Alphabet Inc (NASDAQ:GOOGL) Google Absorbs Nest Labs IoT Team

A few months after Tony Fadell, Alphabet Inc (NASDAQ:GOOGL) Nest Labs CEO, stepped down, Nest Labs is currently undergoing another corporate restructuring. Specifically, its Internet of Things (IoT) team will be integrated into that of sister company, Google.

Restructuring Under Google

The absorption into Google aims to build a unified IoT team led by Hiroshi Lockheimer, Google Senior Vice President (SVP) of Android, Chrome OS, and Play. The integrated division will work further on Google Home, the company’s direct answer to Amazon.com, Inc. (NASDAQ:AMZN) Amazon Echo. It just seems logical since Alphabet, as a whole, will be able to maximize its resources at strategic costs. Afterall, Nest Labs has committed to integrate its thermometers and cameras with Google Home. However, it remains uncertain how many employees are involved in the restructuring.

Impact

While Alphabet may boast this as core strengthening, it can also be viewed as part of its cost-cutting efforts relating to its smaller subsidiaries. Currently, the smart home subsidiary has about 1,000 employees on board. Once the Nest Labs IoT team moves over to Google, Nest Labs will see a dramatic improvement in its balance sheet as long as it sustains revenue growth. Nonetheless, Nest Labs will continue to build and develop software for its devices.

This decision comes a year after Google has decided to restructure and form Alphabet as a holding company for all its subsidiaries. Since the parent company’s inception in 2015, Alphabet has come a long way being able to further understand and gain deeper insight about its businesses. It was a year prior when the technology giant acquired Nest Labs for more than $3 billion.

Google’s Hardware Focus

The move also implies Google’s growing focus on hardware. Started as a software company, Google has been making a revolutionary shift to hardware over the past few years. Such shifts in the diverse technology industry are no longer breaking news. Apple Inc (NASDAQ:AAPL), which is originally a hardware company, is now having its software momentum with services such as App Store, Apple Music, Apple Pay, iTunes, among others. The same goes for Google as it is expected to compete against Amazon.com in the smart home industry with the Google Home.