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Google's Nest to Acquire Dropcam for $555 Million: Two Ancillary Plays

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Google is upping its bet on the "Internet of Things."

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On Friday (June 20), smart thermostat company Nest (owned by Google (NASDAQ:GOOG)) announced that it is acquiring Dropcam, which makes home-monitoring cameras. Recode.net is reporting that the price tag is $555 million in cash.

The theme is obvious -- Google is upping its bet on the "Internet of Things," a.k.a. attaching the Internet to basically everything. (I just joined it myself with a Fitbit scale.)

Dropcam fits in here because it doesn't just make cameras; it also has a cloud storage service to archive video footage, which reduces the risk of commoditization and increases customer stickiness.

In its blog post, Nest insists that privacy (always a question with Google) won't be an issue. Data will not be shared with anyone (including Google) without the user's permission, and ads are not part of Nest and Dropcam's business strategy.

In terms of ancillary plays, GoPro and Ambarella (NASDAQ:AMBA) may benefit from this deal.

GoPro isn't yet public, but it makes action and sports cameras with a heavy Internet and social media bent. Its IPO is scheduled for Thursday. 

And Ambarella makes camera modules for security and consumer cameras, including GoPro and Dropcam models.

Twitter: @MichaelComeau
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No positions in stocks mentioned.
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