Nest Labs, a maker of digital thermostats, announced Friday evening that it planned to buy another fast-growing producer of home devices, Dropcam, for $555 million in cash.
The deal is another sign of the industry optimism that the emerging market for Internet-connected smart devices in the home is poised for rapid growth. The most striking sign of such enthusiasm is Nest itself, which Google bought this year for $3.2 billion.
In a brief interview, Matt Rogers, co-founder of Nest, said, “This is a Nest Labs deal, not a Google deal.”
Until the acquisition is formally approved, Mr. Rogers said, he could not comment on the longer-term plans for Nest and Dropcam. But he said the two companies shared very similar philosophies toward product development as well as an emphasis on making home gadgets easy to use for consumers.
Dropcam’s Internet-connected video cameras are a leading product in the home market, just as Nest has been the breakthrough product in thermostats.
In a recent interview, Jeff Epstein, vice president for home automation products at Home Depot, said that the recent growth in the smart home sector had been fueled by innovative entries in product categories that show consumers the benefits. He specifically mentioned Nest in digital thermostats, and Dropcam in connected video cameras.
But the Nest and Dropcam products, in different ways, are high-tech sensors that monitor the activity of people in homes, which is potentially sensitive data. Mr. Rogers emphasized that “Dropcam data will not be shared with Google or any third party.”
In blog post explaining the acquisition, Mr. Rogers wrote, “Eventually, the plan is for us to work together to reinvent products that will help shape the future of the conscious home and bring our shared vision to more and more people around the world.”
“For now though,” he added, “not much will change. Dropcam products will still be sold online and in stores. And Dropcam customers will still continue to use their Dropcam accounts.”