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The Good News and Bad News about Cisco’s Smart Grid Strategy By Jesse Berst Jul 15, 2010 - 11:25:30 AM
. In separate stories, we’ve described how Cisco’s home energy management initiative reveals the underpinnings of the grid’s first operating system. And how Microsoft’s bureaucratic stupidity caused it to miss this billion-dollar opportunity.
I want to use this space to discuss the good and bad aspects of Cisco’s Smart Grid strategy from the utility point of view. Remember, I'm talking here about Cisco's strategy, not about its current offerings, which still fall far short of the company’s long-term goals.
Let’s Start with the Good News
There is a lot to like about the idea of a standard operating system for the grid. For instance:
· A target for developers. Just like Windows developers or iPhone developers, grid developers will soon have a target platform. This is good news for the productivity of internal and external programmers alike.
· A utility-centric target. Cisco believes a market will eventually emerge for consumer products at retail. For now, however, it believes the Smart Grid will emerge via utilities, and it is building its "innovation platform" with that in mind.
· A converged target. Cisco will work hard to merge the worlds of utility IT and utility operations. Soon they will both be able to use the same tools and work with the same data.
· A certified target. Cisco will certify third-party devices (thermostats, load control switches, smart plugs) to guarantee that they will work seamlessly within its ecosystem.
· A secure, managed target. Cisco's robust security and network management will underlie every part.
· A scalable target. In telecommunications, Internet, cable and elsewhere, Cisco has proven that it can handle massive amounts of data and traffic.
· A standards-based target. Over the years, Cisco has gotten adept at managing the standards process and quickly plugging new standards into its products. (Rivals might say manipulating the standards process.)
· A "socialized" target. Cisco is very good at influencing policy makers, regulators and consumers. It will work hard (and spend millions) to help the Smart Grid get the support it needs with all constituencies.
There’s Bad News Too
I see things to worry about as well:
· High cost. Cisco is quoting $900 per household, which includes the home energy controller and the cloud services. It does not include the truck rolling out to install the gear and get it running. Nor the ongoing maintenance. To be fair, that's the quoted price for small-quantity pilots, not the actual negotiated price for large-scale deployments. Even so, it is a far cry from the $150 all-in price utilities need.
· Lack of competition. Right now, Cisco is the only company that is even promising an end-to-end platform. We’ll all be better off (even Cisco) when there’s choice and competition.
· Hidden lock-ins. As presented to analysts, the Cisco system requires you to use the Cisco home energy controller and the Cisco cloud services. That’s okay for pilots, I guess, but before I deployed to my full customer base, I’d want the ability to swap in alternatives.
· Lack of a low-end solution. Cisco is very upfront that it is starting at the high end with its dedicated controller. It will later offer lower-cost alternatives for Web portals, smartphones and something it describes as a “black-and-white refrigerator magnet.” Again, that’s okay for a pilot. But when a utility rolls out, it will need a solution that embraces low-income households too.
· Unproven ease-of-use. The typical Cisco user interface looks like something from the old Soviet Union, only clunkier. They claim they are getting better. Even so, trusting Cisco to design consumer electronics is like trusting a plumber to design bridal gowns.
· Cloud computing only. Cisco insists on a hosted, outsourced solution. It doesn’t offer a version utilities can host in their own shop. I realize the world is gradually moving to cloud computing. But utilities want (and deserve) to migrate at their own pace. It’s tough to picture large utilities handing over millions of customers to an anonymous facility in a different city or country. Even if it is manned by smart geeks wearing Cisco logos on their polos.
That’s what I like, along with what I worry about. How does Cisco’s end-to-end “operating system” look from your point of view? The comment form awaits below.
You might also be interested in …
Cisco at UTCTelecom 2010 (video)
Cisco Smart Grid Strategy: The Grid’s First Operating System
Utility Pitfalls: The Disturbing New Face of Smart Grid Vendor Lock-In
GE’s Smart Grid Strategy: Cool Little Pieces, No Glue
Key Players: Smart Grid Vendors
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