How One Small Software Company Plans to Rule the Smart Grid Industry

Last Updated Aug 10, 2011 11:30 AM EDT

Gary Bloom, the former CEO of Veritas and president of Symantec, left the fast-paced IT world last year for the power sector -- a traditional, slow-to-react industry that he says is the one of the last frontiers for a massive technology transformation. Now all his smart-grid startup eMeter has to do is to convince more conservative, tech-shy utilities to buy its product and successfully beat out Oracle (ORCL) in the software smart grid game.

I interviewed Bloom about how he plans to push eMeter ahead of its competitors, the future, opportunities and risks of the smart grid and why some companies have already failed.

What eMeter does
eMeter develops software that helps utilities collect data from the grid. Utilities can use that information to change how they deliver and manage power in order to reduce costs and emissions without impacting reliability. And they can give customers that information to help them alter the way they use electricity.

As Bloom put it to me:
It's human nature, once you give them a taste of their consumption data they want more. They come to realize that not only can they help reduce greenhouse gas emissions and make the planet a better place, they can save a lot of money and can manage a line item in their budget that was previously unmanageable.
In many ways the company is well positioned in the industry despite its relatively small size. It doesn't have the same capital needs as some of the big hardware-based companies; It's landed enough utility customers to scale up its operation; and has attracted a number of VC and company investors.

The challenge
Still, the smart grid industry is riddled with all sorts of business-killing land mines. Consumers are energy illiterate and have little awareness of the smart grid and what it can do for them. Meanwhile, utilities, which have the access to consumers and the power to make sweeping changes within the industry, have been sluggish to adopt smart grid technology.

When a utility does opt to buy into smart grid tech, it tends to pick products developed by companies that have operated in the power sector for decades, Bloom said. Utilities also struggle to separate the hype from what's real, he added. That would seem to leave small, innovative companies like eMeter on the outs.

eMeter's strategy to survive

The company is sticking with its niche and that's software -- no hardware agenda, here -- that can be used on anything from old 1950s mainframe systems to modern servers. It can used with any kind of smart meter, Bloom told me:
The challenge for small players in this sector is you have to have staying power because it's a long trail to be able to successfully sell to and service a utility. Utilities aren't used to going out and talking to small players, they're used to buying from a very small set of large suppliers.
eMeter has maneuvered around this obstacle by partnering with big players that are already working with utilities. As Bloom put it: To break in this industry, you have to have big friends and big partners. IBM, Siemens and Verizon as well as Eltel in Europe are among its partners.

An opportunity for small companies
Bloom argues that if utilities pick and choose the traditional suppliers they've always used, they'll eventually come to realize that when it comes to new modern technology, those suppliers will disappoint them.

Technology transformations are typically led by small, innovative companies, and the industry is beginning to realize that, Bloom said. Still, the challenge for these small players will be staying power because "it's a long trail to be able to successfully sell to and service a utility."

Why big companies like Google and Microsoft failed
Google and Microsoft launched free Web-based home energy management software and both companies have since shut down their projects. Bloom expects more failures like this because consumers are generally clueless about energy and utilities want to control their data. The companies that succeed will be the ones that provide the tools and tech directly to the utilities, Bloom said.

eMeter, for example has developed a web portal for utilities that can be used to collect data from old traditional and smart meters alike. The utilities have the power to use their data as they wish. Even once utilities have adopted the tech, the transformation process has been slow in the United States, Bloom notes:
They're adopting technology in this industry at the same rate as telecom industry did, which was an eight- to 10-year time span. I think there's another five to seven years as the smart grid continues to evolve and develop. In Europe and Latin America, you have a pretty aggressive regulatory environment that's dictating a rapid adoption of technology over the next several years.
Beating Oracle
Blooms sees some of its earlier competitors, namely Itron, fading away and Oracle sneaking up into the space. The market is heading toward a David and Goliath battle between eMeter and Oracle. Bloom, who spent 14 years with Oracle early in his career, has a healthy respect for the company.
I don't underestimate them as a competitor, but I can tell you where we differentiate ourselves today is we have live operations running with our software at scale, and they do not.
The competition is between an existing product that has had some success and "a very large sales organization with a Power Point [deck]," Bloom said.

Photo from Flickr user tripp, CC 2.0
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