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Business Model of Google's Nest

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Lydia Ryu

on 11 April 2015

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Transcript of Business Model of Google's Nest

Effective Business Model of
Google's Nest

Smart thermostats
Time & Money

(In some cases)
Recurring revenue
40$ per user, per year
Business Model
Thermostats - Product no one really cared about
Sustainable business model with social value
- energy saving starting by individuals
to nation & global wide
Google's acquisition rule
- Not interested in hardware margins
- Only interested in consumer devices
as a channel to distribute services &
acquire data which can be monetized

Tony Fadell at California-based Nest has been smartening up once-dull household appliances
to save households time and money
- the guardian Nov. 2014
Google Nest
Household Thermostat
households / commercial buildings
Utility service providers
/ Government
Helps cut energy bills (avg. 20%)
Reach desired temperature
by learning and automating

Founder : Tony Fadell, Matt Rogers

Palo alto, setup in 2010
Started with the iconic thermostat,
moving to new products

Bought by Google in Jan 2014 for
$3.2 Billion

Next generation "smart" programmable

Learns users preferences and patterns
uses motion sensors to turn down
temperatures when no one is at home
--> save energy and money!
Access to usage pattern data,
real time demand info
(only aggregated trends&
real-time overall demand metrics,
no raw data)

Natural allies helping reduce
utilities consumption
(gas & electricity for heating)

efficiency of supply
Charge $ 250 per device
+ some installation fee/
app purchase fee

Usage data
Communicate energy grid
data to control users'
Build an ecosystem of innovative products with proprietary standards, under home automation umbrella
- Big Data collected from users
- Technology, patents, R&D human resources
- Consumer stickiness
"invisible control on customers"
01 Multi-sided Platform
02 Open Business Model
Brings together
two or more
distinct but interdependent groups of customers
(individual users & energy providing firms)
" Inside-out " form
Providing external parties
(energy providing firms)
ideas or assets (energy data)
lying idle within the firm
Power of "recurring revenues" based on subscription - over revenues from
one time (limited times) device purchase
KMBA 창업과 벤처전략 Hee Won Ryu
Article presentation given on 9 April 2015
Copyright reserved to Hee Won Ryu

4 Components of
an Effective Business Model
Privacy issues with data still lies...





Entrepreneurship 4th edition, Bruce R.Barringer, R.Duane Ireland, Pearson

성공하는 스타트업을 위한 101가지 비즈니스 모델 이야기, 남대일 외, 한스미디어

컨텍스트의 시대, 로버트 스코블, 셸 이스라엘 지음
/ 박지훈, 류희원 옮김, 지앤선

Thanks for watching!
My husband and I have translated that book above there!
The book was released in March 2014.

Check that out and you'll come across so many exciting news and info about IoT, Big Data, and other things happening in Silicon Valley!
Full transcript