What's potentially at stake here is more than just a few points of market share for Honeywell. The Nest's ability to capture the interest of a major retailer like Best Buy (BBY), where the product is sold -- and which is also named in Honeywell's filing -- suggests the diversification of a market that has long been stagnant, if only by taking into account the younger demographic of Best Buy's shoppers. "This is an underserved and unloved market," Fadell told me when we spoke in November. "The thermostat business is big." (It is not clear what portion of Honeywell's revenues come from such devices.)
The belt-tightening caused by the dragging economy has also made a smart thermostat much more compelling. Instead of doing large-scale remodels, homeowners are opting to make simpler modifications to upgrade their homes, like trying out a new device, Delaney says.
So in the end, it comes down to the bottom line, and Cote knows this better than anyone. "Everybody's in favor of energy efficiency on a survey," he said in that January meeting. "But when it's their own money, they think of it in a different way." He has also stated in the past that if everyone aggressively used existing Honeywell products, the United States' annual energy bill would be cut by up to a quarter. For Honeywell, certainly the Nest is one obstacle getting in the way.
