Reality Comes Hohm for Microsoft, Google and other Lightweight Energy Efficiency Apps
July 1, 2011
Today’s news that Microsoft has scrapped Hohm, following Google’s lead out of the consumer Energy Efficiency market didn’t come as a complete surprise. The writing has been on the wall for some time that vendors who aren’t fully committed to building a platform or at least high-value, utility-centric applications are unlikely to be around to compete in the market in five (or one?) years. And moving forward, we don’t think it is a matter of “if” someone else will abandon that chase, but “when” especially as more and more companies look at a platform approach and understand that it’s not an easy leap.
But really, how hard is it to build a platform? Well, it took Amazon seven years to go from first book sold to web services platform launch, and it had the fuel of being one of the world’s most successful ecommerce players along the way. But Amazon earnings have also shown the opportunity is worth the effort and we think it is too.
Now Google and Microsoft have the resources to build a platform if they want, but they also have the ability to monitor the market and jump in later. But for other point vendors that have had some success with the lightweight report or portal-only approach? Playing catch up or leap frog will be much tougher.
Fundamentally, it comes down to three specific areas where vendors will be made or broken in the large market opportunity that is the Energy Internet, which we believe is a subset of the “Internet of Things” concept you’ve likely started to hear about. Those three things are:
- Business Model—In energy specifically, companies need to partner with and enable the utility and not circumvent it. Ultimately, utilities manage the energy dialogue with consumers and any efforts to go direct to the consumer will not result in an engagement that leverages the full power of the connected home vis-à-vis grid management and the Energy Internet. Both Google and Microsoft were delivering applications of limited value, because they were built in a silo and couldn’t get the utilities to endorse widespread roll outs.
- Application Depth—Lightweight reporting in any form factor is a static way to provide consumers information, but is not the dynamic solution required to drive behavioral change and unlock the value of the connected home for all stakeholders. The solution that wins this race will be grounded in behavioral science and show an understanding of complex building models in order to keep consumers connected and engaged. Lightweight applications don’t satisfy those requirements and lack the technical depth to fully leverage a platform that delivers utility benefits.
- Architecture—Information is not the end game in energy. The end game is insight, choice and control. The market requires a cloud-based platform that can satisfy key requirements like supporting dozens of communications protocols, providing integration with back-office systems, exposing APIs for third-party application development and the data management capabilities to enable analytics. All of this needs to take place with an emphasis on future development and program roll out to ensure the customer, the utility and third-party device manufacturers, application developers and service providers can “talk” to the platform.
Like we said last week when Google PowerMeter powered down, no one knows what the killer app of home energy management is and this market is rapidly evolving. That said, we are pretty sure that whatever killer app is developed, there will be a cloud-based platform supporting it.