Cisco Systems is ramping up its push into the smart grid space, bolstering its efforts with a partnership and an acquisition.
A day after Cisco unveiled a partnership with Itron
to create an IP-based communications network for the smart grid market,
the networking giant announced Sept. 2 that it is buying Arch Rock, a
privately held company that makes IP-based wireless network technology
for smart grid applications.
No financial details were released. Cisco expects the deal to close by the end of the year.
Combined, the two moves illustrate Cisco’s aggressive push into the burgeoning smart-grid market,
an effort that started in May 2009 when the company announced its Cisco
Smart Grid Initiative. At the time, Cisco officials said they believed
it could become a $20 billion market, and they haven’t backed away from that idea over the past 15 months.
Cisco is looking to take its networking and
communications expertise and apply it to the power industry, making
both the delivery of energy by utilities and the consumption of power
by consumers more efficient.
Smart grids is one of more than two dozen new
business sectors—which CEO John Chambers calls “market
adjacencies”—that Cisco is pursuing as it looks to expand its revenue
base by growing beyond its roots as a network technology provider to
become a broad-based IT company.
Brian White, an analyst with Ticonderoga Securities,
said Cisco’s efforts will help it generate more than $100 billion in
sales over the next decade, and that the smart grid push—which Cisco
officials have said will become a larger financial opportunity than the
Internet—makes sense for the company.
“Smart grid also plays into Cisco's Smart+Connected
Community initiative that we believe will become significant in the
coming years,” White said in a Sept. 2 research note. “Looking out a
few years, we believe that a meaningful transition to smart grids is
inevitable for utility companies and is expected to meaningfully
increase Cisco’s overall addressable market.”
He said he expects Cisco to use Arch Rock’s technology in the smart meter products it will develop with Itron.
Cisco officials see the Itron partnership as a key to the company’s smart grid future.
"The alliance between Cisco and Itron represents a
major step forward in the realization of a modern, more intelligent
energy infrastructure,” Laura Ipsen, senior vice president and general
manager for Cisco’s Smart Grid business unit, said in a statement.
“Together, we aim to enable standardization of the smart-grid
architecture and help create an end-to-end communications platform. As
a result, utilities will benefit from an energy grid that is more
secure, scalable and reliable, as well as solutions that are easier to
maintain and able to support future needs.”
Cisco and Itron will jointly create a reference
design for a standard to be used for smart grid and smart metering
network communications, using IPv6, the latest version of the Internet
Protocol.
Using the protocol will mean greater network
performance and enhanced communications. IPv6 also integrates network
security into its framework.
Itron will embed Cisco IP technology into its OpenWay
meters and sell Cisco networking hardware and software as part of its
smart meter deployments.
Arch Rock’s technology enables utilities to connect
such distributed intelligent devices as smart meters over wireless mesh
networks, which Cisco officials said dovetails with its partnership
with Itron.
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