and we still manufacture our own goods—is that low-cost imports (codeword: China) are going to bomb your manufacturing business and destroy your gross margins, right? So the sensible way to respond to that is to bundle in more value, more technology, and really focus on delivering value to your customers through a system as opposed to selling a product. So what you’ve seen over the last eight years is a transformation from a product-based company to a systems-based, to ultimately a value-delivery based company, meaning that you not just provide meters, communications, software, and services, but that you may even go to the point of delivering the analyzed data to the customer in the form of recommendations.”
The big data challenge:
“There’s a consistent polling of utility CIOs, their No. 1 concern is data explosion. And they have a reason. Just looking at the metering space, what was 12 pieces of data a year—a guy walks around, reads your meter 12 times a year—has become 8,760 reads. That’s the number of hours in a year, multiplied by the fact that you’re now reading multiple quantities out of the meters….
“What is going to power the smart grid forward is some field technology, but there is a lot of data analysis and data mining, right? OK, now that I’m collecting all this information, what does it tell me that is really useful and allows me to run my organization more effectively?
“So, we are investing in data analytics, we are working with partners. Microsoft, as an example, is very compelling technology for data analysis. Cloud-based offerings—so really changing how it is that you deliver these kinds of insights.”
Build or buy:
“In an innovation cycle, you have to make a decision of what you build internally, what you partner for, what you invest in, and what you acquire…. We will strongly continue on our internal research and development program. You’ve seen us work with Cisco, as an example, in the networking space…. We just announced a relationship with Qualcomm, which really has the potential to blow the doors off the machine-to-machine cellular market in our space… And then there’s a lot of innovation going on in small startups, and so with startups you’re looking at investment or acquisition as a way of getting access to that high-level of innovation at a small company.”
On inefficiencies in the water system:
“Many people say water is going to be the—fill in the blank—the oil, the gold, the whatever of the 21st century. First of all there are billions without access to potable water, so it’s clearly a pressing humanitarian issue.
“Thirty percent of the water put into the distribution system doesn’t make it to its ultimate end use because we have aging infrastructure, many leaks in the system. And then once it does make it to your house—to the customer’s house—a huge amount of water is leaked through watering systems, toilets, other leaks. We’re providing a similar type of network intelligence that’s being developed on the electric side in the water network to create much greater efficiencies on how water is distributed, and how efficiently it’s being used by the consumer.
“In the case of water, that 30 percent number is a huge opportunity for savings. And, by the way, that 30 percent of water is very energy intensive. A huge amount of energy is spent pumping, purifying, processing water so when you waste water, you’re also wasting energy.”
The potential of smart cities:
“There is a tremendous opportunity for coordinating information from multiple streams—and you see this in smart cities, in which they’re collecting of course electricity, gas, and water—but a lot of other sensor based information: street lighting, solar, all of these things. There are going to be many more measured points within the smart grid. On the gas side, methane sensing, corrosion detection, pressure sensing—all sorts of things. You see innovative companies that are measuring traffic distribution patterns. Some of these have privacy issues, but by coordinating this information, cities can run much more efficiently, cool their buildings before it gets too hot in a day, and set the traffic lights in a different pattern so there’s less traffic….
“That’s going to be a huge area of value creation. And so by participating in the imbedded communications and the networking that’s involved of our systems, we really will have the opportunity to participate in adding more measurements, more sensors onto the network that will ultimately create some interesting insights.”
