What the $3.2B Google paid says about Larry Page's ambitions -- and Tim Cook's focus.
No surprise there. Three billion is a lot of money, and Nest has genuine Silicon Valley star power: It was co-founded by Tony Fadell, a top Apple engineer who had a hand in two of Steve Jobs’ breakthrough products, the iPod and the iPhone.
Also not surprisingly, it didn’t take long for commentators to start asking whether Apple AAPL had dropped the ball by not buying, or even bidding on Nest. One went so far as to ask whether in losing Fadell to Google, Cupertino had let a potential future Apple CEO slip through its fingers.
I see several problems with these questions.
- The alumni issue: Just because Fadell started Nest, doesn’t mean Apple has to buy it. The list of Apple spinoffs and startups that Apple chose not to purchase is long and distinguished. It includes, I’m told, Palm, TiVo, LinkedIn, Flipboard, Pandora, Inkling, Tapulous, UpThere, CopperPix, Meeteor, Path, Posterous, Agnilux, Apperian, Caustic Graphics, Fotonauts, FreePath, Strobe, Tumult, Push Pop Press, NoiseToys and StockTwits.
- The data gathering issue: Data about what customers are doing at home is what Nest brings to the party. Today its thermostats are gathering information about energy use — something energy providers are ready to pay good money for. But if the “Internet of Things” (see last week’s CES coverage) comes to pass and Nest has a part of it, bigger data markets could open up, starting with advertisers looking to make ever-more targeted pitches. Apple isn’t in that business. It’s where Google lives and breathes.
- The sticking-to-your-knitting issue: Between them Apple and Google have acquired 33 companies in the past 12 months — Apple 13, Google 20 — according to the lists Wikipedia maintains (and which I’ve excerpted below). But the kinds of companies each bought says a lot about where the two company’s CEOs choose to focus their attention. Larry Page wears Google glasses and talk about “moon shots.” He picked up seven robotics companies in December alone. Tim Cook talks about sticking to one’s knitting, and his purchases — heavily weighed toward semiconductor and mapping technologies — reflect that.
Maybe it comes down to this: Google, beloved by Wall Street for its steady flow of AdWords cash, can afford to take moon shots that miss their targets. Apple, perceived by the Street to be in perpetual free-fall, cannot afford to fail.
UPDATE: TUAW’s Yoni Heisler points out that the cost of Apple’s 10 most expensive acquisitions combined comes out to less than the $3.2 billion Google spent for Nest. Apple has has never spent more than $404 million on any one company — that one being NeXT. See Why Apple didn’t buy Nest.