Why the Smart Metering Business Just Changed Forever

. Thanks to a May 4 announcement, the smart metering business just entered a new phase. Everyone else will notice about 18 months from now, when the effect starts to kick in. You know it now and can prepare accordingly. . The announcement comes from Accent, a fabless chip maker who is announcing a “system on chip” platform for the manufacturers of smart meters. By jamming five chips onto one, the Milan-based company claims to make smart meters 30% to 50% cheaper for them to build.

The company is able to achieve this in part because it recently bought the RF engineering team from Wipro and brought it in-house to help integrate communications.

Fewer Chips Equals Lower Cost

Reducing the chip count -- stuffing more functions onto the motherboard -- is a tried-and-true cost reduction technique. In fact, Echelon has been using this strategy for a while, albeit on its own, not in partnership with Accent.

But until now, many meter makers have taken an old-school approach. They build the basic unit. To add more functionality, they add another module with the necessary chips. Some advanced units need several add-on modules.

The modular approach does have certain benefits, of course. Many utilities like the ability to stock a standard meter and then extend its functionality as necessary with the correct module. And they like the ability to add new technology via a module without the need to replace the entire meter.

Accent claims that its new package is optimized for the Smart Grid. The firm also brags that it can "semi-customize" its chipset in a matter of a few months, preserving a way for meter makers to distinguish themselves by baking their own secret sauce into the chipset.

When and How the Changes Will Occur

Accent should have a crisp little business, especially since it has already inked Itron as a partner. But they'll soon have plenty of competition.

Initially, metering vendors will try to protect their price points and margins by leaving prices where they are, but offering more features. Initially, buyers will go along. It will feel safer to get a more advanced meter with more headroom, especially at the same price as an older, less capable model.

Eventually, though, utilities will come to a de facto, "consensus" decision on the must-have features for a smart meter. They will then begin to shop on price. They will be less and less willing to pay more money for features that may never get used.

As these changes take place, prices will begin to fall. Aggressive manufacturers, many of them offshore, will begin to offer more chipsets tuned for smart meters. Unable to compete on relationships or features, these manufacturers will compete on price instead.

And we all know what happens from there. If you need a reminder, check out the price trajectory for cell phones, RFID tags, MP3 players, WiFi routers and similar gadgets.

The impacts will start to be noticed in 2011 and accelerate into 2012.

What do you think? Do you agree that this development will forever change the smart meter business? Vote in our Quick Poll and please use the Talk Back comment form below to offer your insights.

You might also be interested in …

Accent ASMgrid System-on-Chip Overview (pdf)

Freescale Demos its Smart-Meter-on-a-Chip

Survey: Cost Per Meter Drives AMI System Selection

Meter Maker Shakedown: The 5 That Will Survive

Smart Metering news and technologies

Stay connected with SGN …

Smart Grid Discussions: Get LinkedIn with Jesse

Smart Grid on Facebook

Follow Us on Twitter

Try our RSS feed

Get our email digest