Last week’s announcement of a formal collaboration between Cisco and Itron was notable in several respects.
First, the simple announcement was termed “collaboration” instead of “joint venture” or even a formal “partnership.” It was also described as non-exclusive, but was a very important step forward nonetheless for both companies, especially for Itron, and serves as a good omen for the AMI portion of smart grid communications in general, thus likely to benefit other AMI market participants that offer communications solutions as part of their go-to-market strategies.
Cisco is a $35 billion company, with an estimated $2-3 billion (Newton-Evans estimate) found within energy-related vertical industry sales of its communications equipment. Itron itself will close in on being a $2 billion corporation again in 2010, with about 50 percent of revenues derived from electric power industry AMR/AMI sales and services.
Continuing across the high Cs, taking a joint solutions-oriented, modern IP-based, customer-focused approach to metering communications is the reason for the collaboration.
Communication of metering data in a sensible, uniform, straightforward, secure and standardized approach is a realistic objective for the industry and for this collaboration of giants.
Interestingly, as I listened in to the press conference last week, I thought back to a column I had written a few years ago. Well, to be honest, we all know how time flies, and it was actually more than 25 years ago, that I had written the “Final Word” column for the April 22, 1985 edition of Information Week.
The title was Are Users, Vendors Communicating? Ironically, not in the data communications field. I couldn’t help but think about the myriad of approaches being taken to AMR/AMI data communications over the past decade or two, going back to Newton-Evans’ own comprehensive multinational study of communications requirements for AMR conducted back in 1990-91.
Listening in on the press conference held on September 1, 2010, it was interesting to note that the senior executives from Itron and the senior smart grid executives from Cisco were directly involved as active participants in this collaboration announcement.
The first-hand knowledge of details each speaker possessed is significant indeed, and will put them and their teams in good stead with the metering and data communications planners in their served markets.
These officials each fielded questions from the analyst community smartly, in spite of some tough questioning. These observations all point up indications of clear upper management commitment to see this collaboration through to market success via ensuring utility customer satisfaction.
The utility community of users of either Cisco equipment or Itron metering solutions is broad-based, both here in North America and around the world. Electric power industry customer counts are in the many hundreds for both firms, with a high percentage of customer overlap.
While Cisco gear can be found in most utilities of any size, it is more likely to be found within the enterprise network and data center at this time, rather than in the operations side, where a large cast of entrenched suppliers of hardened communications equipment still dominate, especially in the substation environment.
However, it is in the enterprise side is where most of the metering IT and metering communications activity and plans can be found, at least for now.
Once distribution automation kicks into high gear, we may be in for another round of communications backhaul decision-making. For now, the electric power utility communications picture is one of mixed media, multiple protocols, and a myriad of technologies which are typically found in most leading utilities.
This extends to AMR/AMI networks — which today often number two, three or even four metering data acquisition sub-nets in many large utilities.
This scenario provides easy entry for Cisco to move directly and rapidly to support Itron metering communications activities using its proven IP expertise.
Cisco has already announced its intentions to be a leader in residential energy management technology. This collaboration is a sound tactical development to support such a strategy.
So there you have it, a highly visible approach to collaboration, an approach targeting the needs of the community of electric utilities, using standardized and secure communications platforms, taking a customer focus, under highly visible upper management commitment among the partners, providing what are claimed to be comprehensive approaches to be based on Internet Protocol-version 6 (IPv6) technology that will enable consolidation of field networks.
Perhaps just as important from my perspective, both parties are large enough to be able to sustain capital investment and provide the requisite talented human resources to make this collaboration successful. It’s no guarantee of success at this point, but it certainly points to the potential for success.
Let’s give this collaboration some time to get off the ground. We will plan to take another look at the Cisco-Itron initiative toward the fourth quarter of 2011 to see how far IPv6 has come into mainstream use, and to learn how many typically (necessarily) cautious utilities will make the move early on, based on the combined efforts of these two industry leaders.
Meanwhile, let’s hope the seven Cs provide for smooth sailing for this collaborative effort. That would be good for the entire industry and for furthering smart grid development in particular.