Why Google is investing $ 450 million in home security company ADT
In early August, Bloomberg announced on the deal – Google, a member of the Alphabet holding, will buy a 6.6% stake in ADT for $ 450 million. ADT is developing home security systems. Why Google? Let’s figure it out in our new article.
What is ADT
ADT is based in Florida. Although not very well known, it is the largest home security tool manufacturer in the United States. ADT employs more than 20 thousand people, more than 6 million customers use the company’s products.
The company’s shares are traded on the NYSE. After the announcement of the deal with Google, the stock soared 57%.
Why Google needs a deal
In 2014, Google bought smart thermostat manufacturers Nest for $ 3.2 billion. Over the years, this division has taken a leading position in the market for manufacturers of thermostats, fire alarms and smart locks. In home security, Nest has about 40% of the market, while Amazon, which makes Ring systems and Alexa, has a 35% share.
Google plans to use ADT technology and the company’s power to improve and distribute its smart home systems. The company competes in this market with Amazon and Apple, but it does not have an offline store network (Apple Store) or its own online marketplace.
The partnership with ADT will allow Google to take a step forward in the market. Previously, ADT home security systems could use voice assistants of any company, but now Google products will be given priority. As part of the deal, the company will become the second largest investor in ADT.
ADT CEO Jim DeVries commented on the future collaboration: “The company will integrate Amazon Alexa into its products if requested by customers, but in the hardware categories where Google products are presented, this company will be the exclusive partner.”
Also, companies plan to differentiate themselves from competitors through additional investments in marketing when they achieve certain KPIs. For example, Amazon’s Ring security system is often criticized for working too closely with the police – the company provides law enforcement officers with recordings from their cameras. ADT chief Jim DeWray said that his company has no plans to enter into contracts with the police and will not provide police officers with access to the recordings from the cameras.
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