Romain Dillet for TechCrunch:
Google will keep the Nest group intact inside the company. The new division will still work on hardware devices, but not necessarily thermostats or smoke detectors. In fact, Google would like Fadell to work on gadgets that make more sense for the company. Will it be a phone or a tablet? It’s unclear for now. link
In case you doubted that the Nest purchase was an acqui-hire to bring in a talented and well-regarded design and management team, this pretty much clarifies it.