Nest CEO Marwan Fawaz has resigned as Google seeks to better integrate Nest products with its Home Division. Fawaz will stay on with Nest as an advisor, but Google has replaced him with Rishi Chandra, formerly vice president of product management for Google’s home and living room products. The move to replace Fawan appears to underscore the potential Google sees in the smart home industry and the importance it is placing on hardware and software integration across its product line.

The smart home industry is expected to grow by more than 100% and increase to $123 Billion by 2022 according to ABI Research. Nest’s smart home products include a thermostat, cameras, doorbell, and other popular devices found on the Internet of Things. Five months ago, in a move foreshadowing the latest executive shakeup, Fawaz brought Nest back under the Google umbrella. For the three years prior to the reintegration, Nest had been running as an independent entity under Google parent company, Alphabet. 

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Illustration of Smart Home Components

Google initially bought Nest in January of 2014 for $3.2 billion, but the company was reorganized under the newly-formed Alphabet in October of 2015. Since Nest rejoined Google in early 2018, the company believes  that Nest products will improve as they are able to more fully integrate with the software advances the company is making. Nest has already benefited from the integration to some degree, with its Nest Cam IQ gaining Google Assistant capabilities.

Google Will Continue to Move Forward with Nest

Nest’s revenue for 2017 was $726 million, demonstrating the popularity and potential of the company, but it ran on an operating loss of $621 million. Hardware engineer chief Rick Osterloh did not mention the profitability of the division when discussing Nest’s future. He did, however, praise the former CEO’s work for Google and give some background for the change stating, “We are accelerating the merger of our Home and Nest teams to provide our users and businesses with even better services under the leadership of Rishi Chandra. Marwan Fawaz is a strong CEO with a track record of operational excellence who led the integration planning efforts and was responsible for determining our organizational strategy.”

Google is the world’s leading search engine, but the nascent smart home industry is still competitive and it remains to be seen whether or not these moves to integrate Nest will give Google an edge over rivals like Amazon and Apple.

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