people will use information right. So more likely, utilities will let them sign up for pre-agreed scenarios where we tell them, ‘You can finish this cycle on your washer but you can’t start the next one,’ or ‘Your hot water heater is free, as long as you don’t reheat it during peak demand times.’
X: Who are you selling your chipsets to—the utilities?
RL: The ZigBee board members are involved directly with the California and Texas utilities, but we don’t have direct business relationships with them. We sell parts for the meters and displays they will all use. So the metering industry is the first big customer. Companies like Itron, Landys + Gyr, and Elster Metering, and also a few smaller companies like Tendril, Control4, Comverge, and LS Research. These metering guys have already won the big contracts, and we expect to see an uptick in demand from them this year. From 2010 to 2012, there will be a proliferation of these in-home devices, and then in 2013-14 on, devices we haven’t even thought about. Once you get a home fully connected, there will be a host of new things where people are saying, ‘Wouldn’t it be cool if…’
X: President-elect Obama [this interview was conducted on January 14] has talked specifically about the need to make the nation’s electrical grid smarter. Has that been a boon for your business?
RL: In smart metering, the people deploying and installing the meters are the utilities, the big companies that manage the meters. And what really reassures us is that no one is turning back. Politics won’t be the gating item. The politicians are already pushing the utilities to go faster than they are willing to go. So it’s nice to have a leader who is saying things that you believe in and that are favorable to your industry.
But I think it probably can’t happen as fast as [Obama’s] rhetoric would say. It’s unlikely he will accelerate it much. But that’s okay, because it’s moving fast already. For the utilities, things are moving at light speed—remember, this is an industry that is used to working with 10-year-old technology. And to be fair, it’s a little like the car industry. People expect their cars to start every day and to work in the rain. If the electricity goes out for four days it’s not just an inconvenience, it’s a health issue. So the utilities are working under different rules; new technology has to be very well proven and it has to be plug-and-play, and it takes a while to put that into place.
X: What markets are you interested in, beyond smart meters?
RL: We have some really good customers doing residential lighting, and commercial lighting is also interesting to us. You don’t need to be running your lights at 100 percent capacity if there’s bright sunlight outside. The idea is to have full control. We also have a couple of customers doing various types of home health care, assisted living. But that is another area that moves pretty slowly. On telecom stuff, I’m not a big fan of it, but there are users looking at tacking a ZigBee chip onto a SIM card and doing commerce through your handset. They’ve been looking at near field communications and passive RFID for that, but ZigBee is another potential way. There are a few other areas we are loosely paying attention to.
X: What’s the exit scenario for Ember’s investors?
RL: My preferred path would be an IPO. We’re not trying to partner up with anybody to sell anybody on the idea that they need to acquire us. That said, it may be that on the path to an IPO, a deal or a partnership comes up that makes perfect sense. I can see another chip company wanting to acquire us to round out their portfolio. But our focus is on building the business and keeping our customers happy, and the rest will take care of itself.
