NEST’S CEO IS REPLACED: Tony Fadell is leaving his position as CEO of Nest, according to a blog post written by Fadell. He will be replaced by Marwan Fawaz, who previously led Motorola Mobility’s television set-top box business, Motorola Home. The transition has been underway since the end of 2015, and Fadell will remain involved with Alphabet (Nest’s parent company) as an advisor.
Nest and Fadell have faced a lot of criticism over the last few months.
Nest failed to meet revenue expectations. When Alphabet (formerly Google) acquired Nest in 2014 for $3.2 billion, Alphabet set Nest’s revenue target at $300 million annually. But Nest has failed to meet that revenue on its own and has only surpassed the target because of revenue from Dropcam, which it acquired for $555 million six months after Nest was acquired by Alphabet.
Nest is being pressured by Alphabet to release a smart home security system, but hasn’t yet. Nest is reportedly working on three devices — Flintstone, Pinna, and Keshi — that would work in tandem to create a smart home security system. Nest has not released a successful product since the launch of its signature smart thermostat in 2011.
Nest shut down service to the Revolv hub. In April, Nest announced it was shutting down service to Revolv smart home hubs, which were used to control smart lights, locks, thermostats, and other smart home devices. Revolv was acquired by Nest in 2014. Shutting down the Revolv hubs led to a major public backlash against Nest.
Fadell pointed the finger at Dropcam’s CEO Greg Duffy for many of Nest’s problems in an interview withThe Information. Duffy publicly responded saying that if Dropcam’s revenue was released, it would make Nest “not look good in comparison” to Dropcam.
Nest isn’t the only company struggling in the smart home market though. There are very few success stories among smart home products right now, as they tend to be expensive, gimmicky, and often don’t add enough value for the consumer. For example, the $250 price tag for the Nest Learning Thermostat is not affordable to the mass market and doesn’t add enough value to justify the cost difference compared to a $30 unconnected thermostat. Over time, the price of smart home products will drop, making them more affordable for the average consumer.