Nest partners with about a dozen utility companies to manage the energy use of some customers, according to Forbes. One competitor, Honeywell, also has 60 partnerships in place with utility companies. Nest founder Tony Fadell says eventually, revenue from such services will outpace hardware sales. “We’ll get more and more services revenue because the hardware sits on the wall for a decade,” he told the magazine.
The scope of these partnerships varies from company to company. In some instances, customers are paid $30 to $50 a year by the utility companies in exchange for the ability to turn down the air conditioning on hot days while other deals have Nest splitting the cost savings with its partners. Nest says its algorithms can lower energy usage during peak times by 50% to 60%.