Google (s GOOG) smart grid news this morning, and you’ll see two major announcements: Duke Energy (s DUK) plans to partner with Cisco (s CSCO) to make the power grid smarter across its 11 million customer footprint, and Chicago-based utility ComEd announced that it plans to work with Silver Spring Networks and GE (s GE) for a smart meter pilot with 141,000 smart meters. Coincidence that the companies have launched dueling announcements? We think not.
While Cisco and Silver Spring have been partners on smart grid projects before, like the one from Florida utility FPL, this morning’s activity demonstrates very strategic moves by the companies to tout their separate (and competitive) plans with utilities. For FPL, Cisco was previously emphasizing how it would focus on the consumer space of the smart grid. But for its announcement with Duke this morning, the companies describe Cisco’s solution as an “end-to-end, smart grid communications architecture — one that both companies believe will be among the most comprehensive and interoperable in the electric utility industry.” The deal includes the network infrastructure and managing the inclusion of home energy management devices, and hundreds of thousands of smart meters across several states.
Cisco previously told us that it will be moving beyond the consumer portion of the smart grid space, extending its communications network all the way to the edge of the network. “We’re looking to build out a common communications infrastructure,” said Marie Hattar, VP of marketing for Cisco’s networking solutions. Hattar said that Cisco’s global footprint and reach into the deeper ranges of the network will give Cisco an advantage as utilities seek more comprehensive solutions.
So the companies have competitive products, and also have similar ideologies. In the announcement this morning, Cisco emphasized how “Internet protocol-based open standards” will be key for its smart grid efforts. While open standards and IP are Cisco’s mantra across the IT world, when it comes to the smart grid, Silver Spring has been chanting IP and open standards since it was founded in 2002.
Ultimately, while Silver Spring has been tying up utility wins in droves, Cisco’s announcement with Duke this morning should make the startup a bit worried. Cisco’s Duke partnership is far bigger and more extensive than Silver Spring and ComEd’s smart meter pilot announced this morning. Perhaps there is room for Silver Spring in Cisco’s Duke deal, as the companies plan to work with both software and hardware partners, but Duke Energy gave us a “no comment” on whether it’s working with Silver Spring or not. And even so, we’re guessing Silver Spring would prefer to own the relationship with the utility, acting as the consultant and choosing partners for the rollout.
Silver Spring has told us that Cisco’s entrance into the market validates the industry, but also is clearly competitive in some ways. Cisco is just massive compared with Silver Spring, and has been building networking equipment for decades. This points to the idea of Cisco acquiring Silver Spring, a move that has already been the subject of some speculation. For the Silver Spring folks, we’re sure that if a good enough offer comes up they will consider it, but they’re gaining enough traction that they could also just keep on scaling up. As investor Steve Westly predicted, perhaps an IPO is in the company’s near future.