Microsoft's Bear Hug of the Smart Grid

Phil Carson | May 26, 2010


Love 'em or hate 'em, beat 'em or join 'em, anyone who ignores Microsoft Corp. does so at their peril.

We've all engaged in our best Paul Revere impersonation, riding into town yelling "the Googles are coming, the Googles are coming." (Inserting "Microsoft" into that phrase doesn't work as well, but you get my drift.) So let's calm down and have a closer look at Mr. Revere's fears.

Jon Arnold, Chairman Bill Gates' managing director for the company's worldwide power and utilities industry practice, is everywhere - speaking, blogging and performing the smart grid two-step for all and sundry. Thus his hour on the phone with me yesterday.

The guy is well-known and well-regarded in the energy industry because he's played a variety of roles in it, including editing Energy Business & Technology magazine and serving as chief information officer for the Edison Electric Institute. He earned his master's degree from Johns Hopkins University in computer science. Thus his value to the Evil Empire, I mean, Microsoft, which he joined in 2004.

I don't slavishly follow the ins and outs at the mega-brands like Microsoft, Google and Apple, because you can get lost in the trees (incessant "news," cultish fascination) and forget the forest. The closer you get, the more awestruck (or indignant) you become over their technical prowess and market power.

Besides, being a behemoth like those companies is a double-edged sword. Heft can help you and it can make you less nimble. (Ask Goliath.) Microsoft won big in enterprise software, for instance, but failed to complement that with success in, say, smartphone software on the client side. In that example, Research In Motion, Ltd. and Apple (not exactly David) rolled over Microsoft, which dithered on its operating system.

In smart grid, however, when Arnold pontificates that the clean energy network that's coming will be "bigger than the Internet," I think you're looking at Microsoft's post-Gates second wind. I'd take them seriously. Especially when utilities sense that some solution providers will be rolled up by mergers and acquisitions, rolled over by competitors or stuck in the middle. Big brands may have the best shot at longevity and, thus, credibility.

Okay, to the point. Microsoft would like to "own" the utility and the consumer. By getting the consumer's attention through its "Hohm" offering - a branded, online, residential energy management tool for consumers that offers to save them money - the company plans to educate and motivate, changing behaviors.

That fits its approach to utilities, to which it is offering myriad products and services along with a Smart Energy Reference Architecture, designed as an open-source roadmap for a flexible, scalable, interactive grid. (No, I haven't consumed the Kool-Aid, and I am sorry for this violence to the English language.) With Microsoft's data analytics, it can provide to the utility some very tailored insights on consumers' energy behavior gleaned from the latters' Hohm activity.

Hohm will make small potatoes through advertising, while Microsoft's global utility business is destined to be a real profit center, from what I gathered. Microsoft already sports a lengthy list of partners who will help realize this vision.

This column is, in effect, a set-up for tomorrow, in which I will give detailed insights into Microsoft's strategies in Arnold's words. The bookends for tomorrow's piece are goodies: Arnold was hired by Microsoft in 2004. Two years later, he was at dinner in Italy, celebrating his wife's birthday, when an email rolled in. Chairman Gates, through a vice president, wanted to know what Microsoft was doing in utilities. By morning, the email was repeated, this time directly from Mr. Big himself. Crunch time!

In short, Arnold discussed what has transpired in Microsoft's thinking about utilities since he responded to Gates' email four years ago, as if he was rewriting that memo today.

Here's an appetizer: Microsoft is working on plug-and-play connectivity for in-home devices, be they thermostats, appliances or electric vehicles. Arnold doesn't foresee (he said) offering utilities contractually defined blocks of consumer-based "negawatts" as is being done in the commercial/industrial sector. But the company thinks it can provide insight into predictable consumer behaviors on a predictable scale, which preserves consumers' flexibility to opt-in or to override previous decisions.

Hohm's current modus operandi is to provide a homeowner with a neighbor-related context for his/her energy use ("are you an energy miser or an energy hog," the Web portal asks, and you can get a score on that), the sort reputed by studies to produce 10 percent to 15 percent monthly savings. Pressed on whether that offers enough incentive to change behavior - or pay for in-home, energy-saving devices and services - Arnold is certain that carbon price signals, emissions standards and rising prices will force consumers to become cagey about energy use - or lose ground financially. Darwinian economics 'R Us.

See you here tomorrow.

Phil Carson
Intelligent Utility Daily


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Microsoft Marketing

In my experience, utilities typically take the path of least resistance. This usually equates to Microsoft something. In this case, I think you need to add Cisco to the mix -

If you want to typically get a blank stair from a utility official, ask him/her/them what they think of open source software.