GOOGLE IS to merge smart home company Nest into its operations as the fight for home control intensifies.
Previously, Nest had been run as a separate subsidiary of holding company Alphabet, but as Google's hardware including the Pixel range and Google Home claws forever more market share from rival Amazon, there have been months of speculation that a merger was more than likely.
There's no question that this is a direct move to try and slow Amazon down. The runaway success of its Alexa voice assistant has now been bolstered by home hub functionality from Zigbee and more recent models carrying screens, something that Google is yet to offer, aside from tight integration with Chromecast.
But what difference will merging Nest into Google actually make to customers? While Assistant and Nest are already working together perfectly, Google will be looking to build its AI helper directly into Nest's cameras and thermostats.
With Alexa coming to Windows and Apple joining the race with its insular HomePod device, Google needs to do everything it can to avoid falling further behind.
One of the key bonuses will be a combined approach to putting AI into its products, with all devices working off the same technology and being developed in tandem.
But from a business perspective, Google is merging with the only other part of Alphabet that currently makes money. And sure, that's fine, but it does somewhat devalue the whole Alphabet structure created in 2015.
By offering an ecosystem that works closely not only with itself but with the world's biggest mobile operating system, seamlessly, it will send a strong message to Amazon that the fight is far from over. After all, Amazon's attempts to launch a phone did not go well, and Google will always have that card to play.
Our only concern is that Google and Nest have both shown themselves willing to position their hardware at the pricey end, where Amazon works in loss-leaders. The combined company may have to price aggressively to have a dog in the fight. µ
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