Silver Spring Networks' smart grid ambitions (and how its IPO could rock our world)

Next page >> By Jesse Berst   To many outsider observers, Silver Spring Networks' smart grid accomplishments to date make it our industry's poster child. By most accounts, it owns the largest share of the smart grid communication segment at roughly 24%.What's more, it was the first smart grid company to bring Silicon Valley-style strategies to the staid electric power sector. And Silicon Valley-style flash to its sales and marketing.

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No wonder the entire industry has been watching Silver Spring's pending initial public offering (IPO) with great interest. A successful IPO could buoy the whole sector. A failure could turn today's smart grid plateau into a downward dip.

What are SSN's prospects? Well, you could read Silver Spring's official S-1 filing. But that document is filled with standard, cover-the-waterfront legalese and generalities ("volatility of utility spending"... "failure to respond to technology changes...") Instead, I thought I would share an inside view of the company's strengths and challenges, then invite you to weigh in.

Silver Spring Networks smart grid strengths

Brand and reputation. When analysts and researchers conduct surveys, SSN is at or near the top in name recognition and positive impression. SSN has won a long string of awards from the likes of the World Economic Forum, Ernst & Young, Frost & Sullivan and, most recently, the Global Cleantech 100, which named it North American Company of the Year for 2011.

Sales savvy. In the words of one analyst, SSN "revolutionized how to sell to utilities." What to say. How to say it. And, especially, who to say it to… namely, the CEO. SSN was the first to suggest an enterprise network – build it once, use it many times. (A concept that is now at the core of the newly updated Cisco smart grid strategy.)

Business model. First you put in capital equipment that provides a platform for future applications. Then you return to the customer repeatedly with new applications that ride on top. It's a great model in theory… provided SSN can persuade slow-moving utilities to get on board in practice. The company currently generates less than 10% of its revenue from those add-on sales. SSN may be two or three years ahead of its customers. One good sign: PG&E recently decided to pilot six new projects, several of which leverage SSN's metering infrastructure.

Speed to market. Virtually every month, SSN is out with another addition to its growing list of smart grid solutions. I dare you to find a hot new growth area -- customer portals, outage management, EV charging, smart water -- where SSN is not already there on its own or with a partner.

Partner network. I think SSN is best-of-breed when it comes to recruiting, supporting and promoting the partners that build solutions on top of its network. They are #1 partly because they've been smart about it. And partly because the competition has been stupid. Some of those competitors still haven't built a strong ecosystem. Others have a good partner network but have failed to publicize it. SSN understands that a smart grid solutions company must have a well-stocked "apps store."

Successful deployments at scale. Silver Spring Networks smart grid scorecard has some impressive deployments listed. It may sound odd to cite PG&E as a success, but hey – it is a massive deployment where the technology works. It's not SSN's fault that PG&E bungled the consumer engagement piece. Meanwhile, the Oklahoma Gas & Electric rollout is turning into one of the country's big success stories. And SSN has many other customers as well.