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Introducing a thermostat Steve Jobs would love: Nest

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Can gorgeous design, learning algorithms and millions in venture capital funding make a simple home thermostat as coveted as the iPhone? If anyone can achieve such a lofty goal it’s Tony Fadell, the former chief architect at Apple (s AAPL), who led the development of the iPod and the first three versions of the iPhone, and who left Apple two years ago to start connected thermostat company Nest Labs.

While Palo Alto, Calif.-based Nest has been operating for about a year and a half, has 100 employees, and funding from Kleiner Perkins, Google Ventures and Al Gore’s investment fund, it just came out of stealth on Tuesday to reveal its smart thermostat design and energy efficiency ambitions. Nest says the thermostat is the first “learning thermostat” in the world. It will be available for $250 in mid-November, and can save 20 to 30 percent in a home’s energy consumption.

The idea behind Nest

Fadell explained to me in an interview that he and his wife (who led human resources for Apple) decided to leave Apple about two years ago to spend more time with their young children, and basically retire. But you know how that goes for the ambitious, young, Silicon Valley types. While designing a green home in Tahoe, Calif., Fadell became hung up on the lack of options for a thermostat for the home — they were expensive, not smart, ugly, and basically “crap” says Fadell. And like all good entrepreneurs he thought to himself: there’s got to be a better way.

That option ended up being getting back on the Valley treadmill, and creating one of the most ambitious greentech ventures I’ve seen to date. Nest has raised tens of millions of dollars (they wouldn’t disclose the amount) from high profile venture capitalists including Kleiner Perkins Caufield & Byers, Google Ventures, Al Gore’s investment group Generation Capital, and Shasta Ventures.

While other companies are targeting the smart thermostat market (see my article on The next home energy battleground: the smart thermostat) like Opower and Honeywell (s HON), Radio Thermostat Company of America and EnergyHub, and EcoFactor, Nest is the first company that has created an end-to-end smart thermostat service, which offers the software, a gadget and a data-filled website. Fadell tells me that everything that the consumer touches has been designed by Nest.

That’s why it has 100 people and have raised a lot of money. The team building the learning algorithms includes Yoky Matsuoka, the former head of innovation at Google (s GOOG), and machine learning expert while Stanford Professor Sebastrian Thrun is an advisor to the company.

How Nest works

What will stand out most to energy nerds like me that look at a lot of thermostats, is the unique design of Nest. The thermostat’s form is a simple circle, with a ring on the outside and a single button, that controls the entire interface. Like the iPod and iPhone, Fadell wanted to make the device intuitive and simple to use and he says for the Nest system to work “it needed to be a coveted, cherished object that sits on your wall.”

In contrast, a major problem with most thermostats is that only two out of five are programmable and of those that are programmable, only 6 percent are actually programmed by the owners, says Fadell. Most thermostats are confusing, boring, or just not smart enough to keep the home owner’s attention.

The Nest thermostat, on the other hand, is supposed to learn your energy consumption behavior and program itself, and then automatically help you save energy in a convenient way. Once installed, the thermostat takes about a week of hardcore learning to recognize the standard way you heat or cool your home, and then recommends settings that are slightly more efficient than what you already do. It also automatically turns down the thermostat at times that are convenient to you. The device also continues to do lighter learning of your behavior via pattern recognition and your manual interaction with it, throughout the life of the device.

The recommendations and energy efficient mode appear to the Nest user as a leaf on the interface, giving direct feedback on energy choices. But the automatic control of heating and cooling will likely have a bigger impact on energy use. The Nest thermostat has five sensors — temperature, humidity, light and two activity sensors — and the activity sensors can notify the device to turn down the heating and cooling when no one is in the house.

The Nest thermostat also has a feature called “time to temperature,” which shows the home owner how long it will take to heat or cool the home. Say, you set the thermostat for 75 degrees, the Nest interface could read, 75 degrees in 25 minutes, letting you know how long it will take. The idea behind that feature is that most people set a thermostat like an accelerator, says Fadell, increasing the temperature or cooling way above or below the actual desired setting. But giving the user more feedback can help curb this problem — think of it like seeing how long a download of a file will take.

In addition to the thermostat device itself, Nest has created mobile apps and a website to be able to remotely turn up or down the thermostat, and also to give far more detailed data about home energy use. For example, you can log into the Nest website and see how much money you’ve saved, how many times you’ve turned up or down your thermostat.

The smart grid and Nest

The Nest thermostat also has Zigbee and Wi-Fi chips, so that it can connect with both your home broadband connection, and also other Zigbee devices like a smart meter, or smart appliances. Fadell says that thermostats are installed only every decade or so, so when the smart grid is fully deployed he wants the Nest thermostat to be ready.

Other companies like Opower and Honeywell are using a smarter thermostat as a way to connect with and control the smart energy home. While a lot of companies have focused on fancy dashboards that can monitor and control a home’s energy consumption, these devices haven’t really caught on, and smarter thermostats seem to be a better way in.

However, Nest is one of the only companies that is directly targeting consumers for its thermostat. Nest plans to sell its thermostat at Best Buy,(s bby) via building specialty channels, and through its website. Fadell tells me the company wants to “connect with the iPhone generation where it shops.”

But at the same time that Nest is going direct to consumer, the device will clearly have a utility play, which the company is being quiet on right now. Like EcoFactor’s smart thermostat service, I could imagine utilities could work with homes that have Nest installed, to collectively curb energy consumption during peak grid events. This type of service is called demand response, and the saved energy per household helps utilities manage their grids during really hot summer days. Since the device also has ZigBee installed it could potentially connect with utilities’ smart meters, too.

Nest says that home owners can save 20 to 30 percent on their energy bills, which is one of the highest estimated ways to curb home energy use on the market. In contrast, mailed detailed energy bills from Opower are helping home owners cut around 2 percent. EcoFactor says with its similar thermostat service (but no designed gadget) it can get home owners to cut their energy consumption by 17 percent. If Nest actually takes off, utilities will be interested in working with that double digit energy reduction, though I’d like to see that 20 to 30 percent reduction validated in larger real world customer deployments.

My impressions

I think Nest is one of the more ambitious, and cool, ideas I’ve seen in the greentech space. The Nest thermostat is also beautiful and the idea is game changing on its own. However, I’m not so convinced it will work (I want it to! Prove me wrong!). I just don’t know if people will spend $250 on a thermostat, particularly in this economy. You can buy a connected, digital, programmable thermostat for $50, and $100 on the high end.

Also while Nest includes detailed instructions on how to install the thermostat (including a Nest screwdriver), installing a thermostat is actually kind of confusing. I’ve tried to tinker with some of the newer connected thermostats, and usually I end up wishing I hadn’t tried to do this myself — it involves circuit breakers and electrical wiring. Nest says it will offer Nest-approved installers, if people don’t want to install it themselves. Maybe the Best Buy Geek Squad will be able to help with this.

At the end of the day, it will take an army of Nest-inspired early adopters to convince the rest of the country and world to adopt Nest. Silicon Valley will probably rave about it, as they should, but will the other 99 percent of the country get on board with a $250, do-gooder, smart thermostat that’s as pretty as the iPhone?

58 Responses to “Introducing a thermostat Steve Jobs would love: Nest”

  1. Patrick McGuire

    I am in. Get me on the early adopters list and let’s make this happen. Hope they release with BestBuy Canada or at least ship to Canada once they release.

  2. Darryl Chronister

    You mentioned that you can pick up a connected programmable for $50, $100 on the high end. Where are you looking? I’ve been trying to find an inexpensive IP-connected thermostat for a while and don’t see them anywhere for less than $200. Could you drop a link or two? At $50, I’d probably buy today.

  3. Wow, I am so glad some people are willing to think outside the box. This thermostat seems like it will make “green” be cool. A thermostat should able to learn the living style of its owner. Just like a transmission/engine should be able to determine the driving habits of the driver. Some of the thermostats available today are not very intuitive and they are more complicated then they need to be. Lastly, they truly are boring and are an eyesore. Props to Mr. Nest.

  4. All of the new smart thermostats I have looked at requires a “C” common wire for power, which most older homes don’t have. Nest doesn’t seems to need one. It should be uneasier install for older homes.

  5. Unfortunately, the people smart enough to figure out how to wire up a thermostat are also those smart enough to figure out how to navigate arcane menus – so you’re left with those individuals that have to pay a premium on the unit (compared to the competition), *plus* the installation.

  6. There are any number of z-wave and zigbee TSATS all ready on the market, that work with home/energy management systems, like Vera from Micasa Verde, and Homeseer, and others. Trane/Schlage offers Schlage LiNK (subscription service). Micasa Verde, offers Vera (the controller – no subscription required) with a SmartSwitch, which can report wattage energy use or KWh energy use over a period of time. Connecting other Z-Wave enabled devices can be done with Vera and other controllers as well.

    This TSAT looks cool and I suspect the iPhone drones will gravitate to it if its associated with Apple in some fashion, but there are plenty of options available to the consumer now.

  7. I’m sure from a Northern Californian perspective it may not seem like it makes sense. Here in Northern CANADA it makes a lot of sense and many of us DO get excited about it. When it’s not unusual for temperatures to dip below -30 going away for a weekend and forgetting to turn down the thermostat has big impacts on an already skyrocketing heating bill. Likewise for any system that can know when heat isn’t needed.

    I for one will be lining up to buy it (provided it can deliver what it promises).

  8. Left Coaster

    If you already have a programmable thermostat and have taken the 10 minutes to learn how to use it, this device doesn’t feel particularly necessary. Might catch on with the status conscious, or those that don’t like to read directions though.

  9. ” I’ve tried to tinker with some of the newer connected thermostats, and usually I end up wishing I hadn’t tried to do this myself — it involves circuit breakers and electrical wiring.”

    Nest is low power so it doesn’t require circuit breakers or electrical wiring.

    • All thermostats (except for baseboard heating) are low power. You still need to cut power to the furnace and AC units (which are not low power) when wiring up the thermostat or risk shorts and damage to your HVAC equipment.

  10. DontTrackMeBro

    This could be very cool and very popular. There are two problems that I see. First is the price. I am currently looking for a new thermostat and $250 is too much. Price it closer to the high end available on the market now, I think that $150 would be OK. The second thing is that I have absolutely no ambition to let any service provider know when I am most likely to be at home by tracking my activities. Maybe it is just me, but a non-connected version or even better a version that can connect to a phone or pad via NFC with an app that does not report up would be better

  11. Great write-up…knowing a little about consumers that buy tstats I doubt it will hit. At $250, it commands a huge premium. Plus, as beautiful as it is, most folks will have concerns that it will cover a. the wire hole and/or b. the unpainted area it will expose after removing their old one. Tstats need to be functional…they aren’t extensions of ourselves.

  12. Ted Kidd

    Somehow the thermostat is the key to controlling energy costs by 30%?

    This view that the thermostat exists on its own is Perpetuated disconnect.

    Hvac equipment must be run properly to achieve maximum efficiency. This doesn’t happen without high levels of control. Communicating hvac equipment now “talks” to the thermostat, helps it understand household conditions and modulate output.

    On top of this, every home and it’s occupant comfort needs are different, taking a prescriptive non-diagnostic approach is not going to cure anything.

    I regularly save my customers 30-70% on their energy bills, documented. I often run across devices marketed promising magical savings. Devices like this prey on ignorance and false hope, and the fact very very few keep track.

  13. While this looks interesting I’m not sure I want a thermostat that tries to be smarter than me. When I redid the heating system in my house I searched for a cool looking thermostat and found a LUX large touch screen one. I like to program it once and maybe tweak it a little and let it do it’s job. Not sure I’d want to take a week for it to learn by me getting up early to set it till it learns. While price is important I lean towards form over function slightly so I will pay more depending on what I like. If this Nest doesn’t have a simple way to program it once its installed and only tweak it then it would be of no interest to me even though it looks nice.

  14. This certainly looks nice and sounds like maybe they have tried to cover all of the bases to make a unified experience. I’m waiting for a thermostat that knows whether or not my wife and I are home based on our cell phone proximity and uses that to setback temp etc. Occupancy sensors in our house typically will not work as the thermostat is on a wall we rarely are near although we spend most of our time in the next room. This tstat seems like a good crack at a issue with our energy usage.

  15. Garison C. Garison

    Great write up and I have a huge desire to add this to my house, but in PA, PECO give us a huge rebate to add a wirelessly controlled disconnect to the heatpump which lets them control the amount of energy consumed in the “dog days” of summer and not overwork their system. That device that I already own makes this technology (despite being sleek) useless when I need it the most. Now, as for my house in KY, this would be great if I spent the money to add a second heat pump and ducting to break multi story dwelling into zones to match the temperature across all levels, but that would cost $8,000 and it is not worth the expense when I can install remote control cieling fans for about $500.00. Maybe in 10 years when I expand the KY house by a thousand square feet and have to upgrade the mechanical, then this would be a great investment.

    • @Garison C. Garison, I’ve heard similar things from other people when talking about Nest. The utilities are already subsidizing some of the connected thermostats, so the home owner has an incentive to go with the utility option. Maybe some utility will partner with Nest someday soon (PG&E please!)

  16. Michael Pawlowsky

    Very cool. I just wish they would have chose ZWave instead of ZigBee for remote access. If it would have been ZWave enabled I would maybe even be standing in a line of one to buy it on launch. :)

  17. Rob Marković (Robi)

    Seems a utility has to pick this up in a subsidized fashion to offer it at a lower (or no cost) to a certain market to prove itself on a larger scale.

    I am also not convinced it will help me, as my thermostat has been set statically for the past few years. Heat does not come on until 64 degrees or so, which only happens at night (N. CA). AC is not a part of most homes in the area anyway.

    What is really needed is industrial (corporate) smart thermostats, that adjust to outside temperature and RAISE the temperature inside the building to track the heat cycle during hot days instead of forcefully trying to lower it to 72 degrees in vain.
    This not only lowers energy costs, but increases worker productivity, causing less thermal shock to the human bio-system which results in less sick days.

    $250 for such a set of devices for the corporate world is not a hard sell.

  18. I think at the high end of the market people will go for this. Thermostats in fact any type of H&V controls are usually hidden away. I’ve found wireless stats in the kitchen drawer because the client doesn’t like the look of it and doesn’t understand how it works. By and large the industry has designed controllers as if they will operate them and ignore the user. It looks good which is a great start. How do I get one in London?

  19. PhycoKrusk

    People got on board with the iPod when it was hundreds more than other MP3 players. If the Nest thermostat is climate control’s iPod (and it looks like it might be), people will get on board with it, and will get on board with it fast.

      • Daniel Kotz

        I agree with Katie, its going to be hard to get people excited about this at that cost point. As a selling point (leading by example), Gore should showcase these thermostats all throughout his mansions in Tennessee and the one he acquired from Nick Cage.

      • Well since it impacts their wallet directly, they should get excited really quick. I’ve had a smart programmable thermostat installed in my house since day one, but I often find it stuck in the wrong mode because my wife is not very technical and frankly the UI is confusing. So for us we’ll probably recuperate the 250$ in saved phone bills, since she won’t call me everytime the temp needs to be adjusted. Of course this is an exaggeration, but this things are really useful only if used/set properly – and it seems this device addresses just that..