Google recently grabbed headlines with its US$3,2bn acquisition of home automation company Nest Labs. The deal is the second biggest in Google’s history, after the $12,5bn it splashed out for Motorola Mobility in August 2011. But why did it buy it?

Nest Labs designs and manufactures Wi-Fi-enabled programmable thermostats and smoke detectors. The company released its first product, the Nest Learning Thermostat, in 2011. The thermostat learns your habits and and programs itself accordingly and it can be controlled using a smartphone. According to Nest, once the thermostat knows your habits well enough, it is able to lower your electricity bill by up to 20%.

In 2013, it released another product, Nest Protect, a smoke and carbon monoxide detector. Its alarm sends out warnings when it detects smoke or carbon monoxide levels rising. So, if you are in the kitchen and something on the stove is about to burn, it speaks to you by giving you a “heads up” before the a loud alarm goes off. Alarms can be silenced if you wave your hand in front of the detector from a close enough range. If you’re not at home, it will send a message to your smartphone via the app.

But why would Google be interested in a company like this? Well, we already know that it wants increase its presence in the living room. It introduced Google TV in October 2010, which was a bit of a flop. It was co-developed by Intel, Sony and Logitech using x86 microprocessor architecture and initially available officially through Sony and Logitech products. Google TV works with the Android operating system and the Chrome web browser to create an overlay on smart TVs. The second-generation Google TV, based on ARM architecture, allowed for additional partners such as LG, Samsung, HiSense and Vizio.

Since then, Google introduced the $35 plug-and-play Chromecast dongle. It connects to a high-definition television via an HDMI port and, with a Wi-Fi connection, you can push content from your existing devices — smartphones, tablets and laptops — to your big-screen TV. It also gives you access to streaming services like Netflix, Hulu, YouTube, Google Play Music and Movies.

Even though Nest Labs only makes two products, founder and CEO Tony Fadell credits the success to its background technology. In an interview with the New York Times in November, he said the real success behind Nest was based on key technologies like communications, algorithms, sensors and user experience, which run over a network to the cloud.

Nest has a lot of data on how people live their lives inside their homes. The obvious question here is what Google plans to do with all this information. With the growing trend in smart living and home automation, the Nest deal puts Google in a powerful position to learn your offline habits through your behaviour in your home, in addition to tracking your usage from connected devices and services tied to it. In effect, Google wants to know everything about you. It’s not enough having access to our online lives, Google now wants insight into our offline habits, too.

Essentially, all this ties in with the catchphrase of the moment, “the Internet of things”, which refers to everyday objects with unique identifiers being connected to the Internet, thereby automatically transferring data without needing the help of a person to sit down and do it. Think smart appliances, wearable tech or any object that is able to transfer data automatically once connected to a Wi-Fi network.

According to Gartner, connected devices under this “Internet of things” paradigm — so, excluding PCs, tablets and smartphones — will grow to 26bn by 2020. That’s almost four times the population of the planet. The volume of data that this will produce, and the ability to use it to target commercial messages will be enormous. For Google, this big data is a treasure trove of possibilities. — © 2014 NewsCentral Media