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Why does Google enter the Internet of Things by way of acquisition?

01 Jun 2017 -
      Google was $ 3 billion in cash to buy home networking device startup Nest Labs, recently there are many media mention. While Nest has been hype because of its smart products, some have argued that $ 3.2 billion is a very generous price for small companies worth $ 800 million a year ago. But perhaps more importantly, Google's previous record is good, the market is successful, the design capability is strong, the engineering talent, why choose to acquire the way into the Internet of Things (IoT)?

      Perhaps it is because it is really hard to create organic growth through networking devices. It needs to be so far almost no big business to do the successful way to link the physical product and software experience, that is, to integrate and design. While many companies have begun to explore home automation, networking cars and wearable equipment, the ecosystems that build and expand networking products and services are actually more challenging than most high-level executives understand. In addition, there is no proper integration and may have a significant impact on the company's profit and loss and market reputation.

      More clearly, designed for integration, involves three major challenges, and these three challenges are very difficult - but enterprises to establish a successful cause of things, you have to try to properly respond.

    Link the vision with real customer needs

      Imagine in the future situation, the previous analog products look realistic, it is exciting. How can these products become "full of wisdom", in an interesting way and exchange information with each other? But the most striking value proposition, usually starting from focusing on a customer's pain point. AAA club partner company Connected Car for AAA Club Partners vice president Mike. Mike Slattery understands this. "When we build SMARTTrek on a networked car platform, knowing there are many possible situations that need to be addressed," he said. "But we focus on a meaningful service - combining road rescue, maintenance and car insurance - to create a unique networking experience. The SMARTtrek platform provides location co-ordination to help us quickly schedule and find members and provide Car diagnosis on the views to troubleshoot problems, and finally provide the best maintenance experience.

      Whether your vision is based on a car, central air conditioning, refrigerator, or any other project, make sure you focus on the customer's desire to have a better solution and then think about how to integrate the hardware and software platform, Solve the problem in a simple, intuitive way.

      Integration of physical and digital development

      Design networking experience, the need to integrate a variety of different development technology portfolio and process. First of all, you need hardware manufacturing, which requires a very long straight line development cycle, to carry out product design and engineering. Secondly, you need digital and software design, which happens in a short, modular development loop that requires a variety of designers (for example, experts in user interaction) and programmers support. Software and hardware to rely on good design will be successful, but the two methods have a world of difference - in addition, good at pixel design, and can not be easily converted into good at atomic design. Believe Bug Labs Executive Peter. Seeing Peter Semmelhack, with a software background). "The hardware is very difficult," he admitted in his own book "Social Machines". "Any disruption in product development will have a 3% greater impact on your schedule than you would expect."

      For most businesses, the implication is that they rarely have both hardware and software capabilities. These two core advantages are far worse, so very few often exist in a company. This is a major loophole that many large companies often encounter in the process of the Internet of things, in particular, it seems to be the reason why many of the joint venture networking companies decline, even if these enterprises for the new Internet of Things supply project attractive ideas The

      Connect different business models

      The Internet of Things contributes to new growth pipelines, but also threatens the way companies earn money in the past. The way in which hardware companies traditionally make profits is by balancing product revenue and costs associated with raw materials, manufacturing and supply, and on the contrary, software companies often use service business models and often have regular revenue streams. For the networking device, the two worlds are confusing in a confusing way: the hardware company must begin to account for the cost of tracking data and supporting services, and the software company must begin to control the cost of manufacturing and distributing the actual product.

      Entrepreneur and "Lean Startup" advocate Steve. "The start-up is to seek a reusable and sustainable business model," said Steve Blank. "In doing the difficult task, the Internet of Things is further challenged by the fact that, They have an old business model, and they must be successfully transformed.

      Manufacture, acquire or find a partner

      Talk back to Google, and try to build the Internet of Things business every big company. They face the challenge is to build a strong hardware company, both with physical products, but also has the integrity of management services company. Undoubtedly, they have seen some companies transition through internal programs and organic growth, but have seen how most other companies are struggling to fight. One customer recently told me: "The result of this action is a business, not a group of products." That kind of argument is very simple, but it is difficult to make the organization fully adopt its proposed changes. So we can expect to see more companies like Google decided to buy or choose a partnership, is to establish a network device business relatively simple way.
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