No Sweat? Honeywell Feels Heat From Google
Written by: Lou Whiteman
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That was before Mountain View, Calif.-based Google late Tuesday said it would buy smart thermostat maker Nest Labs for $3.2 billion, building the search giant's position as a provider of smart appliances and putting it in the middle of an ongoing dispute between Honeywell, a major supplier of thermostats and related home electronics, and Nest.
Nest and Honeywell in recent years have been battling in court over patents, with Nest co-founder and CEO Tony Fadell once referring to the diversified manufacturer as being "worse than a patent troll" for alleging that Nest's intelligent thermostat infringes on Honeywell intellectual property.
More troubling for the incumbent, with Google's help Nest could push into the commercial building control segment and pose a bigger threat to Honeywell's $16 billion-sales automation and control services unit. "The technology race within the building controls market just got put on notice," wrote Stern Agee analyst Peter Arment.
Honeywell at times has been dismissive of Nest's products, saying in the past that it believed consumers are more interested in controlling their thermostats than being controlled by the device. But the company has not had its head in the sand; rather it has been rolling out a steady stream of wifi-connected thermostats, smoke alarms and home security products for residential and commercial users.
"Given [Honeywell]'s history of product innovation we would anticipate an aggressive response to continue to protect its number one market share position," Arment wrote. Honeywell has ample resources in-house to respond, but if it wants to boost its R&D bench potential targets are out there.
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That would be a small price for Honeywell to pay if competition gets uncomfortably heated.