Google buys stake in ADT to make Nest devices the cornerstone of ADT’s smart home business

Google opened its ample war chest this past week to beef up its smart home business, purchasing 6.6% of ADT for $450 million. By teaming with ADT, the largest provider of professionally monitored home security services in the U.S., Google gains immediate inroads into the professional home security market – ADT has over 6 million customers in the U.S. The deal will see ADT’s technicians selling and installing Google’s Nest smart home devices, including cameras and smart displays, as early as this year.

 Google’s line of Nest devices have been mostly sold through retail and HVAC companies, but with this new ADT partnership, the Google Nest Home Hub line could eventually serve as an alternative to the ADT “panel” — the heart and brain of a home security system. For the time being, representatives for ADT have told The Verge that Nest devices won’t replace its own ADT devices.

It’s worth noting, however, that with this investment, Google can begin to edge out Amazon’s Alexa voice technology, which is baked into ADT’s Command system. Moreover, Google’s expertise in AI and cloud technology should assist ADT in developing home automation and security systems that are much smarter than anything in the field, and include advanced facial recognition, false alarm detection, smartphone integration, and community monitoring features.

Interpret’s Smart Home Matrix shows that Nest already commands strong brand recognition, especially among “Converts” – the first-time smart home buyer segment.  Additionally, pro-installed home security system buyers, “Conductors”, show high interest in Nest’s doorbells and cameras. Together, Nest and ADT have an opportunity to grab sizable shares from both the DIY market and the pro-install market.

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