Why Cisco's Smart Grid Strategy Failed
A little more than a year after unveiling an ambitiously broad array of smart energy-grid products, Cisco has put the kibosh on the program. The networking giant's entry into the smart grid was considered a game changer. It had the capital and expertise. But with a muddled focus on the wrong products and market, the company's big foray into the smart grid fell flat.
The centerpiece of Cisco's (CSCO) smart grid assault was energy management software and a flashy counter-top gadget that allowed homeowners to communicate with utilities and view and manage their energy consumption in real time. The company also rolled out Cisco Mediator, a building management that allowed corporations to connect, monitor and manager energy usage throughout all of its operations.
Speculation about the future of Cisco Mediator came up last week after a key exec left the division. Cisco put the rumors to rest in a blog post this week that announced the company would scrap its home and building energy management products and instead stick with its core networking technologies.
Here's a breakdown of what went wrong:
It tried to do it all, but was the master of nothing
Last year I warned that Cisco's smart grid strategy was flawed mainly because it focused too much on the consumer side. At the time, I wrote that its plans on the commercial side were far more promising. And they were.
Unfortunately, it was crowded out by a business model that tried to do too much. Cisco had two separate experiments going on: One that tested software and hardware for building management and another geared towards homeowners that included an expensive energy dashboard gadget.
And as Gigaom noted, Cisco was just "dabbling" in the energy-management field through experiments and pilot projects. This can be a disjointed, lengthy and expensive process that can be hard to justify if your company is about to cut 6,500 jobs and go through a reorganization.
There isn't a market for an expensive "energy dashboards"
Cisco's home energy controller and its service were to be bundled and sold to utilities for $900 per household. The utility isn't going to eat that, which means the cost would have eventually been passed on to the homeowner.
Smart phones and iPads
Consumers already have a TV, laptop and smart phones, not to mention iPads. As I've written before, the iPad is actually the perfect home-energy monitoring platform.
Why buy into the Cisco system, or anyone else's for that matter, if you can download a home-energy app to your iPad ? At least one free app, created by Control4, already exists.
Consumers are energy illiterate
Cisco was focused on selling its products to the utilities, which would in turn offer it to consumers. Cisco probably realized during the several customer pilots of its products, that folks haven't a clue when it comes to energy. Google (GOOG) and Microsoft (MSFT), both of which have shut down their free home energy management websites, made the same unfortunate discovery.
Photo from Flickr user hans.gerwitz, CC 2.0
Related: