[Updated Jun 24] — Nest Labs is buying Dropcam for $555 million, and will integrate Dropcam’s Linux-based surveillance cameras into its own Linux-based home automation system.

Nest’s deal to acquire Dropcam for $555 million was revealed by Recode and confirmed in a Nest blog post by co-founder Matt Rogers. The acquisition follows Nest’s own acquisition by Google for $3.2 billion, announced back in January.

The home surveillance company’s Linux-based cameras will be integrated within Nest’s own Linux-based product line, including a smart thermostat and smoke detector (see farther below). The Dropcam team will move from San Francisco to Nest’s offices in Palo Alto.

Dropcam (left) and Dropcam Pro
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According to Rogers, consumers of Dropcam products will be protected by Nest’s strict privacy policy, which promises to keep user data private, including a provision that Google won’t see the data, either. Still, some consumers may feel more wary about sharing their home videos with a Google-owned company than sharing their thermostat settings.

According to Recode, Dropcam has raised $48 million from investors, and recently hired Apple’s Andy Hodge, who had previously worked with members of the Nest team on the original iPod as a product leader. Dropcam is said to be the top-selling security camera on Amazon. It’s also a video cloud storage company. Some 39 percent of its customers store their videos on Dropcam’s cloud servers.

Dropcam sells a $149 Dropcam camera and a $199 Dropcam Pro, each based on embedded Linux. It recently announced a $29 Dropcam Tab device that provides motion sensing. The WiFi-enabled cameras send encrypted video to Dropcam’s cloud servers, which then stream video for free to a mobile Android or iOS app. Video storage in the cloud starts at $99 per year. The devices also enable two-way talk with remote mobile users via the cameras.

The Dropcam cameras provide a remote zoom feature, infrared night vision sensing, and intelligent alerts. Camera scheduling features include the ability to automatically turn cameras on and off dependent on your location. Video streams can also be shared with others.

The Dropcam provides a 107° field of view and 4x zoom, with “good” low light vision and “solid” audio quality. The Dropcam Pro moves up to 130° field of view, 8x zoom, “excellent” low light vision, and “superior” audio, says Dropcam.

According to an Oct. 2013 Anandtech comparison of the Dropcam Pro with the older Dropcam HD, the Pro has a six-element glass lens, a large 1/3-inch Aptina sensor with up to 1080p resolution, and dual-band WiFi and Bluetooth 3.0 LE. The largely favorable report faults the device for not enabling local storage of video. Other reviews have noted the lack of pan and tilt support, which is offered by other home surveillance camera hubs such as iControl’s (formerly Blacksumac’s) Piper.

 
Nest Protect back on shelves after recall

Nest Labs sells two Linux-based products: the Nest Learning Thermostat and the Nest Protect Smoke + CO Alarm. Nest got off to a rocky start in its new Google incarnation when the Nest Protect was recalled several months ago for safety concerns. Last week, the company re-released the Nest Protect in new units that deactivate a feature called Nest Wave, which lets users temporarily silence the alarm by waving their hands. The device was picking up too many false positives.

Nest Learning Thermostat
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Nest Protect Smoke + CO Alarm
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Nest is working on a fix and hopes to reactivate the feature, which was one of its chief selling points. Meanwhile, the company dropped the price of the Nest Protect to $99.

Quirky Wink (click to enlarge)

Presumably, the Dropcam and Nest products will communicate with one another and be available from a single mobile app. The acquisition is another indication that the home automation market is picking up. Today, Quirky announced a Linux-based home automation hub and mobile app called Wink.