Nest Labs purchased by Google and SmartThings acquired by Samsung Electronics have already started to fight for global dominance in platforms for the Internet of Things (IoT). Therefore, experts are saying that the local industry needs more systemic strategies to increase its competitive advantage in the field.
“Existing IoT businesses have eyed the B2B market, but they are now creating a small but meaningful market in the B2C sector,” said Hwang Byung-sun, head of PAG&Partners. His remarks were made in his report on Google's Nest Labs and Samsung's SmartThings as a case for the ecosystem of IoT businesses published on Dec. 20 through the KT Economics & Management Research Center. He also said, “In this situation, we need to pay attention to cases where companies make strategies for the platform-based business ecosystem for the IoT market.”
Hwang named Google and Samsung as examples of the construction of the ecosystem. In January of this year, the search engine giant announced that it would buy thermostat and smoke-detector maker Nest Labs for 3.4 trillion won (US$3.1 billion). It is the second largest M&A deal after its acquisition of Motorola Mobility in 2012, and thus the deal contains a lot of meanings.
Nest Labs was established by Tony Fadell, former CEO of Apple, and Matt Rogers, former engineer at the same firm. The Nest Learning Thermostat is not simply a thermostat, but the most ideal product for the realization of the IoT. Since the device has a few sensors and machine learning processors, it can control temperature after users teach it about their favored temperatures for about a week. It automatically lowers the temperature to save energy when users are not at home as a result.
More importantly, products made by Nest are sold as electronics goods. In addition, the company is taking root in the smart home market, a major IoT sector, as a core hub. Nest already opened its platform to outside developers through an API so that Nest's thermostat can connect to Whirlpool washing machines, Mercedes-Benz cars, LIFX smart bulbs, Jawbone's wearable fitness tracker, Chamberlain's garage door opener, and Google's voice-activated app Google Now.
When Mercedes-Benz cars approach home, they can notify the Nest thermostat at home that the homeowners are coming, and the thermostat can raise the temperature in response.
When Nest Protect detects carbon monoxide or smoke, it sends information to LIFX's smart bulbs so that the light bulbs can automatically go off. Jawbone's wearable fitness tracker can predict when the wearer gets up in the morning, so Nest's thermostat can control temperature at home at an optimal level, before they get up.
Numerous manufacturers and service providers have already began competition for smart home platforms, which help different IoT products communicate with each other at home.