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Report: Utilities Should "Be Realistic" About Partnering with Google, Microsoft

Looks like there’s a solid reason for all these companies developing home energy management tools. Pike Research published a report this morning that says that 28.1 million consumers will be using home energy management tools worldwide by 2015, which is significant growth, but still a “nascent market.” The market will be led by energy information displays (separate dashboards and devices), followed by web-based energy info tools and in a distant third will be cell phone energy applications.

But beyond the market prediction, Pike Research details a variety of interesting info in the report that makes for good tips for utilities, startups, consumer electronics makers and investors. One of the most interesting is that Pike says utilities should “be realistic” about partnering with Google’s (s GOOG) and Microsoft’s (s MSFT) home energy management tools. While partnering with Google and Microsoft could be a “relatively low-cost way of learning about customers’ attitudes,” “participating in such programs comes at a cost.”

Pike says that the utilities it’s talked to have reported “spending tens of thousands to hundreds of thousands of dollars and many months developing feeds of customer usage information for Microsoft Hohm and Google PowerMeter.” There’s also the added costs for communicating with customers about the programs. Pike recommends that if utilities sign up with Microsoft or Google for home energy management, “they should make sure they have the means to measure the impact of the chosen program and to gather information that can be applied in other consumer-focused programs in which they may choose to invest.”

Another tip for utilities: “it’s a buyers market” for home energy management tools. In other words, there’s so many new home energy management tools being developed and just coming to market that utilities should “make sure that vendor products meet their technical, functional, pricing, and delivery requirements.” If utilities don’t like one product, there’s 50 more they can choose from.

A key takeaway for startups building home energy management tools is that the utility distribution channel will remain the dominant channel for the early years of the market. While Pike thinks that “the retail channel may become an important channel for these devices in 3 to 5 years, the early market will be driven by utilities.” So companies looking to sell directly to consumers might struggle for a good long while unless they have a utility strategy.

The overall market will be driven by both supply — the U.S. smart grid stimulus investments — and demand from consumers increasingly becoming interested in home energy efficiency. Pike says in a consumer survey, “over half of consumers surveyed were very or extremely interested in having a device in their home to monitor and control energy usage,” (more on that in GigaOM Pro, subscription required). Here’s 10 tools for smart home energy.

Image courtesy of Tendril.

5 Responses to “Report: Utilities Should "Be Realistic" About Partnering with Google, Microsoft”

  1. If anyone has questions about Hohm or what we’re doing with Hohm feel free to reach out anytime on facebook (search Microsoft Hohm) @microsofthohm or @elemenager. I’ll do my best to get your quesitons answered – any feedback on our product to help improve it is much appreciated.

    Elliott – Online Community Manager