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Nest’s Google Tie-Up Signals Hardware is Still Hard

Nest Labs’s decision to sell to Google rather than build its business alone should be a cautionary tale for the technology industry’s flood of hardware hopefuls.

Of course, the $3.2 billion acquisition price is a generous amount for the three-year-old startup, which makes thermostats and smoke detectors that can be controlled through mobile phones. A deal this size is likely to encourage teams of talented hardware engineers and investors looking for an eventual sale.

But for those who aspire to build big standalone businesses, including Jawbone, which makes wearable devices and speakers, and camera maker GoPro, the move should raise some concerns.

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Nest and the other companies declined to comment or didn’t respond to requests for comment.

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What’s striking about Nest’s change of course is that the company had more advantages than most hardware startups.