Technology and Marketing Review of the Nest Learning Thermostat

The Nest Learning Thermostat fought the odds of being just another thermostat, and wow’d everyone. In my recent purchase, frustrating setup, and review of the product, I created below two other executive-summary-style reviews on the technology and the marketing behind Nest’s Thermostat product. Some are surprising, some are downright aggravating, and some are areas for growth for either Nest or the industry.

TECHNOLOGY REVIEW

  • Nest displays energy usage in units of ‘minutes’ HVAC is on, not kWh
  • Nest learns and shows users how long it will take to get to temp
  • Manual schedules override the learned schedule, rather than ‘assist’ it
  • Auto-away is performed once it learns how often you generally walk around it
  • The thermostat has a Zigbee chip that has not been marketed, used nor mentioned by Nest, relying on wifi to do communication
  • Nest’s mobile apps are narrowly focused on temperature control, and have not expanded to energy … yet
  • Thermostat simplifies energy savings by showing a green leaf indicator
  • The communication method of the thermostat talking to their server actually makes it incompatible with some home routers
  • The first week of ‘training’ creates very cold mornings in winter until it realizes when to preheat the house
  • The thermostat does not anticipate your unscheduled arrival, but does allow you to adjust the temperature of your house from your phone from anywhere
  • For upgrades in the field without internet access, they chose to include a standard mini-USB connection – plug it in like a memory stick and copy the update file over.
  • Nathan at Sparkfun does a fantastic tear down explanation found here.

MARKETING REVIEW

‘Learning’ is the Future Buzzword of ‘Smart’ Products

Nest Labs has described its technology to the mainstream media by referring to it as ‘Learning’. Expect many consumer devices to follow suit and for it to become the new way to describe the already trite descriptive word “Smart”. Of course learning is not new, but Nest has finally started the process of teaching the world that technologies such as ‘predictive scheduling’, ‘pattern recognition’, ‘artificial intelligence’ and ‘analytics’ are cool by referring to and marketing them in a very digestible way. This is similar to the technology trend found in services such as Amazon, Pandora or Apple iTunes with their Genius music recommendation service that scans your music and then gives a list of artists you would also like. Learning in the digital realm is creeping into the physical realm.

Nest Shows That Good Design Can Get Price

No one in their right mind would ever admit that they paid $249 for a device that normally goes for one-fifth that price … that is, unless it actually made your house look better. Nest continues to get price that is unprecedented in a very competitive and established market by putting a lot of thought into the design – their reflective sides that allow the thermostat to blend with any décor, the friendly round shape with the retro but simple outer ring for control, and the ability for you to interface with it very simply from your mobile devices are getting way more praise (and income) than the industry ever expected.

Consumer Devices Require a Dedication to Customer Support

A well thought-out strategy, automating help, having a dedicated team of real people to help users, and making the installation as painless as possible through instructional videos, pre-self-certifying compatibility, and including tools (such as the screw driver included in the Nest Thermostat) are key for success. These types of strategies, along with the good design, impressed upon many media outlets the desire to write stories on this gadget. My personal experience showed how poor of a follow-up Nest did which greatly affected my opinion and recommendation of the product to others.

Thermostats Are Only the Beginning – If Nest Survives the
Honeywell Court Suit

In an act of frustration for claims Nest has made about their thermostat, Honeywell published a press release announcing their formal patent infringement suit against Nest Labs. The act seems rather childish, because their legal team did not give prior notice to Nest of their complaint, which seems to indicate that the 7 patents Honeywell lists (which includes patents such as ‘A thermostat that is round’ and ‘A thermostat that includes setup questions in plain language’) are a smokescreen for scaring Nest and to bring Honeywell back into the ‘thought leadership’ position. The sad truth is that Honeywell was blindsided by the success of the startup, and mis-judged their stodgey marketing positions that ‘consumers did not want to pay for wifi connected high-end thermostats’. The real question is what will Nest Labs cook up next: Alarm Clock, Coffee Maker, Lamp, EV Charging Station, Solar Inverter …

Nest Lab’s Approach to Home Energy Management is Through the Consumer, not the Utilities – Opening Up the Market to Everyone

Nest looked at consumer benefits primarily, not the electric Utilities’ benefits, to sell their product – which opened up the market to everyone that has an existing thermostat. This could potentially open up a secondary market for Nest to approach Utilities that have a high clustering of these thermostats. This approach is unlike many other energy management solution providers, which try to go through the Utility angle, using an electric utility’s purchasing ability to ‘rate base’ technology (chop up the cost of infrastructure and spread it like peanut butter to all their customers) for use of helping every man, woman, and child in their legal geographic monopoly*. Though there are utilities actively trying to understand how to get at and change home owner behavior to lower their electricity usage peaks, and fill their usage valleys, utilities have fragmented approaches to how to attack the opportunity. Each utility has a different opinion on what they believe the solution is in their service territory, however they all share in an uncharacteristic common pipe-dream that involves consumers buying the infrastructure themselves that then have the hooks for the utility’s to influence their usage patterns. Nest could be a dream come true.

*Most electric utilities are geographic monopolies, governed by an oversight organization usually referred to as the Public Utility Commission (PUC). There are some markets, such as in Texas and California, that have deregulated the sell of power/electricity, allowing multiple entities to be the ‘vendor of power’ to a homeowner and separate from the ‘generator of power’. In most areas in the United States, however, the former is the case.
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11 responses to “Technology and Marketing Review of the Nest Learning Thermostat

  1. I had to remove my Nest after spending time and money with my AC company to to determine that it’s battery charge behavior was cycling the outside compressor on and off rapidly when ever it needed to top off the battery. It took a few weeks to notice and get the AC guys out as we did not hear the on and off from inside since the inside fan kept running. My A/C pros determined there was deep incompatibility that the Nest website and support did not know about. So after all of that hard effort by me Nest refuses to take back the unit by hiding behind a 30-return “policy”!
    Such inflexibility is not acceptable in a company that wants to sell direct.

    Basically the company is full of itself and acts like it walks on water, pretty arrogant for a company that has been in business for 6 months.

  2. Andrew – I am so sorry to hear about your predicament. I can say I was so frustrated during my 3 weeks of trying to get the Learning Thermostat to work right … but when it finally did, it was good. The HVAC industry is rife with little gotchas like any other industry – and it sounds like you found one of the nastiest ones.

    So, if Nest won’t budge on the ‘policy’ – what you may be able to do is resell the device. I would call Nest, and see if they can at least send you replacement drywall anchors so it can be a complete set (if not BigLots/HD/Lowes has them cheap). The other option is to become a little bit of an engineer and use a separate power supply – but that may get a little tricky – your AC guys may know better whether that is even possible.

    As one of my friends who has been confronted with lots of different problems throughout her life as an executive says: “Don’t let anyone steal your joy.” I have to keep reminding myself of this, too – but sounds like good advice. Thanks for contributing Andrew.

  3. Good idea about selling it on Ebay, I’m sure there are many people who can use the thing.
    Nest has yet to respond to my request to reconsider their so i am writing Nest Labs off as a smug start-up that has a blind spot for what it will take to succeed beyond the first wave of good buzz. Nest Labs is arrogant about their limitations for a 6-month old company that has yet to prove their in-service units actually hold up to real world conditions.
    It could be a really big problem if they don’t figure out how to better profile compatibly with A/C systems for their “power stealing” approach and have a lot of customer whose systems are doing what mine did. To this day, they still show my configuration as compatible despite the reality that their product does not work in an acceptable way.
    My A/C company left a note describing how the transformer in our outside box with the compressor & fan would never work for the Nest Labs’ thermostat power stealing approach without a lot of effort to be sure, and that it was not worth the trouble as the risk is all on the HO and A/C company. It is Nest Labs’ problem and they are skating on thin ice IMHO by not addressing the problem and taking back the units sold to customers with the “1%” of 4-wire system that are not compatible.

  4. They just contacted me and have agreed to take it back. I wanted to acknowledge that Nest finally listened and did the right thing.

  5. That is great for you Andrew – and great that Nest made an exception to its policy. That is a good sign – and as we all have seen, sometimes it takes a little insistence to get done what is right.

  6. I just purchased two nests and was wondering if there was any settings for sabbath? The sensors and lights engaging pose a problem for Jews who observe the sabbath.

    • Albert – good question because I have seen other appliances such as stoves have ‘Sabbath’ settings. I have not seen a Sabbath setting in the version of Nest my family has … but you could always create a setting if it bothered you by basically setting the temp in the schedule to something high or something low to make sure it does not ‘spark’ to turn on the relay or put it in an all day override.

      My study of the Sabbath has led me down a path that takes what some may say is a more moderate or liberal approach to the kindle the fire instructions. However, I also understand that we are each personally responsible for whatever each of us decide to do … and God will be the final judge. If my liberality is incorrect, I will take responsibility for that. Have a wonderful Sabbath tomorrow Albert.

    • David Goldhaber-Gordon

      Albert, have you come up with workable solutions for this? I’m also interested, as I’m sure are many others.

      • The best solution would be a software update by Nest to address this but I don’t think we will see that anytime soon as we don’t represent a critical mass. That being said there a few things that you could do. For starters you currently have the option to set the Nest to “light up” when you touch it as oppose to when it senses movement close by. The other good thing is that the Nest uses an led type screen and not a light which has some “halachic” or Jewish law ramifications. With theses two technical details on a halachic level it is more like a regular thermostat. You also have the option to set it to away and manually set your tempature which disengages the learning mode-I think?. Although I believe the fact that it is constantly learning is not a problem on the sabbath since it is not your intention when passing it and is a rabbinic law. Further research and understanding is required. As always ask your local rabbi as they will have a better understanding on the law. I asked mine and it seems as though it should be ok as long as you disengage the light in settings. Hopefully Nest has someone who could do a quick and easy software patch that would be synced with the calendar for sabbath and holidays! Otherwise I love the Nest and beleive “smart hardware” is the future of the US economy. Best of luck and Happy Thanksgiving!

  7. You should have a look to the wifi smart thermostat of Greenmomit that is really quite something! http://www.greenmomit.es

    • Thanks Alex for your comment. Checked it out, and it appears to just be a copy cat of Nest, but with a touch screen. See Nest did a great job of actually setting themselves apart by calling it a ‘Learning Thermostat’, not just a smart one. No one really understand what smart means, anyway – because I can guarantee you that your smart is different than my smart. Just having it be a remotely controlled one is not enough to be differentiated … and with some of the newer energy saving algorithms that Nest has come up with, it seems like Momit is just playing catchup – which is fine, it’s just not the innovator – its the copycat, which is a very good business strategy, but one that lacks real innovation.

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