Navigant Research Blog

Tropos Acquisition Puts ABB in the Middle of the Field Area Network Battle

Bob Gohn — June 4, 2012

ABB picked up another dance partner with the planned acquisition of Tropos Networks, a leader in standards-based 802.11 Wi-Fi and WiMAX for smart grid applications.  This is the latest in a spree of major and minor ABB acquisitions, with the most recent big one being January’s announcement that ABB would acquire Thomas & Betts for $3.9 billon.  Certainly Tropos Networks, with somewhere around 50 people, counts in ABB’s “minor” acquisition tally.  But it is significant nonetheless, as ABB is jumping into the communications market while its other smart grid buys have focused on software and analytics (Ventyx, Obvient Strategies) or expansion of power infrastructure and equipment (such as Powercorp).

ABB is no stranger to smart grid communications, with leadership in IEC 61850 standards for substation automation and a popular line of communications gateways.  However, ABB has been largely agnostic on actual communications technologies.  Tropos now puts ABB in the middle of the Field Area Network battle, a crowded segment with many private / public / wired / wireless offerings from a plethora of large and small vendors.  Tropos has had respectable success with Wi-Fi based mesh networks for distribution automation, AMI backhaul, and other smart grid applications, but like others, has found breakaway success elusive.

One of the key assertions of smart grid technology adoption is an evolution from vertically integrated application silos (including communications) toward horizontal multi-layer networks supporting multiple applications.  Yet this acquisition could be viewed another vertical element to ABB’s distribution and substation automation solutions.  And ABB would not be alone, as GE continues to talk about WiMAX field networks, S&C continues to develop its SpeedNet technology, and Cooper Industries (soon to be Eaton) picked up Eka Systems not long ago.  Does this portend a continuing mish-mash of grid communications?

We think the answer is a little yes and little no.  Utility business models still favor projects that have fully self-contained ROIs, making more general multi-application investments in grid infrastructure difficult to justify.  This makes the job of broader communications companies such as Cisco, Trilliant, and Silver Spring Networks (outside of AMI) that much harder.  Yet as each of these solutions adopts IP standards, which is happening though with frustratingly varying degrees, interconnectivity into viable “networks of networks” become more possible, and the benefits of a layered multi-service network can be realized.

Getting back to ABB and Tropos, there are likely other good business drivers for the acquisition outside of smart grid, as there are other industrial automation, transportation, and mining applications where the Tropos solution can help.  And Tropos, whose major strength is in North America, can help expand ABB’s footprint as well.

Naturally, other independent vendors of grid communications technology, including Trilliant, FreeWave Technologies, On-Ramp Wireless, and Silver Spring Networks, are certainly watching and wondering if one of the other grid infrastructure vendors might ask them to dance. Fortunately for them, the music is still playing.

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