google's history after the $12.5 billion acquisition of mobile phone maker Motorola in 2012.

Like the Motorola deal, which marked Google's first major foray into hardware, the Nest acquisition gives Google a stepping stone into an important new market at a time when consumer appliances and Internet services are increasingly merging.

"Nest Labs appears to be focused on thermostats and smoke alarms, but it's not far-fetched to see Google expanding this technology into other devices over time," said Shyam Patil, an analyst at Wedbush.

"Home automation is one of the bigger opportunities when you talk about the Internet of everything and connecting everything. This acquisition furthers their strategy around that," he said.

Shares of Google were up 0.5 percent at $1,128.49 in extended trading on Monday.   Continued...