Google's Nest Labs acquires Dropcam for $555M

CNET

Home automation company Nest Labs will acquire the video-monitoring startup Dropcam, which makes Web-connected home security cameras, in a deal worth $555 million in cash. The deal, signed Friday, has yet to close.

Nest will fold the company into its existing line of smart-home products, which currently includes the Protect smoke detector and Learning Thermostat. Dropcam's products will now be under Nest's privacy policy.

Despite that assurance, the deal is likely to prompt privacy concerns considering Google bought Nest in January for $3.2 billion. The deal, however, was sealed solely by Nest, the company said, and will be used to expand the Nest brand into home security and video monitoring.

Following its acquisition by Google, Nest has ballooned from 130 employees at the end of 2012 to more than 460 this year. Dropcam will relocate from its San Francisco office to Nest's Palo Alto, Calif., headquarters.

News of the acquisition was first reported Friday by Recode, as well as The Wall Street Journal.

Nest, founded in 2010, is the brainchild of former Apple executive Tony Fadell -- who headed up the company's iPod division -- and Apple colleague Matt Rogers. Hitting the market in 2011 with its thermostat and following in 2013 with the Protect smoke detector, Nest established itself early on as an industry favorite in the nascent smart-appliance market by bringing refreshing design and powerful software to once-immutable and ignored devices.

Nest has used the thermostat and smoke detector as the linchpins and starting points for its smart-home philosophy, which starts with hardware and aims to expand into a software platform layered over a web of connected home appliances.

Dropcam, which has thus far raised $47.8 million in venture capital funding, was founded in 2009 by Greg Duffy and Aamir Virani, who spun the company out of camera-software development that the two engineers had performed for Swedish technology company AXIS.

"The teams are very well aligned and we love the product," Rogers, Nest's acting vice president of engineering, told Recode. "We both think about the entire user experience from the unboxing on. We both care deeply about helping people stay connected with their homes when they're not there."

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Google's Nest Labs acquires Dropcam for $555M