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5/21/2014
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Google Outlines Advertising Vision

Google tells SEC there are no plans to run ads on Nest thermostats, but other Internet-connected smart devices are fair game.

Google's 10 Big Bets On The Future
Google's 10 Big Bets On The Future
(Click image for larger view and slideshow.)

In a letter sent to the Securities and Exchange Commission late last year to explain why it doesn't disclose revenue generated by mobile devices, Google said that breaking out revenue by device platform is difficult because the definition of mobile devices remains in flux.

"We expect the definition of 'mobile' to continue to evolve as more and more 'smart' devices gain traction in the market," Google said in its letter, first reported Wednesday by The Wall Street Journal. "For example, a few years from now, we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses, and watches, to name just a few possibilities."

The mention of thermostats set off alarm bells within the technology press because in January Google acquired Nest, which makes a smart thermostat, and because Nest CEO Tony Fadell promised that his company will be transparent about changes in its privacy policy and will make any changes opt-in.

[Why one techie won't bite. Read Google Glass: 5 Reasons I Won't Buy.]

But concerns that the much ballyhooed Internet of Things is destined to become the Ad Network of Things appear to be premature. Google issued a statement clarifying that the hypothetical scenario it described for the SEC -- ads everywhere -- doesn't reflect the company's product roadmap.

"Nest, which we acquired after this filing was made, does not have an ads-based model and has never had any such plans," Google said in a statement of clarification sent to The Wall Street Journal.

There's a difference, however, between stating that "Nest never had any such plans" and "Google isn't considering such plans." Google anticipates that advertising will appear on a wider set of devices.

(Source: Nest)
(Source: Nest)

"Our expectation is that users will be using our services and viewing our ads on an increasingly wide diversity of devices in the future, and thus our advertising systems are becoming increasingly device-agnostic," Google says in its letter. "Because users will increasingly view ads and make purchase decisions on and across multiple devices, our view of revenue is similarly device-agnostic."

Google's interest in ads on Internet-connected devices can be seen in its patent on gaze tracking, which could be used to refine ad delivery in wearable devices like Google Glass.

But Google's vision doesn't entail ads everywhere, because ads don't work well everywhere and because ads wouldn't be welcomed everywhere.

The notion of ads on one's thermostat fails to consider how Nest products and other "smart" devices are more likely to be used. Smart devices might or might not be suited for the display of ads -- the Nest thermostat screen isn't nearly as appealing as a smartphone screen or Google Glass as a place to display graphics -- but they are well-suited for generating data.

The Nest thermostat, for example, can detect when a person is in a room where it is installed. If that room happens to be, say, the kitchen, that information could confirm or refine data coming from the person's phone or tablet, to ensure the delivery of a contextually relevant ad. And such information does not have to be personal information, which Nest would be obligated to seek permission to share. Google might be able to determine who is in a room by correlating Nest environmental data with other data from other devices, even though Nest's data wouldn't, by itself, identify anyone.

Google insists Nest has no plan to turn the Nest products into the advertising end-points it described to the SEC. That doesn't mean such products will have no role to play in the Ad Network of Things.

Next-gen intrusion-prevention systems have fuller visibility into applications and data. But do newer firewalls make IPS redundant?Also in the The IPS Makeover issue of Dark Reading Tech Digest: Find out what our 2013 Strategic Security Survey respondents have to say about IPS and firewalls. (Free registration required.)

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful ... View Full Bio

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D. Henschen
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D. Henschen,
User Rank: Author
5/21/2014 | 4:32:09 PM
Glad to hear there's not Nest desperation
Ads on your thermostat and fridge? That would really be a new low. I'm skepitcal about Google's ability to succeed with consumer products, whether that's Google Glass, Nest, or anything else I've seen. Even the Compute Cloud seems like a hobby without an aggressive game plan. Without the Google name, some of these projects would have killed off by now. For example, now that Honeywell (and others) have gotten hip to smart thermostats, I don't think premium-priced Nest stands a chance.
jlkansascity
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jlkansascity,
User Rank: Apprentice
5/21/2014 | 5:31:34 PM
Oh No, I can see it now!
I can see it now. If you want to change a setting on your thermostat, you have to watch a video ad for 5 seconds first. When you're just checking the temperature, you'll have invites to play Candy Crush on your Nest screen.
anon7888201425
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anon7888201425,
User Rank: Apprentice
5/21/2014 | 6:21:08 PM
Ad's
They need to be sued, $900 million in a class action law suit would stop these stupid ad's nobody wants to see
Uplift_Humanity
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Uplift_Humanity,
User Rank: Strategist
5/21/2014 | 8:52:43 PM
Nest is in trouble - and Google is hiding their true strategy

I don't agree with your point about Honeywell giving Nest any challenge. Honeywell has never made a good product. They take average technology and use it to add bells & whistles to their products (they give no real benefit to their customers other than flashy screens and beeps). This is very different from Nest, which is all about creating advances and new capabilities.

Nest made their mark because their product is truly great -- it actually learns your habits (temperature-related) and it uses the weather to basically predict what you want.  And it actually does a decent job.  Nest was founded by basically a bunch of former Apple employees, who understood design (not just aesthetics, but also software and user-interface).

Now, Google comes along, and is trying to squeeze Nest (not realizing they're ruining it). Because they're clueless (or maybe single-mindedly ad-focused)


1) Google issued several press releases trying to clarify the news. They did not say Nest will never put ads on its screens.  Google's statement is guarded and carefully worded:  "Nest ... does not have an ads-based model and has never had any such plans,"  This is Corporate Speak -- and it talks only about Nest's past. Google did not say Nest will never show Ads.  Ads are Google's entire corporate strategy -- they will never disclose their strategy.


2) Google's entire business model is based on advertisements (and the data they need for it).  It relies on clueless users giving their personal data to Google, freely. Google then sells that (our) data to advertisers -- to anyone that pays them (even thieves who form fake companies). Google could care less if their data discloses when you're home and when you're not, what road you drive to work, and what stores you shop at and when. (all of this is free, from the GPS data they get for free, from every android phone).

Uplift_Humanity
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Uplift_Humanity,
User Rank: Strategist
5/21/2014 | 9:09:01 PM
Google - stop trying to fool us!
Google said they have "no plans to run ads on Nest thermostats."  That's corporate-speak. They didn't say Nest will never show ads.


Makes you wonder why Google does this. Who they really care about.
D. Henschen
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D. Henschen,
User Rank: Author
5/22/2014 | 8:39:24 AM
Re: Nest is in trouble - and Google is hiding their true strategy
Honeywell has never made a good product? I suppose that's why their round thermostats are as ubiquitoius as Kleenex and BandAids? In fact, Next took it's design cues from Honeywell.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
5/22/2014 | 11:01:30 AM
Re: Google - stop trying to fool us!
Google's extremely successful business model is based on ads and data generated around those ads. Don't think for a second it'll make an exception for Nest because it's a home consumer product.
Lorna Garey
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Lorna Garey,
User Rank: Author
5/22/2014 | 11:44:21 AM
Re: Google - stop trying to fool us!
I suspect that whatever lowly functionary threw what was probably considered a throwaway line in that SEC filing is, even as we speak, hiding in a bathroom somewhere deep within Google HQ.
Thomas Claburn
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Thomas Claburn,
User Rank: Author
5/22/2014 | 4:18:29 PM
Re: Ad's
If Nest ever did start showing ads on its thermostat, I predict Post-It sales would surge as people looked for ways to create make-shift ad blockers.
Uplift_Humanity
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Uplift_Humanity,
User Rank: Strategist
5/22/2014 | 4:50:39 PM
Re: Nest is in trouble - and Google is hiding their true strategy
@D. Henschen:  You have a point.

Though, ubiquitousness does not imply a good product.  E.g., food sold by McDonalds is everywhere worldwide, but is not considered to be good (at least, to most people who have truly had good food).

My point is, Honeywell are not known for innovation in the consumer market.

And I agree, Nest did copy the emblematic rotary design. Though I believe it was not as a homage to Honeywell's, but rather for simplicity, aesthetics, and user-interface design.  The rotary dial affords more degrees of freedom than buttons, and looks better (it can be made "invisible" as Nest has done).
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