Only a couple of days before his committee's hearing on data privacy, Senate Commerce Committee chair Roger Wicker headed a letter to Google CEO Sundar Pichai wanting some answers following a story in Business Insider that the company had failed to disclose that there was a microphone it its Nest Secure home security device.

Google said that not to have mentioned the mics in the devices' technical specs was an "error." The senators want to make sure that was all it was, and that there are no similar errors out there yet to be discovered.

Wicker, joined by Sens. Jerry Moran (R-Kan.), chairman of the Consumer Protection Subcommittee, and John Thune (R-S.D.), chairman of the Communications Subcommittee, want to know when Google realized the mics had not been disclosed, how it developed those specs, and more.

In the letter, the senators pointed out that there is growing concern about large tech companies "collecting and using personal data about [consumers] without their knowledge."

They said it was important that Google be "completely transparent" and provide "full disclosure," something that could well be part of general privacy legislation that both Democrats and Republicans are suggesting needs to be hammered out on online privacy.

They also pointed out that Google's chief privacy officer testified last September before the Commerce Committee that "transparency is a core value." They told Pichai that given that pledge, the failure to disclose the mic raised "serious questions" about its commitment to that value.

Even if Google was not using the mic, hackers could have activated it to record illicitly, they said, though not pointing out the irony of using a "secure" device to do so.

The senators want a half dozen questions answered by March 12 (by 5 p.m.), including whether Nests have always had mics, when and how it became aware it had failed to list it in the spec, if Google is aware of any third party having used the device for any unauthorized purpose and whether there are any other "similar omissions" in the tech specs for other Google products.

Cable veteran Marwan Fawaz has stepped down as CEO of Google’s Nest unit, becoming an executive adviser to the smart-home technology company, according to reports.

According to CNET, Nest will be combined with Google’s home devices team, and be headed by vice president of product management Rishi Chandra. Fawaz will stay on as an executive adviser to the unit.

Related: Marwan Fawaz Named CEO of Nest 

Fawaz, who served as chief technology officer at Charter Communications and Adelphia Communications for decades, joined the Google family in 2012 after the search giant purchased Motorola Mobility, heading up that company’s cable-focused Home unit until it was sold to Arris Group in 2013. After Motorola, he helped found consulting firm Sarepta Advisors before re-joining Google in 2016 as CEO of Nest, which develops devices for smart-home applications.

Related: Nest Joins Google’s Hardware Team

Google and its parent Alphabet have shaken up the Nest unit in the past. Once part of Alphabet’s “Other Bets” division along with Google Fiber, it was placed within Google’s Hardware unit earlier this year. 

Nest was founded by former Apple tech guru Tony Fadell in 2010 and was sold to Google in 2014 for $3.2 billion. The company has faced some stiff competition on the smart-home front from Amazon's Echo and Alexa products.  

"For communications companies that already have a firm stake in the home through traditional offerings such as video, broadband and voice, an unprecedented opportunity is up for grabs. As the connected home market quickly expands, blazing the trail in the emerging landscape will become increasingly non-negotiable to incumbents’ future growth and survival." —Shuvankar Roy, Comcast; and Sumit Banerjee and Abhinav Saksena, Accenture Strategy

Over the past decade, connected technologies have evolved from an abstract idea into something woven into the fabric of our everyday lives. Whether it’s switching off a forgotten light with your smartphone or jumpstarting your home’s smart entertainment systems via a simple request to Alexa, connected devices enabled via technologies such as artificial intelligence are reshaping consumer experiences as we know them. 

They’re also redefining the word ‘convenience.’ A recent Accenture Strategy study found that 56% of executives predict AI deployment will drive new growth and revenue opportunities. And nearly 6% say this revenue growth will come from increased consumer satisfaction and engagement.

Nowhere are these opportunities more apparent than in the connected home where, according to the U.S. Department of Labor, Americans spend more than half of their daily time. Today, products that once seemed futuristic are now common household items. There has been a 60% growth in smart speakers, while smart home products have increased by 41%. The future will see a collection of deeply integrated micro-ecosystems that will make the home intelligent, personalized and seamless.

For communications companies that already have a firm stake in the home through traditional offerings such as video, broadband and voice, an unprecedented opportunity is up for grabs. As the connected home market quickly expands, blazing the trail in the emerging landscape will become increasingly non-negotiable to incumbents’ future growth and survival.

Preparing for the Fight

In the fight to own the home, communications companies face an increasingly crowded and complex path ahead. Competition is fast expanding past traditional players to include Silicon Valley giants and other players looking for the next platform to reach consumers. 

A wave of recent M&A activity — such as Amazon’s acquisition of Ring — underscores that both traditional and new entrants are recognizing the major value of the connected home market, and acting accordingly. In fact, Accenture Strategy research finds that 43% of companies cited the need for next-gen technology as a trigger for their M&A as they race to win over consumers with top-of-market digital offerings.

As communications companies face multiple headwinds, including shifting customer presences and cost pressures, they must rise to the challenge and best position themselves in the fight to win. By facing barriers head-on, embracing new business models, and looking outside the four walls of their organization, communications players have a major opportunity to become the dominant and holistic service providers in consumer homes.

Confronting Challenges

To start, communications companies should recognize where they have advantages to seize — for instance, familiarity among consumers in the home space, and an existing suite of home services — and where vulnerabilities remain. For one, the connected home market differs significantly from communication providers’ core products. 

Many successful connected home products, such as Alexa and Nest Thermostat, are purchased through one-time sale — contrasting with the recurring subscription model typical of communications companies. This means communications companies will need to rethink their pricing models to reap the most benefit, while also finding ways to reduce cost-of-entry for consumers.

Another challenge facing incumbents is navigating a market built around product design and experience — features that haven’t been historically paramount to traditional communications providers’ offerings. To compete with companies such as Google and Amazon, who put product design at the core of their DNA, traditional companies need to accelerate investment in best-class product design and manufacturing, as well as transition culture and ways of working. Some companies are already making this shift in their business models — among them, Comcast, which is helping transform the video product experience with the release of X1.

In today’s day and age, companies also need to remember that they don’t always need to go it alone. In fact, doing so may prove to be a disadvantage. Instead, communications providers need to decipher how and where they want to participate in the connected home ecosystem, so they are best able to bolster traditional portfolios, bring differentiated offerings to market and reach new segments of consumers. 

Accenture Strategy research has found that nearly half (44%) of executives across industries agree the value of ecosystems lays in access to new customers. As lines blur between industries, there are also new opportunities to partner with “frenemy” companies to create new integrated experiences and put down a lasting stake in the connected home experience.

The Path to the Finish Line

In an increasingly complex and crowded industry, there are several steps communications companies can take to stay ahead of the curve and own a connected home market share:

• Form an Integrated Strategy: Evaluate new opportunities in the context of traditional products and services, with an eye toward creating integrated service offerings that allow you to both dominate the old and win in the new. Create a refreshed home services aggregation strategy that defines a path forward for both defending core services and expanding to new revenue streams through digital offerings. Create new, holistic business and pricing models that give consumers a more seamless exchange on everything from user experience, service, billing and beyond.
• Shift Focus to Design and Experience: Refocus priorities to place design and experience at the forefront of service offerings, which is necessary for keeping up with Silicon Valley rivals and emerging players.
• Redefine your Role in the Broader Home Ecosystem: Ask yourself: what role should your company play in the broader — and rapidly expanding — connected home ecosystem? What gaps remain in your company’s capabilities, and where can a digitally savvy partner create a distinct advantage? Think outside your four walls to embrace non-traditional partners, including longtime rivals, to create differentiated product offerings, expand market share and provide best-in-class experiences to consumers.
• Embrace Data: Create an analytics strategy to power the home business. Ecosystems will soon evolve from value chain partnerships, in which each entity has a specific function, to information exchanges that drive new opportunities to leverage and monetize data. Through investments in analytics combined with strategic partnerships, companies can access rich data insights that enable them to better service customers and ultimately drive growth.

As connected devices become more ingrained into consumers’ everyday lives, the connected home space has grown to be a major market opportunity, creating a fierce battleground between traditional and emerging companies alike. If incumbent communications players develop bold visions, rethink long-held business models and make strategic bets today, they can find themselves victors in the connected home race of the future.

Shuvankar Roy is vice president of business operations at Comcast; Sumit Banerjee is managing director at Accenture Strategy; and Abhinav Saksena is a former managing director at Accenture Strategy.

Fulfilling a rumor that surfaced about three months ago, Nest will indeed “join forces” with Google’s hardware team, Google confirmed today.

RELATED: Google May Bring Nest Back: Report 

The move to combine those teams comes about four years after Google acquired Nest, a maker of thermostats, cameras and other smart home equipment and software, in 2014 for $3.2 billion. Nest has been operating independently as part of the Other Bets unit of Alphabet, Google’s parent company, that also includes Google Fiber.

RELATED: Capex at Alphabet’s ‘Other Bets’ Continues to Fall

Update: The companies confirmed that Marwan Fawaz, the former cable industry vet, will remain CEO of Nest and will now report to Rick Osterloh, the head of Google hardware. In addition to leading Nest, Fawaz will also play a big role in the integration with Google's hardware team. TechCrunch reported earlier that Google doesn’t “anticipate any significant role reduction," while a Nest official told the site that the Nest brand will continue under the new structure.

In a blog post about the move, Osterloh touted Nest’s momentum, noting that it doubled its hardware portfolio last year and sold more devices in 2017 than the previous two years combined.

“To build on this momentum, we're excited to bring the Nest and Google Hardware teams together,” he wrote. “The goal is to supercharge Nest’s mission: to create a more thoughtful home, one that takes care of the people inside it and the world around it.”

RELATED: Altice USA Hawks Nest Smart Home Products

He said the combo will enable Google to continue to focus on combining hardware, software and services, with Google’s artificial intelligence and the company’s Assistant “at the core.”

“We’ve had a head start on collaborating since our teams already work closely together, and today we’re excited to make Nest an integral part of Google’s big bet on hardware,” Osterloh said.

That big bet also includes Google’s recent acquisition of a part of HTC that includes the team that worked with Google on its Android-powered Pixel smartphones.

The latest move also comes about four months Google introduced several new consumer products, including the Pixel 2, and updated model of the Daydream View mobile VR headset, and expansion to its Google Home ecosystem.

Capital spending at “Other Bets,” the unit of Alphabet containing Google Fiber, Nest and Verily, fell sharply for 2017 amid shrinking spending for fiber-fed broadband services.

Accrued capex at Other Bets was $507 million, down from $1.4 billion in 2016, “primarily reflecting a reduced investment in Fiber,” Ruth Porat, CTO of Google parent Alphabet, said Thursday on the company’s Q4 call.

That reduced investment follows the company’s decision to pause expansion of Google Fiber as it focuses on existing deployments and less expensive wireless broadband alternatives. This week, the company also confirmed that it is winding down operations of Webpass, the wireless broadband company acquired in 2016, in Boston. Other Webpass market deployments are not affected.

RELATED: Google’s Webpass Backing Out of Boston

Revenues at Other Bets for Q4 hit $409 million, up from $262 million in the year-ago quarter. The unit posted an operating loss of $916 million, narrowed from $1.08 billion.

For full-year 2017, Other Bets revenues were $1.2 billion, up 49%, driven by Nest, Fiber and Verily, while the operating loss for 201 was $3.4 billion, trimmed slightly from a loss of $3.6 billion in 2016.

Porat noted that Nest “turned in a strong holiday performance,” with Nest products also becoming available in 12 new countries in 2017, more than double the number from 2016.

Turning to YouTube TV, Google did not announce a subscriber figure (a CNBC report puts it at about 300,000). But Sundar Pichai, Google’s CEO, talked up YouTube TV new multi-year partnership with Major League Soccer’s LA Football Club.  

YouTube TV is on board as the “Official Live TV Partner” and “official Video Partner” of the club, and will be the exclusive home for all locally televised English-language LAFC matches. YouTube TV will also carry the team’s nationally televised matches on ESPN, Fox and FS1. LAFC jerseys will also don the YouTube TV logo.

In addition to showing locally televised LAFC matches on a designated YouTube TV channel (they will be geo-fenced and offered only in the L.A. market), the broadcasts will also feature a 30-minute pre- and post-game show from the YouTube TV Studio set at Banc of California Stadium.

Turning to Google’s hardware business, Pichai said device shipments in Q4 more than doubled year-over-year, and that the company sold “tens of millions” of products such as Google Home, the Google Home Mini, Google Home Max and Chromecast streaming adapters in 2017.

YouTube this week also expanded its YouTube Go app to more than 130 countries. That offering lets users download and view videos (and share them with others using device-to-device links) when there is a limited or slow data connection. This video offers more detail about that offering: 

Google is considering combining Nest Labs with its hardware team, a move that could aid it in its fight against Amazon and its rival’s lineup of smart home products, The Wall Street Journal reported.

Google acquired Nest in 2014 for $3.2 billion. Nest is currently operating independently as part of the Other Bets unit of Alphabet, Google’s parent company. Other Bets, a unit that also includes Google Fiber, posted Q3 2017 revenues of $302 million, up from $197 million a year earlier, and an operating loss of $812 million, narrowed from $861 million.

Google declined to comment on the WSJ story.

Nest is now led by Marwan Fawaz, a former cable industry vet who also headed up Motorola Home before it was sold to Arris in 2013.

Nest, a maker of thermostats, cameras, doorbells and other smart home products, recently inked a deal with Altice USA. Google also makes its own line of smart home products, including an expanding group of Google Home products and models hat help it to match up against the Echo, Echo Dot and other Alexa-powered smart home gear from Amazon.

RELATED: Altice USA Hawks Nest Smart Home Products

The WSJ said combining Nest and its 1,000 employees “would market a retrenchment of Alphabet’s strategy to separate its core Google internet business from a number of other units, such as its research lab and life-sciences firm.”

Combining Nest with Google’s hardware business would bring more unification with respect to the company’s smart home products and how they are marketed and sold.

WSJ also pointed out that many of Nest’s products already work with Google’s and Amazon’s A.I. platforms, and that Alphabet had also combined the supply-chain teams of Google and Nest last year.

Pushing more deeply into the smart home market, Altice USA announced that it is selling connected home products from Nest to its Optimum (former Cablevision Systems) and Suddenlink customers.

Billing itself as a “one-stop shop” for Optimum and Suddenlink customers who want a simplified connected home experience, Altice will sell several Nest products, including its Learning Thermostat, Thermostat E, Nest Protect smoke and CO alarm, and a range of Nest Cams.

Altice USA is already selling Nest products at select Optimum and Suddenlink retail stores, and expects to offer them across its other sales channels, including online and by phone.  Customers who buy Nest products through Altice USA will also have access to a professional installation option from the operator’s Premier Installation and Support Service.

RELATED: Altice USA Pitches Premium Service Products

Altice USA is currently selling Nest products in select Optimum and Suddenlink retail stores, with plans to offer Nest’s products to all customers across its sales channels, including all stores as well as online and by phone.

Altice USA said it also plans to offer Nest Aware, a subscription service that provides alerts and 24/7 continuous video recording for Nest Cam users.

The agreement represents a new, direct cable operator deal for Nest, which has also integrated some of its products with Comcast’s Xfinity Home platform. Nest, part of the “other bets” unit of Alphabet, Google’s parent company, is led by cable industry vet Marwan Fawaz.

RELATED: Marwan Fawaz Named CEO of Nest

Suddenlink also offers smart home and security services via a partnership with Alarm.com that was formed prior to Altice’s acquisition of Suddenlink in December 2015. Altice USA has been asked if the new Nest agreement will have any effect on that offering, though, at last check, Suddenlink’s web site for its Connected Home product appears to be alive and well.

UPDATE:Altice confirmed that Suddenlink continues to offer the Connected Home product. 

RELATED: Alarm.com At Home With Suddenlink

“Altice USA is focused on providing our customers with the services and solutions that support their full digital lifestyles, and offering Nest products is our next step in delivering a more robust and differentiated product set to enable the smart home experience and meet even more of consumers’ connectivity needs,” Dexter Goei, Altice USA’s chairman and CEO, said in a statement. “We are excited to be working with Nest as we continue to reinvent and simplify the connected home experience for all of our customers - now and in the future.”

Nest employees are probably breathing a sigh of relief after reportedly receiving word from new CEO (and long-time cable industry vet) Marwan Fawaz that the Google-owned smart home unit is not on the block.

“My only agenda for Nest is to scale and grow with innovative products. Nest is not for sale, and scaling and innovation aren’t mutually exclusive,” Fawaz told Nest employees in a memo obtained by The Verge, which noted that an Alphabet source also told the online pub that “Nest is categorically not for sale.”

So, there.

But it’s easy to see why some might think that Fawaz’s appointment could lead to a sale (I’d be lying if I said that thought didn’t enter my head, too).

After all, Fawaz’s big focus after taking the helm of Motorola Home in June 2012 was to find a buyer. And he succeeded -- Arris acquired Motorola Home from Google in 2013 for $2.35 billion, the high end of the expected range.

Per the memo obtained by The Verge, Fawaz also noted that there’s no change in Nest’s strategy and direction, as the plan is to focus on the product roadmap, which included a reference to a new product that was redacted from the copy shared with The Verge.

So, what is Fawaz’s plan? Nest turned down our first request to speak to him, telling us he’s unavailable for the time being, so we’ll have to keep at it.

In the meantime, I’m not surprised that, unlike the situation at Motorola Home, Fawaz is not joining Nest to sell it off. Google paid handsomely for Nest and the smart home and larger Internet of Things are all part of the plan. Plus, Nest has lots of brand equity.

Though retail will probably remain part of Nest’s focus, Fawaz’s value to the company also includes his deep ties into the cable MSOs and other types of service providers, including many that have smart home products and direct relationships with millions of customers that Nest, as a partner, could benefit from. Those deals could perhaps offer the path with least resistance to the kind of growth and scale that Nest desires. 

And Nest has already started down that path. Nest’s Learning Thermostat now works with Xfinity Home, Comcast’s smart home platform, as well as with Icontrol’s “PEQ” retail product also works with Nest's smart thermostat. Icontrol also works with Bright House Networks, Time Warner Cable (now part of Charter Communications) and Cox Communications, but has not yet detailed if its Nest integration will be extended to the platform in use by those service provider partners.

Additionally, Sage, the DIY retail smart home/security service from EchoStar Technologies (the technology-focused corporate cousin of Dish Network), currently supports Nest products, including security cameras, smoke and carbon monoxide alarms and the Learning Thermostat.  Sage remains a retail play, but I also won’t be surprised if it also becomes a platform that will eventually be integrated with  and sold by Dish.

Marwan Fawaz, a long-time cable and tech industry exec, has been named CEO of Nest, the Google-owned maker of an iconic smart thermostat and other smart home products.

Nest’s original CEO and founder Tony Fadell shared that news by announcing Friday on the Nest blog that he was leaving the company more than two years after it was sold to Google for $3.2 billion.

Calling the news “bittersweet,” Fadell said “I have decided that the time is right to ‘leave the Nest,’” noting that revenues at the smart home company have grown in excess of 50% year-over-year, and that “millions” of people now use Next products in 190 countries. He also said the third-gen Nest Learning Thermostat sold 1 million units in half the time of its previous generation.

Nest is part of the “Other Bets” unit at Alphabet (Google’s new parent company) that also includes Google Fiber, self-driving cars, Verily (formerly Google Life Sciences), GV (formerly Google Ventures) and Google Capital X.  That division generated revenues of $166 million in Q1 2016, up from $80 million in the year-ago period.

Nest pulled down $340 million in sales last year, aided by sales from its acquisition of Dropcam, but still a figure that fell short of Google’s initial expectations, according to Recode.

“Although this news may feel sudden to some, this transition has been in progress since late last year and while I won’t be present day to day at Nest, I’ll remain involved in my new capacity as an advisor to Alphabet [Google’s parent company] and Larry Page,” Fadell wrote. “This will give me the time and flexibility to pursue new opportunities to create and disrupt other industries – and to support others who want to do the same – just as we’ve done at Nest. We should all be disrupters!”

Fawaz, Nest’s new CEO, has strong ties to Google as well as to the cable industry and technology vendor community.

Fawaz, a founder and principal of consulting firm Sarepta Advisors and recently-named to the 50th anniversary class of Cable TV Pioneers,was in charge of Motorola Home before Google sold it to Arris in 2013. Notably, Motorola Mobility expanded its reach into the connected home market in 2010 when it snapped up a startup called 4Home.

Of recent note, Fawaz was appointed to the board of billing and customer care company CSG International, and has been serving on the board of Synacor and as an advisory board member of ADT, Liberty Global and Guavus, a big data firm.

Update: Per his Linked In profile, Fawaz is the technical advisory board chair at ADT, a top company in the home security and automation sector. 

Fawaz is also a former CTO of Charter Communications and Adelphia Communications (sold to Comcast and Time Warner in 2005), and served as an engineering exec at MediaOne (now part of Comcast). He also served as an investment analyst at Paul Allen's Vulcan Inc.

“Marwan’s extensive technology and engineering knowledge, his experience with global service providers, as well as his background in connected home platforms will be valuable in continuing our trajectory, especially in scaling the business, working with our partners, and supporting our enterprise channels,” Fadell wrote. “I have no doubt that the company will continue to flourish under his guidance and can’t wait to see the innovations currently in development brought to market.”

Comcast’s flurry of technology and service announcements this week at INTX also included what’s on the horizon for Xfinity Home, the MSO’s home security and automation platform.

Xfinity Home is about to get a big facelift in the form of a new software platform that will run a variety next-gen products developed by Comcast alongside integrations with a batch of third-party devices, including Nest, the popular smart thermostat that’s now part of the Google empire.

Amplifying a broader strategy that’s well underway in which Comcast is developing and designing its own consumer products such as set-top boxes, gateways and remote controls, the MSO showed off a suite of internally developed Xfinity Home products, including smart thermostats, indoor/outdoor cameras with night vision, sensors, and a revamped touchscreen controller (see picture above). Some of those products will feature the same low-power E Ink Corp. technology used in Amazon’s latest line of Kindle e-readers.

Comcast has not announced when it will launch the new products, but they will be made to support a range of wireless connectivity protocols, including WiFi, Zigbee and Bluetooth, according to an exec who was demoing the products.

Comcast also announced that it will open up Xfinity Home to a broad set of device partners, noting that the MSO later this year will release a software development kit (SDK) and a “Works with Xfinity Home” certification program.

This week, the company announced several partners, including August, a maker of smart locks and car adapters (Comcast Ventures is an investor); Cuff (smart jewelry); Leeo (maker of a connected nighlight); Lutron (dimmers, remote controls and battery-powered shade); Rachio (sprinkler controllers); Automatic Labs (car adapters); SkyBell (video doorbells); and Whistle (pet monitors).

Comcast is  separately developing an integration with Nest Labs through the Works with Nest program.

“We want to help people unlock the potential of their smart home,” Dan Herscovici, SVP and GM of Xfinity Home, said, in a statement. “Whether it’s through the television, an app or a voice command, we’re giving customers one easy-to-use experience to control all their favorite devices, seamlessly on the same platform.”

A Comcast official said the MSO’s relationship with Icontrol, its original Xfinity Home technology partner, is unchanged.

However, the coming SDK, an exec at the Comcast booth explained, will established a broader, “super set” platform that will encompass Icontrol, Comcast’s new internally-developed products, and its grander third-party integration initiative.

Comcast’s Xfinity Home is evolving as the platform starts to scale up. Speaking on the company’s first quarter conference call on Monday (May 4), Comcast Cable president and CEO Neil Smit said Xfinity Home has more than 500,000 customers.

“That business is really starting to catch on,” Smit said.

Icontrol Networks, the home automation and security platform company that’s working with several major MSOs, said it has integrated its OpenHome platform with the Nest Learning Thermostat, the smart home product that is now part of the Google empire.

Icontrol said the tie-up with Nest is currently offered through the Icontrol-powered PEQ home automation system, a retail product that was launched earlier this year by SmartHome Ventures, a startup led by former Charter Communications exec Ted Schremp.

Icontrol said PEQ customers will be able to access and control their Nest Learning Thermostat via the same interface that can monitor and control door locks, lighting controls and video cameras that run on OpenHome, which uses a customized version of the Android operating system. Google, the company behind Android, bought Nest early this year in a $3.2 billion cash deal.

Icontrol, which claims to be currently managing more than 26 million sensors and devices, said it couldn’t comment on any plans in the works to extend its Nest integration to the Icontrol platform that has been rolled out by several cable operators, including Comcast, Bright House Networks, Tim Warner Cable and Cox Communications, among others.

But Icontrol said in a statement that it “recognizes that interoperability is key to successful mass market adoption of the smart home.”