Contact: Ben Kolada Scott Denne
In a decade and a half Google built itself into the world’s largest advertising company, though more recently it’s been branching far and wide into new markets. Yesterday the search giant spent $3.2bn of its cash on Nest Labs, a smart-home device company best known for its thermostat. It’s the latest in a line of schizophrenic dealmaking, including Google’s rollup of robotics startups, a smattering of facial-, speech- and motion-recognition businesses, a few book publishers and the $1bn pickup of a mapping application that’s only tangentially related to its core business.
In fact, the last time Google bought a company that directly related to its core business of search, display and video advertising was its mid-2011 purchase of AdMeld. That was 60 deals ago, according to an analysis of The 451 M&A KnowledgeBase.
We’d note as well that Google’s track record of capitalizing on acquisitions outside of advertising is less than stellar. It shelled out $12.5bn for Motorola Mobility in 2012 and while that company already faced headwinds when Google got involved, its annual mobile phone revenue has halved under Google’s watch (the same amount as BlackBerry, for what it’s worth). Surveys by ChangeWave Research, a service of 451 Research, show that only 4% of smartphone buyers plan to buy Motorola, a number that hasn’t changed meaningfully under Google’s watch.
However, with rising interest in consumer hardware and more types of consumer devices becoming Internet-connected every day, we’d expect Google to continue to pay attention to this emerging market. Putting two and two together, Google could next make a move on smart scale and nutrition device maker The Orange Chef. Its VC arm was an investor in Nest and is still an investor in Orange Chef.
Select recent, unusual Google acquisitions
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Source: The 451 M&A KnowledgeBase *Reported deal value **451 Research estimate