Google just provided 3.2 billion reasons for companies to start taking the Internet of Things seriously. But Google's blockbuster deal to acquire Nest also offers a warning that the next generation of smart, connected devices must get a whole lot smarter, and that it'll take a big investment in people and tech to get there.

Google will pay $3.2 billion for Nest, the startup maker of two everyday products -- a thermostat and a smoke detector. Nest made these humdrum products more interesting by connecting them to the Internet, analyzing data from the devices to make them more effective, and offering a mobile app interface. It's a wake-up call for execs at any product company who aren't exploring  Internet of Things opportunities.

That price tag is huge validation for the Internet of Things concept, but looking at Nest's product lineup says as much to me about what's not yet possible. And it explains why a deal with Google -- even more than Apple -- makes so much sense.

[Google isn't the only big company betting on connected devices. See CES 2014: Cisco's Internet of Everything Vision.]

One word comes up often when we start spinning Internet of Things fantasies: "automatically." We will have devices collecting data and then "automatically" making decisions and adjustments. I haven't used Nest's thermostat, but the multiple reviews I've read suggest it does what it promises. It learns how you use the thermostat and when you come and go, and automatically adjusts the temperature to cut your power bill.

But the furnace is a relatively low-stakes game when it comes to automated decisions. If my smart thermostat is wrong, and it's too cold for my tastes, I can turn it up. As long as it's not completely turn-off-the-heat-when-I'm-on-vacation-and-let-my-pipes-freeze wrong, it isn't a disaster.

Nest's smoke detectors operate in a much higher stakes realm, and they don't offer automated decision making, such as deciding whether to call the fire department when the alarm goes off. If a smoke detector is wrong and calls the fire department every time my frozen pizza drips cheese on the oven floor, we have a problem.

Google, however, is exploring these kinds of life-and-death, automated decisions with its self-driving vehicle research. If my car is wrong and slows down to 15 miles an hour on the highway, mistakenly thinking I'm about to hit a car, I (and that semi on my ass) have a very big problem.

Automated response is the Shangri-La of the Internet of Things, that place where everything truly just works. But do we trust these devices to do what they should? Google has the cash, talent, and drive to try to develop the data analytics and algorithms needed to power this kind of high stakes, automated decision making.

Chris Murphy is editor of InformationWeek magazine and Global CIO columnist on IT strategy issues. He has been covering technology leadership and strategy issues for InformationWeek since 1999.

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