As mentioned in an earlier post by my colleague Eric Bloom, last week Cisco began to clarify how its corporate restructuring – “refocusing on core businesses” – would impact its initiatives in energy management and smart grid. Eric discussed the commercial building energy management impact. Let’s take a brief look at home energy management and smart grid.
Laura Ipsen, Cisco’s Senior Vice President & General Manager for Smart Grid explained in a blog post, “…we will transition our focus from creating premise energy management devices to using the network as the platform for supporting innovative applications and architectures.” Translation: Cisco is backing away from the energy-specific Home Area Network (HAN), at least in terms of specific devices and associated management software. This follows a number of field trials, a significant partnership with Control4 announced just five months ago, and some ambitious utility-focused management software. All this effectively goes away.
Why back away now? Cisco could be seen as just the latest big-name tech company jumping off the home energy bandwagon, following Google (PowerMeter) and Microsoft (Hohm). Certainly, the factors driving Cisco’s biggest headcount reduction in its history is not a recipe for patience in the uncertain home energy market. The bottom line however, which may be of small comfort to Cisco’s HAN competitors, is a profitable business case in home energy management, and the industry policies needed to enable such a case, just are not clear enough.
Note this is not the smart grid capitulation that some in the industry have been whispering since Cisco announced its refocusing plans. Cisco remains active in the grid and, specifically with its impressive work with Itron, remains on track. Certainly, its initial grandiose pronouncements are now further humbled, but assuming Cisco stays in the home via Linksys and former Scientific Atlanta devices, they can still do what I always thought they would do: add home energy management as “just another feature” in these devices as the market develops.
This move by Cisco further proves one of my favorite business observations: bigger is not always better. Many buyers, especially utilities, tend to think that working with established vendors is always a safer choice compared to smaller companies. The fact is larger companies often have less resources and patience for emerging technologies than smaller companies that have bet the farm on a given application. The difference is not unlike the old adage about the contributions of chickens and pigs to an eggs and bacon breakfast: the chicken is involved, but the pig is committed.
Vendors focused on home energy management, such as Control4, Ecofactor, Energate, EnergyHub, and Tendril, may feel they’ve been called pigs now that Cisco has joined fellow market-makers Google and Microsoft in declaring their market not worth making. But utilities – especially those now under pressure to prove their smart meter investments will pay dividends for consumers – need to recognize the pigs are the ones truly committed to what is hoped to be a HAN feast.
Tags: Building Systems, Energy Efficient Buildings, Energy Management, Smart Buildings Practice, Smart Energy Home, Smart Grid Practice, Smart Industry Practice, Smart Meter
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