Nest unveils Thermostat E with a new design, a simpler interface, lower $169 price, and almost all the same features, shipping tomorrow
Nest is debuting a new version of its thermostat today, the first truly different model since the product was introduced in 2011.
Context & Ripple Effects
The Thermostat E closes a loop that opened earlier this year: Bloomberg reported in March that Nest was working on a cheaper sub-$200 thermostat alongside an alarm system and doorbell, and an alleged press render of the redesigned device leaked just weeks before today's announcement. The reveal confirms both threads — the first genuinely different design since the original 2011 launch, priced at $169 against the $249 third-generation flagship.
The timing matters because Nest's finances were under strain: Alphabet's one-time accounting disclosure showed $726M in revenue against a $621M operating loss for 2017. A second SKU at a lower price point is the visible move to widen the funnel without abandoning the premium tier.
First-order effects
- Buyers get almost the full feature set of the third-generation thermostat for $80 less, with tomorrow's shipping date meaning the choice between $169 E and $249 premium lands on store shelves immediately.
- Nest now runs a two-tier thermostat lineup for the first time, splitting its single-product brand into a price ladder.
Second-order effects
- Rivals in the smart thermostat market face a sub-$200 incumbent with Nest's brand recognition, pressuring their own mid-tier pricing.
- The lower entry price feeds the accessory business — the $39 Temperature Sensor and other add-ons announced the following spring attach to a larger installed base than the $249-only lineup could build.
Third-order effects
- The pattern holds through 2020, when Google's Nest pushed further downmarket with a $130 dial-free model — evidence that the smart thermostat was settling into consumer-electronics-style tiered pricing rather than staying a premium gadget category.
- For Alphabet, cheaper hardware points toward monetizing the connected home through ecosystem lock-in and services rather than device margin, consistent with the unit's later absorption into Google's home devices organization.
The trend: Smart home hardware is migrating from single premium flagships to tiered, mass-market price ladders, with vendors trading device margin for installed-base scale.