Nest generated about $340 million in sales last year, according to three people with knowledge of the matter. That's an impressive figure for a company in the very nascent market of Internet-connected devices.
But it's below the initial expectations Google had set for Nest when it bought the startup in 2014 for a whopping $3.2 billion. The company's sales performance may face even deeper scrutiny inside Google's new parent company, Alphabet, where Nest now sits, as the hardware maker faces its most critical year ever.
Nest's plight is a far cry from two years ago when it was brought on as Google's biggest acquisition ever as a vehicle to compete with Apple in the growing smart home market. Google also brought on CEO Tony Fadell, a former Apple exec, to inject Google with Apple's hardware sensibility. But now it's future is up in the air as it's clearly fallen short of those lofty expectations.