At this year's Google I/O, Google finally outed something a lot of people had seen as sorely missing from their portfolio - an AI powered smart home hub in the vein of the Amazon Echo, powered by their new Assistant technology, no less. While Nest has had its fair share of trouble and even seen the CEO it had upon entering the Alphabet fold part ways with the company, they are still supposed to be handling Google's hardware products for them. So, why did Google choose to manufacture Home on their own, rather than having Nest handle it or at least help? The question is exacerbated by the fact that Google is actively working with Nest to integrate Home with their products.
The answer is that Google needed the hardware and software to jive perfectly together. While some deride Apple for it and say it's the reason they cling to Android, Google could not afford to open up Home or have somebody else handle it, for the simple fact that such a product, by definition, needs to be completely perfect, appearing to function with zero bugs whatsoever. Anything else, in a consumer's eyes, breaks the futurist illusion and is seen as the mark of a subpar product. While that is the long and short of it, it's not the entire story.
Essentially, the reason that Google is working on Home internally is because the same software people that create products like Search, Assistant, Now and Voice Recognition, and the same people that program their neural networks for machine learning, will be the ones integrating those same products into Home. Rather than shoehorning the products to work with Home, as Amazon is allowing third parties to do with Alexa Skills, Google wants to shape Home around those products, making it the perfect, end-all-be-all portal to their services. While it's far too early to say whether this approach has paid off for them, since Home has yet to hit the market, it will be interesting to see exactly what happens when Google clamps down hard on the software and hardware end of things in home automation and AI the same way they did with the Pixel C and Chromebook Pixel lineup. Those products had their share of issues, but ultimately represented the tightest, clearest and most accurate vision of a Google experience in the real world.