Linksys' brand recognition in routers should help Cisco gain a foothold in home-energy management as it builds out a $1 billion smart grid for Duke Energy
Homeowners soon may be managing their energy consumption via Cisco's Linksys broadband gear. The networking giant unveiled a deal this week that will see it lead a $1 billion smart-grid infrastructure buildout for Duke Energy (DUK), and Cisco (CSCO) tells us that for the consumer portion it will largely be deploying its own smart-energy home hardware, which includes Linksys products and "homeplug" devices that transfer data via power lines. Mark Miller, director of business solutions for Cisco, said the company has been working on various energy management products—some of them in the Linksys portfolio—for the last 18 months.
While Cisco previously told us it was developing energy management tools for the consumer, the Duke deal marks the first time we've heard firm plans to make such devices available via a smart-grid buildout. Duke didn't say how many of its customers would have access to energy management tools, but the utility has 11 million people in its service area (4 million customers) and is rolling out smart meters to more than 1.5 million of them.
From a brand recognition perspective, using gear made by Linksys, which Cisco acquired in 2003, could help consumers become more aware of—and even ease them into the practice of buying—home energy management tools. In contrast to relatively unknown young startups like Tendril, AlertMe, or EnergyHub, Linksys broadband hardware is available at retailers all over the U.S. and is a known name in the Internet gear space.
But Cisco choosing to mostly use its own home energy hardware doesn't mean there won't be any third-party (or startup) vendors invited into the Duke deal. Miller tells us that Cisco is planning to work with partners that provide software for home energy management as well as those that make connected devices and appliances, like smart water pumps or smart dishwashers (likely GE's connected appliances).
A Jolt to Rival Silver Spring
Beyond the consumer, Cisco is also working with Duke to provide an "end-to-end" smart-grid network solution. Cisco started moving into the smart-grid space earlier this year, establishing partnership deals like the one to roll out smart meters to Florida utility FPL in conjunction with Silver Spring Networks and General Electric (GE). Soon after that deal was announced, Cisco made clear that it wants to be a major network player in the $20 billion U.S. smart-grid market.
In light of that goal, the Duke deal is a major win for Cisco—one that startup Silver Spring (which has been called the Cisco of the smart grid) is likely worried about. Duke Energy's smart-grid senior vice-president, Todd Arnold, told us that Duke chose Cisco because of its long history in the networking world.
Duke's smart grid will be built out over the next five years, so don't expect Cisco (branded Linksys or not) energy management tools in the homes of residents in the coming months. The plan also still needs to pass various regulatory hurdles in some of those states, and Duke is also looking to get smart-grid stimulus money to partially fund the project.