Why Nest is Worth $3.2B to Google (an alternative to the Internet of Things thesis)

#5 – Don’t forget – we’re in an era of mega-sized market caps – the 1% applies to market winners and losers too, so don’t get too worked up over the number. Of course it’s too much. Isn’t it always?

#4 – Convergence of Video Surveillance with Home Video. Surveillance cam tech is being used everywhere today in remote broadcast TV production. Dropcam has taken it to the home – Google/Nest can easily be a leader in that market, making a run for the current leader in the space, Alarm.com. (They’re probably a bit nervous at this announcement. Actually, Alarm.com does a better job of knowing when I am home or not because it uses my 3 motion detectors, not just the 1 attached to the thermostat.)

#3 – Rise of the next-gen gateway. The legacy ‘customer premise equipment’ or CPE companies like Motorola (now Google) and others do not have what it takes to build a great residential gateway product. Tony does. And this product is coming — and strategic — whether we like it or not.

#2 – Re-emergence of over-the-air TV in digital form. Witness Aereo’s success, and think, wait, if Nest can get people to install a thermostat, why not also an antenna on the roof? Then you’ve got the ability to deliver on Aereo’s value prop with very little effort and no court costs!

#1 – Last, but not least, you’ve probably seen Comcast, AT&T, and Tyco battling it out on TV ads in the home security biz – it’s like the new cola wars! The entire area is ripe for disruption and a bundle will be spent and lost in the coming years.

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