Is Li-Fi the Next Wi-Fi?

The New Scientist published a networking-related article last week that took me back to my early days in the industry.

The piece in question dealt with Visible Light Communication (VLC), a form of light-based networking in which data is encoded and transmitted by varying the rate at which LEDs flicker on and off, all at intervals imperceptible to the human eye.

Also called Li-Fi — yes, indeed, the marketers are involved already — VLC is being positioned for various applications, including those in hospitals, on aircraft, on trading floors, in automotive car-to-car and traffic-control scenarios, on trade-show floors, in military settings,  and perhaps even in movie theaters where VLC-based projection might improve the visual acuity of 3D films. (That last wacky one was just something that spun off the top of my shiny head.)

From FSO to VLC

Where I don’t see VLC playing a big role, certainly not as a replacement for Wi-Fi or its future RF-based successors, is in home networking. VLC’s requirement for line of sight will make it a non-starter for Wi-Fi scenarios where wireless networking must traverse floors, walls, and ceilings. There are other room-based applications for VLC in the home, though, and those might work if device (PC, tablet, mobile phone), display,  and lighting vendors get sufficiently behind the technology.

I feel relatively comfortable pronouncing an opinion on this technology. The idea of using light-based networking has been with us for some time, and I worked extensively with infrared and laser data-transmission technologies back in the early to mid 90s. Those were known as free-space optical (FSO) communications systems, and they fulfilled a range of niche applications, primarily in outdoor point-to-point settings. The vendor for which I worked provided systems for campus deployments at universities, hospitals, museums, military bases, and other environments where relatively high-speed connectivity was required but couldn’t be delivered by trenched fiber.

The technology mostly worked . . . except when it didn’t. Connectivity disruptions typically were caused by what I would term “transient environmental factors,” such as fog, heavy rain or snow, as well as dust and sand particulate. (We had some strange experiences with one or two desert deployments). From what I can gather, the same parameters generally apply to VLC systems.

Will that be White, Red, or Resonant Cavity?

Then again, the performance of VLC systems goes well beyond what we were able to achieve with FSO in the 90s. Back then, laser-based free-space optics could deliver maximum bandwidth of OC3 speeds (144Mbps), whereas the current high-end performance of VLC systems reaches transmission rates of 500Mbps. An article published earlier this year at theEngineer.com provides an overview of VLC performance capabilities:

 “The most basic form of white LEDs are made up of a bluish to ultraviolet LED surrounded by a yellow phosphor, which emits white light when stimulated. On average, these LEDs can achieve data rates of up to 40Mb/sec. Newer forms of LEDs, known as RGBs (red, green and blue), have three separate LEDs that, when lit at the same time, emit a light that is perceived to be white. As these involve no delay in stimulating a phosphor, data rates in RGBs can reach up to 100Mb/sec.

But it doesn’t stop there. Resonant-cavity LEDs (RCLEDs), which are similar to RGB LEDs and are fitted with reflectors for spectral clarity, can now work at even higher frequencies. Last year, Siemens and Berlin’s Heinrich Hertz Institute achieved a data-transfer rate of 500Mb/sec with a white LED, beating their earlier record of 200Mb/sec. As LED technology improves with each year, VLC is coming closer to reality and engineers are now turning their attention to its potential applications.”

I’ve addressed potential applications earlier in this post, but a sage observation is offered in theEngineer.com piece by Oxford University’s Dr. Dominic O’Brien, who sees applications falling into two broad buckets: those that “augment existing infrastructure,” and those in which  visible networking offers a performance or security advantage over conventional alternatives.

Will There Be Light?

Despite the merit and potential of VLC technology, its market is likely to be limited, analogous to the demand that developed for FSO offerings. One factor that has changed, and that could work in VLC’s favor, is RF spectrum scarcity. VLC could potentially help to conserve RF spectrum by providing much-needed bandwidth; but such a scenario would require more alignment and cooperation between government and industry than we’ve seen heretofore. Curb your enthusiasm accordingly.

The lighting and display industries have a vested interest in seeing VLC prosper. Examining the membership roster of the Visible Light Communications Consortium (VLCC), one finds it includes many of Japan’s big names in consumer electronics. Furthermore, in its continuous pursuit of new wireless technologies, Intel has taken at least a passing interest in VLC/Li-Fi.

If the vendor community positions it properly, standards cohere, and the market demands it, perhaps there will be at least some light.

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Utilities Still Aren’t Ready to Get Serious with Consumers

In his Green Tech blog, Martin LaMonica of CNET News writes that utilities have acknowledged belatedly that they are poor marketers .With that realization in mind, they are said to be redoubling their efforts to explain smart-grid benefits to skeptical consumers.

Notwithstanding utility executives’ apparent contrition and ostensible commitment to institutional reform,  I remain unconvinced that they have seen the light. I still think they require further reprogramming, a service that disaffected consumers will be only too happy to provide.

As I read through LaMonica’s piece, I noticed the absence of a very important word. The utility executives, despite their recitation of anodyne platitudes, could not bring themselves to say the word, though they ventured occasionally into its outlying neighborhood.

That word? Savings.

Although the article featured many instances of utility bosses talking about getting consumers onboard, getting consumers involved, and treating ratepayers as customers, there was no specific mention of passing significant, quantifiable savings to smart-meter-equipped residential consumers.

Jim Rogers, CEO of Duke Energy, came closest to striking gold. He said consumers will want better ways to manage and reduce their energy use for economic reasons. But he should have gone further .

All the utilities should and must go further. It’s well understood how smart meters, dynamic time-of-use (TOU) pricing, and demand-response programs can help utilities reach their business objectives and regulatory mandates. What’s less clear is exactly what consumers will get from the deal.

It’s too late in game for the utilities to be using nebulous niceties and vague concepts to sell consumers on smart meters and the smart grid. Now is the time for utilities to cut consumers a pice of the action. It’s time to incentivize the consumer with hard ROI numbers and compelling savings. Don’t dance around the consumer benefits; spell them out.

Utilities say they want to treat their consumer ratepayers as customers. Well, customers don’t buy products or services unless they perceive value in doing so. Utility executives seem to realize that what they’re peddling doesn’t have the raw sex appeal of an iPhone or an iPad. Consequently, they should recognize that the value they offer to consumers must include a strong monetary dimension.

It’s long past time for utilities to get specific about the tangible benefits, including savings, that consumers can derive from smart meters. If the smart grid is to result in something more than efficiency and operational savings from upgrades to transmission lines and distribution automation (DA) facilities, consumers must have good reason to play their part in making it happen.

Smart-Grid Post at GigaOM Pro

Readers with an abiding interest in the smart grid might wish to check out a piece I wrote for GigaOM Pro (subscription required) on Cisco’s foray into ruggedized networking gear for utility substations.

In that post, I examine the market opportunity, the competitive landscape, Cisco’s strengths and weaknesses in the space, and some of the challenges the networking giant will have to meet as its seeks to extend its hegemony into what should be a natural “market adjacency.”

Toward an Understanding of the China Problem

In this post, I will attempt to pull together some interrelated and overlapping observations (which I have touched on previously) and synthesize them into what I hope will be a rough framework for understanding some of what’s been happening to the global technology industry.

This is a blog, however, and not a book, so I’ll be painting in broad brushstrokes. Some generalizations will be closer to the mark than others, and for that I readily apologize. Still, I thought it was time to write this particular piece. Let’s get on with it.

The very thing that the helmsmen of market-based capitalism wanted most of all might have sewn the seeds of its decline.

Transnational corporations obviously wanted globalization. It would give them access to new sources of growth in foreign markets; it also would provide access to new investment opportunities, new supply-chain relationships, and new pools of low-cost labor. If you were a corporate chieftain, what was not to like about globalization?

But perhaps they forgot about the enduring, immutable law of unintended consequences.

In some ways, globalization has undermined market-based capitalism’s formula for success. For years, as global markets were regulated and protected, corporations struck a tacit pact, or a socioeconomic contract, with the governments and peoples in their home markets and their primary sales territories.  Corporations would generate returns for their shareholders, governments would benefit from corporate tax revenue, and the people would benefit from jobs at the corporations as well as from the infrastructure and services that taxation funded.

But, with globalization – especially in the context of the aftermath of the global financial crisis and China’s rise as an industrial hegemonic power – the old models and verities are unraveling. Many transnational corporations, who serve shareholders before all others, might be compelled by circumstance to reassess their accommodations of enlightened self-interest with governments, employees, and other secondary stakeholders in their home markets.

What I am suggesting here, in a roundabout way, is that globalization set the stage for China – with its massive domestic market and its command-and-control state-based capitalism — to steal a march on market-based capitalism’s standard bearers.  While the social compact in developed markets seemingly has broken down, China has fashioned an impressive alignment of interests between its political rulers, its people, and its geopolitical industrial strategy.

Keenly attuned to history, China’s rulers recognize that it’s easier to run an immense country with the implicit consent of the population than without it. China’s political masters have been careful to ensure that China’s people benefit from the country’s economic growth and industrialization. That’s why we see policies like “indigenous innovation,” designed to ensure that homegrown Chinese companies, products, and technologies are favored domestically over their foreign counterparts. The Chinese market is a big market, and if Chinese companies can dominate there, they will have the economies of scale to compete successfully, in many market segments, on the global stage.

China’s authorities recognize, at a fundamental level, that their long-term political control is inextricably linked to how well they pacify and placate the Chinese population. Providing people with jobs, rising income, and improving standards of living will be essential to the long-term rule of China’s political elite. This is why China will not allow itself to remain in the relative ghetto of commodity-product manufacturing. The Chinese authorities have devised an intricate, sophisticated plan that envisions the country and its people ascending the technological value chain, moving up from low-cost manufacturing to higher-end innovation and research and development (R&D). That transition won’t be easy to achieve, but it has begun.

Look at what is happening in many renewable-energy markets, such as photovoltaics and wind power, where Chinese companies are trying to advance from the manufacture of cheap knockoff products to the development of innovative breakthroughs. They have a lot of work to do, especially on wind turbines, but the plan clearly is in place.

In computer networking, Huawei went from, um, emulating the likes of Cisco Systems and Alcatel to developing its own standards-based networking products that now compete nearly as much on quality as on price against products from longtime market leaders. Cisco CEO John Chambers has said Huawei increasingly is his biggest global competitor, and he is not flattering to deceive.  It’s no coincidence that HP bought 3Com, which had transformed itself into a Chinese company with an American façade.

Meanwhile, the information-technology industry is commoditizing, a process intensified by what HP terms “labor-market arbitrage” – a euphemistic phrase denoting a transfer of jobs across international boundaries to where they can be done cheapest – and increased automation of functions that formerly were delivered by humans. At the same time, the global economy is undergoing a major realignment, as tapped-out consumers (and many governments and businesses, as well) in Western markets can no longer fulfill their role as consumption catalysts. Growth is occurring elsewhere – in the BRIC nations and beyond – and jobs are moving with it.

When the developed-world’s consumers could still buy more stuff than they actually needed, China – the world’s manufacturer – was more than content to buy U.S. treasuries to sustain a mutual relationship of convenience. Now , though, as the U.S. consumer engine sputters, China is reassessing its options. Already, we’ve heard Chinese officials say the U.S. and Europe are “less indispensable” to China’s strategic aspirations than they were in the past. Chinese has begun cultivating its own consumer economy, but it’s doing so under a state-controlled capitalism that espouses “indigenous innovation,” under which Chinese companies will keep most spoils and benefits at home.

Many Western technology companies are banking on growth derived from sales of products and services in China. As long as China pursues policies of nationalist mercantilism and indigenous innovation, those growth expectations are unlikely to be realized.

The only way Western companies will be allowed to derive big contracts from China’s biggest customers, most of which are owned or affiliated with the Chinese government, will be by moving their core R&D efforts and initiatives to China, which will make them subject to that country’s intellectual-property rights (IPR) and laws. This strategy amounts to a very different type of labor arbitrage from the one to which transnational companies have subscribed.

Fear not, though, because Chinese regulations and laws pertaining to intellectual property will become more effective and protective as China gains the upper hand in innovation and R&D. As HP has figured out, China doesn’t so much care that a company is Chinese as long as it plays by China’s rules, which will entail doing an increasing percentage of innovation and R&D in China, and not elsewhere.

Think about that.  It might be a beneficial arrangement for corporate shareholders – though that remains to be seen – but it’s not so good for engineers, researchers, and many other knowledge workers in Western economies.

I think this dynamic, the zero-sum rise of China at the direct expense of many of us in the developed world, is a problem that needs to be recognized and addressed. What China is pursuing is not your father’s market-based capitalism, in which the benefits of trade presumably would be widely shared worldwide. This is a different model, one guided primarily by geopolitical considerations. As it gains ground, it will have major repercussions worldwide.

GridPoint Among Startups Recalibrating in Search for Smart-Grid Gold

Using GridPoint as an example, Martin LaMonica of CNET examines the hardships some smart-grid startup companies are experiencing as utilities take a discriminating approach to expenditures on technology upgrades.

Even though the general consensus holds that the smart grid eventually will fulfill its commercial promise — most of it, anyway — many market analysts and startup investors now concede that they were overly optimistic regarding their industry forecasts and commercial expectations.

Like a pop star trying to appeal to a fickle audience, GridPoint has reinvented itself on a number of occasions, with its transformations perhaps prompted as much by anxious investors as by customer demand. Depending on one’s perspective, GridPoint is a market visionary seeking to provide comprehensive grid-management software or an increasingly desperate company firing shotgun blasts in all directions.

As often is the case, however, it’s not that simple. In nascent markets, such as the smart-grid space, startup vendors often recalibrate their strategic plans as expectations meet reality. It isn’t unusual for companies to go through several metamorphoses before finding the right path to prosperity — or getting irredeemably lost in the wilderness (where there are no paying customers). It remains to be seen how it will end for GridPoint, but the company is leaving no stone unturned its quest for viability.

GridPoint has struggled as a purveyor of residential energy-management software, partly because consumers remain unconvinced they need such a product and partly because utilities are ambivalent about acting as a sales channel for such products. GridPoint also has tried, with varying degrees of success, to sell grid-management software, including vehicle-to-grid (V2G) solutions, directly to utilities. Now, the company believes it has worked the market oracle by offering energy-management software to commercial, industrial, and government customers, obviating utilities in the process.

There is an identifiable, well-contested market for demand-response software in the commercial and industrial sectors, but GridPoint’s play is a bit different. Through its acquisitions of Standard Renewable Energy and ADM Micro, GridPoint has put together a relatively comprehensive offering for businesses and government organizations pursuing “optimized energy consumption” — comprising reduced costs, longer equipment life cycles, and attainment of corporate-sustainability goals — as well as a greater integration of renewable energy (and, thus, lower emissions) into their consumption profile.

It’s true that organizations can derive efficiency gains and cost savings these sorts of solutions, but customers tend to be keener on adoption if they have a self-appointed or externally enforced “green mandate.” For that reason, large departments and agencies at governments of various levels, even in these straitened times, might be the low-hanging fruit for GridPoint’s latest near-term revenue focus.

As for what LaMonica’s interlocutors, including GridPoint, tell us about the state of the rest of the smart-grid space, I agree and disagree with some of their salient observations. Yes, I agree that it’s exceedingly difficult at this juncture to sell home-energy management solutions to consumers. Most consumers aren’t fully cognizant of the smart grid, and many whose homes have been equipped with smart meters aren’t much interested in the new devices. They typically don’t notice the smart meters until time-of-use (ToU) billing is activated, at which point they are as likely to react with indignation as with bemused curiosity.

It’s not clear to me that utilities know how to sell residential energy-managmeent systems, nor is it obvious that they want to sell them. At the same time, utilities are equally concerned, perhaps for good reason, about allowing third-party vendors, such as Google and Microsoft, to circumvent them and go directly to consumers with home-energy management offerings.

Another challenge, of course, is proving to consumers that the time and money they’ll spend on such systems will be rewarded with a compelling ROI, whether measured monetarily or in environmental gratification. Utilities haven’t worked it out, and neither — as far as I can see — have vendors of such products. For their part, regulators and public-utility commissions (PUCs) seem undecided about how to proceed.

So, yes, the smart-meter-connected consumer remains a tough nut to crack. Interests haven’t yet aligned to bring the consumer the type of value proposition that will persuade him or her to become an active market agent.

But, contrary to what the article seems to suggest, utilities are spending on smart-grid upgrades to their electricity generation, transmission, distribution, and substation infrastructure. Vendors are making money selling products and services to utilities in those areas. GridPoint might have missed that particular target, but others are hitting it. The spending occurs in phases — not all at once, and not in a huge wave — but it is proceeding in measurable increments that continue to grow.

The smart grid is an expansive, sprawling, heterogeneous mosaic of  functions, products, technologies, interdependencies, and ecosystems. Depending on one’s particular vantage point, it will look different. What’s more, not all smart grids, in all parts of the world, are being created equally. Some utilities are ahead of others, and some have different priorities based on economic, environmental, financial, geographical, and policy considerations.

For vendors, as GridPoint will attest, the challenge is in determining who in the smart-grid constellation is wiling to spend now on urgent near-term priorities as well as on long-term strategic initiatives. For some vendors, that will mean reaching outside utilities, while others have found ready markets for their products and services inside utilities.

Cisco Announces Ruggedized Gear for Smart-Grid Substations

Until now, Cisco has done more talking than doing on the smart grid.

Yes, Cisco has made investments, including a notable stake in GridNet, and it has been involved in some prominent smart-grid projects and trials. But those efforts have been tentative, and they haven’t involved Cisco introducing new products specifically built for utility customers pursuing smart-grid deployments.

Earlier today, though, Cisco rectified that situation, announcing a hardened, ruggedized router and a similarly hardened, ruggedized switch, both of which are designed for deployment in utilities’ electricity substations. The new Cisco IP-based smart-grid products — the Cisco 2000 Series Connected Grid Router (CGR 2010) and the Cisco 2500 Series Connected Grid Switch (CGS 2520) — are adaptations of existing Cisco gear.

As reported by Network World, the CGR 2010 is based on Cisco’s Integrated Services Router (ISR), whereas the SGS 2520 is based on Cisco’s Catalyst 2000 and 3000 series products. The SGS 250 comes in two four-slot versions, with speeds and feeds similar to those of ruggedized switches from smaller players that have been active in the market well before Cisco’s arrival on the scene.

Like those competing offerings from the likes of RuggedCom and GarrettCom, Cisco’s smart-grid networking gear adheres to IEEE 1613 and IEC61850-3 standards for utility substation environments, including the capacity to withstand extreme temperatures. The devices also provide enhanced protection against electrical surges and electromagnetic interference.

Although smart meters and advanced metering infrastructure (AMI) receive a lot of media coverage because of their consumer-facing orientation, smart-grid products and technologies — such as substation networking gear — built for utilities’ distribution networks could possess a greater likelihood of achieving near-term commercial success.

While nobody seems sure whether or when consumers will want to fiddle about with smart meters and home-energy management systems to derive potentially modest savings on their electricity bills — consumers’ willingness to subject themselves to demand-response initiatives also remains unknown — utilities will have a need to upgrade and overlay their electricity-distribution systems with two-way communication networks. Those networks will provide efficiency savings by capturing and transmitting data from multiple intelligent electronic devices in the substation back to utility data centers for analysis.

By making their distribution networks smart, utilities will be able to quickly and accurately identify, isolate, diagnose, and perhaps even automatically repair network faults. They’ll also be able to reconfigure networks on the fly to circumvent trouble spots and keep electrons flowing.

For Cisco, the kingpin of Internet routing and switching, these new products represent a logical entry point into the smart-grid marketplace. Cisco already is a market leader in switching and routing. To get into the smart-grid space, all it had to do was adapt existing products to the specific requirements of substation deployment.

Cisco is hoping to benefit from the inherent conservatism of the utility sector. Utilities prize reliability — and hence risk mitigation — above all else. Utilities prefer to go with the tried and true over the conceptually interesting but unproven; and they also tend to favor established, well-known vendors over startups. Cisco is hoping its Internet market leadership, in enterprises and service providers, carries over to the utility industry, allowing it to tap an opportunity that it believes could be a hundred to a thousand times the size of the Internet, representing a $20-billion market in just five years.

The networking giant’s success isn’t assured, though. While Cisco is the top dog of enterprise networking, it’s a newcomer to the utilities. Even though its brand is known, it’s not known directly by many utility customers. It will have to build a base, as well as relationships and credibility.

In an email message to Forbes, Forrester analyst Doug Washburn discussed the challenge Cisco faces:

“It’s going to be critical for Cisco to forge partnerships with smart grid solution providers, the Accentures and ABBs of the world. Those companies] specialize in the utility industry and can engage the utilities at a business and strategic level, not just the IT and operational level.”

In talking with EE Times, Washburn elaborated further:

“I did not hear much from Cisco on this topic, and it’s an important one since these players (Accenture and ABB, and the like) help utilities determine their smart gird strategy which ultimately drives technology and vendor decisions.”

But Cisco has drawn Accenture’s support. In a press release announcing its hardened networking gear, Cisco includes a salutary quote from David M. Rouls, managing director of Accenture Smart Grid Services:

“Accenture and Cisco have a shared Smart Grid vision. We believe that the inherent value in moving toward a Smart Grid is derived from securely transporting, integrating and analyzing the vast amount of information that results in the transformation from analog to digital. Accenture is particularly excited to enable the data management, event processing, and analytics functionality delivered with the Accenture Intelligent Network Data Enterprise (INDE) and leverage the advanced networking capabilities of the Cisco CGR 2010 for our utility clients.”

Besides, when it comes to entering new markets, Cisco knows the drill, even though this challenge might be qualitatively different from those that have preceded it.

Internet historians will remember that Cisco was once new to carriers. It had to develop domain expertise, develop and acquire new skills, and build and nurture new contacts and long-term relationships. It was largely successful in that endeavor, and it will follow a similar blueprint in attacking the smart-grid opportunity in the utility sector.

The company already is following the well-worn playbook, hiring utility insiders to join and lead its smart-grid team, obtaining essential skills and valuable customer contacts in the bargain. It’s building relationships with early customers, too, including three utilities that will use its new products  in substation automation trials.

Network World reported that both Cisco products, the router and the switch, start at about $6,000, with the router available in July and the switch available in August. Meanwhile, EE Times reported that the router starts at a list price of $7,800, with the switch prices starting at $5,300.

Cisco has taken a while to make a product splash on the smart grid. This first tangible foray might not have the superficial glamor of a home-energy management play, but it’s a logical first step that allows Cisco to build a bridge from its successful past into a potentially lucrative future.

Components Shortages Affecting Vendors Worldwide

At the moment, components shortages seem to be pervasive in the technology industry. Vendors large and small, throughout most of the world, have been affected by them to greater or lesser degrees.

The problem appears to be with us for a while. To be best of my knowledge — and I will concede at the outset that my research hasn’t been definitive — vendors everywhere in the world are having difficulty sourcing adequate numbers of many types of components. The only exception is China, where vendors in telecommunications, cleantech, and other fields have not reported that same component-sourcing difficulties that have hobbled their counterparts in Europe, North America, and other parts of Asia.

That doesn’t necessarily mean that Chinese companies aren’t affected by components shortages. All it means is that they haven’t reported them, at least in the English-speaking media I’ve perused. Still, it’s a development that bears watching. In that China does not ascribe to the tenets of unfettered capitalism, it sometimes operates according to a unique set of rules.

Today’s component shortages span various semiconductor types, including but not limited to DSPs, FETs, diodes, and amplifiers. Vendors of solar inverters, particularly those based in Europe, also have been affected.

Meanwhile, Reuters reports that a shortage of basic electrical components could last into the second half of 2011, limiting the ability of telecommunications-equipment manufacturers to respond to improving market demand.

Reuters reports that memory chips and other fundamental components such as resistors and capacitors are in short supply after their makers slashed output, fired staff, put equipment purchases on hold or went out of business during the recession.

The shortages already have been blamed for weaker-than-expected results last quarter at telecommunications-equipement vendors Alcatel-Lucent and Ericsson, which really don’t need the added grief.

Alcatel-Lucent blamed components shortages for a large loss that it posted in its first fiscal quarter. Alcatel-Lucent’s CEO Ben Verwaayen said the said the shortages involved “everyday” low-cost components. He explained that most components come from China, where the manufacturing industry hasn’t been revamped since major cuts that followed the severe global downturn. 

We already know that the supply-chain issues that afflicted Cisco’s channel partners and customers were blamed partly on component shortages.

What’s more, Dell partly blamed shortages and higher costs of components, including memory, for its inability to maintain gross margins during its just-reported quarter.



And AU Optronics, Taiwan’s second-ranked LCD manufacturer and a supplier to Dell and Sony, reported that an LCD panel shortage is likely to last into the second half of this year.

By no means are those the only vendors affected. You only have read the recent 10-Qs or conference-call transcripts of companies involved in computer networking, telecommunications gear, personal computers, smartphones, displays, or cleantech hardware to understand that components shortages are nearly everywhere.

I just wonder — and I make no accusation in doing so — whether Chinese manufacturers are as affected by the shortages as are their competitors in other parts of the world.

As Belkin Ramps Home-Energy Management, Where’s Linksys?

As Belkin ramps up its smart-grid activities in electric-vehicle charging and home-energy management, an obvious question arises: Where’s Cisco?

Specifically, where’s Cisco’s Linksys unit, the business that competes against Belkin in the home-nettworking market with a portfolio of wireless routers and other access gear?

Linksys would be a natural player in home-energy management. In fact, it wouldn’t be a stretch to imagine Linksys offering home-energy management or vehicle-to-grid (V2G) applications in residential and commercial environments.

True, Linksys already has powerline products, which were reportedly involved in Cisco’s smart-grid, home-energy management initiative with Duke Power. Nearly a year ago, speculation mounted regarding the imminent arrival of Linksys-branded, home-energy solutions.

Those products have yet to arrive on the market, though. Here are some scenarios that attempt to explain the Linksys no-show.

1) Patience — they’re still coming.

For all I know, Cisco could be on the veritable cusp of making a major Linksys home-energy-management announcement. Such an announcement might have been planned for months, and it might be made within the next few weeks.

2) The best smart-grid opportunities are elsewhere

Cisco might think the smart-grid market’s low-hanging fruit does not include home-energy management systems connected to smart meters. Indeed, considering all the infrastructure upgrades at utility data centers, across transmission networks, throughout distribution facilities, and spanning mesh networks that connect everything together, Cisco conceivably could have more than enough on its smart-grid plate.

What’s more, the home market might prove a tougher nut to crack than the aforementioned areas, most of which are, to varying degrees, “now” markets.

In this scenario, Cisco is treating home-energy management as a secondary consideration, a market segment to be addressed at a later date.

3) Maybe an all-Cisco-branded solution is in the works

In a way, this scenario connects to the first one, and maybe even to the second. Perhaps Cisco is putting together a utility-friendly end-to-end solution that will omit Linksys-branded products. I don’t know whether this scenario is probable — the Linksys brand has consumer cache, and it could be leveraged accordingly — but it can’t be dismissed.

4) Perhaps Cisco is asleep at the switch

Cisco is busy on multiple fronts across a growing number of technology-related markets. It’s entirely possible that Cisco’s market reflexes have slowed, and that it was beaten to the punch by a nimbler rival.

It’s possible, but I’m not buying it. John Chambers and his team waste no opportunity to cite the smart grid’s commercial potential and to emphasize Cisco’s singular suitability to address it. I don’t think Cisco has forgotten about this market.

In all probability, a hybrid of scenarios one and two explains the low profile Linksys and Cisco have projected in home-energy management.

HP Dumps Cold Water on Smart Grid

If the nascent smart-grid market is afire with hype, HP Is doing its utmost to throw cold water on the blaze.

Speaking at HP’s annual Executive Energy Conference in Dubai this week, Ian Mitton, HP’s utilities industry director and global lead on smart grid technology, said smart-grid security has been an “afterthought” in early deployments and that “projects are not happening fast enough,” according to a report in eWeek Europe.

When it comes to HP and the smart grid, we can go one of two ways with our interpretation. We can conclude that HP is right, that security has been overlooked and that market adoption has been tepid; or we can conclude that HP is denigrating smart-grid security and the overall market because it is late to an increasingly festive party.

Then again, maybe both conclusions are valid. They aren’t mutually exclusive, after all. In some parts of the world, such as Asia and North America, the smart-grid market is exhibiting relatively strong growth, whereas market vitality is less in evidence in many European jurisdictions.

What’s interesting, though, is that 3Com’s H3C, which HP now owns, is said to be well positioned to benefit from booming smart-grid expenditures in China. As the 3Com integration proceeds, HP’s tune on the smart grid might change.

Examining Analogies Between Internet and Smart Grid

In the summary paragraph of a perspective piece he wrote for Greentech Grid, John Steinberg, the CEO of EcoFactor, makes the following claim:

The Internet, the growing importance of the user experience, and the entrance of large tech companies should all be seen as good omens for the future of the smart grid.  These trends will lead to better products and services, which will in turn drive consumer adoption. And consumer adoption will be the key to fulfilling the environmental and economic potential of the smart grid.

For the most part, I agree with Steinberg, though, as the CEO of a software-as-a-service (SaaS) platform vendor offering consumer-oriented smart-grid solutions, he admittedly has a vested interest in promoting his argument.

I am perhaps not as sanguine as Steinberg on two points. In his commentary, he compares the early Internet service providers and their walled gardens — the likes of CompuServe, Prodigy, and AOL — with today’s utilities. His argument is that just as the Internet occasioned the demise of walled gardens and their purveyors, Internet-based technologies providing the communications infrastructure for the smart grid will bring about a similar fate for utilities that resist demands to provide consumers with third-party, energy- and money-saving applications and services.

To a point, I accept that argument. That said, I’m not entirely certain that the aforementioned service providers are completely analogous to today’s utilities. The utility sector is probably the most highly regulated of any industry in the Western world. Any change that comes to the industry will not happen overnight. While I agree that Internet technology will unleash tremendous innovation and valuable services for energy consumers, I suspect the pace of change in the utility sector will be significantly slower than what we experienced in the Internet ecosystem.

In a similar vein, Steinberg asserts that incursions into the smart grid by information-technlogy giants Google, Cisco, and Microsoft represent both validation of the smart-grid market opportunity and a sign that said market has reached a critical phase of maturation. I accept the first premise, but I am skeptical of the second.

Cisco, for example, recognizes the vast growth potential of the smart grid, but it has yet to find a means of tapping into it meaningfully.  Cisco will figure it out, I’m sure, but the company is still learning about the energy business and utilities. It’s a radically different space than anything Cisco has tacked previously, and I think the leadership is Cisco is realizing that it must listen and learn before it prescribes nostrums.

Meanwhile, Google and Microsoft are making similarly measured moves.

There’s real promise in the smart grid, and liberating change will come to the utility industry. However, as Gartner might say, technology vendors seeking fortune in the space should expect to travel through a trough of disillusionment before ascending a slope of enlightenment.

Will Electric Cars Redeem the Smart Grid’s Reputation?

Michael Kanellos of Greentech Media has written a commentary suggesting that electric vehicles might be the silver bullet that overcomes public apathy and outright antagonism toward smart meters and the smart grid.

After explaining that utilities in the United States and Australia have discovered that consumers aren’t enamored of the concept of demand response or of the higher electricity bills that frequently accompany smart-meter rollouts, Kannellos writes the following:

Even avid greenies seem blasé. In Canada, Toronto Hydro has scrutinized the behavior of around 115,000 customers on time-of-use plans. Has cut rate power at night goosed them to shift their behavior? “No. Not really,” said Toronto’s Karen France during a meeting at eMeter’s customer event.

Matt Golden, co-founder of retrofitter/software vendor Recurve, told me recently that the company has installed some energy management dashboards in the homes of clients. After two weeks, the frequency of interaction with the dashboards drops considerably. There have been success stories — customers surveyed in a test conducted by Silver Spring Networks and Oklahoma Gas and Electric were overwhelmingly surprised to learn about their rate of energy consumption — but people seem to be dozing off on what is a very important technology.

So what’s the problem? Utilities and building management outfits are asking people to change their behavior to save pennies. PG&E’s residential rates range from 11 to 49 cents a kilowatt hour. Will you alter your laundry schedule to save 37 cents? Toronto’s spread is 9.9 cents at peak and 4.4 at night.

Indeed, Kanellos identifies the problem, in Toronto and elsewhere. But the problem runs deeper than that, and Kanellos, to his credit, addresses it.

A little later in his commentary, Kanellos writes that consumers are wary of smart meters, and of the larger smart grid, because they suspect strongly that utilities will be the only parties to benefit from them. There’s some truth to that assessment, too, especially when one considers utilities’ operational costs savings: no more truck rolls for meter reading or for shutting down or activating service, plus the capacity to shave peak demand and to avoid having to add costly electricity-generation capacity.

For the consumer? Well, the benefits aren’t so clear, and certainly not as compelling. In some jurisdictions, careful consumer ministrations to smart meters mean only the difference between small increases in electricity bills and larger hikes.

Kanellos thinks electric cars will enhance the consumer appeal of the smart grid. To his way of thinking, electric cars are destined to be a huge hit with consumers, who will come to understand that the smart grid, including charging stations at home and out in the wider community, is essential to the sustenance of their new vehicles. At that point, Kanellos believes, consumers will grasp the importance and value of the smart grid, and they’ll buy into the program the utilities are pushing.

Maybe Kanellos is right. Perhaps electric vehicles will rescue the smart grid from public apathy and infamy. Then again, electric cars will not become ubiquitous overnight. A year from now, even a few years from now, not everybody will have one.

In the meantime, the braintrusts at utilities, regulators, and smart-grid vendors will have to devise other means of engaging, rather than alienating, electricity consumers.

DOE Sounds Alarm on Rare-Earth Metals for Cleantech

The devil is in the details. We’ve all heard the saying, and we know what it means. It’s great to have a big picture and a bold plan, but getting the details and execution right ensures our success.

As the U.S. and other Western countries pursue a future in which clean technologies and renewable energy will play integral roles in economic growth, industrial strategy, environmental sustainability, and societal wellbeing, the details will be increasingly important.

Here’s a detail that’s been overlooked until recently: China produces more than 95 percent of the global supply of rare-earth metals. Some reports suggest that China controls, through ownership of foreign sources as well as those on its own territory, nearly 100 percent of the global market. That’s an important detail, because rare-earth metals are essential ingredients in a wide range of technology products.

Rare earths are integral to the development and manufacture of a wide range of technologies and products used in medicine, consumer electronics, mobile phones, computer networking, data storage, and — last but not least — cleantech (wind turbines, photovoltaics, HVEC batteries and engines, among others).

Without an adequate supply of rare-earth metals, or suitable substitutes for them, the future of cleantech (and many other kinds of technology, too) is compromised.

All of which explains why the U.S. Department of Energy (DOE) yesterday issued a request for information (RFI) pursuant to development of “its first-ever strategic plan for addressing the role of rare earth and other materials in energy technologies and processes.”  The purpose of the RFI is stated clearly:

The purpose of this RFI is to solicit feedback from industry, academia, research laboratories, government agencies, and other stakeholders on issues related to the demand, supply, use, and costs of rare earth metals and other materials used in the energy sector. DOE is specifically interested in information on rare earth elements (e.g., lanthanum, cerium, neodymium, terbium, europium, samarium, dysprosium and ytterbium), gallium, lithium, cobalt, indium, tellurium and platinum group metals, as well as other materials of interest identified by the respondents to this request.

During the Cold War, the U.S. pursued a strategic interest in rare-earth metals, ensuring their exploration, mining, separation, refinement, alloying, and manufacture domestically and in countries such as Brazil, South Africa, Canada, and elsewhere. Then, the Cold War ended, and the focus shifted, primarily because rare-earth metals had been strategic defense considerations in the showdown with the U.S.S.R, which no longer existed. With no need to worry about the U.S.S.R., and cleantech not yet considered strategically important, rare-earth metals were deemphasized.

In the interim, however, cleantech — and especially renewable energy — has become a top-of-mind strategic concern. During the same period, China — emerging as the global manufacturing foundry for a panoply of technology products — seized control of the market for rare-earth metals. China realizes that demand for those key ingredients outstrips supply, and it has been increasingly taking measures to restrict their export. China’s goal, it seems, is not only to control the market for rare-earth metals, but also to control the downstream markets for the products and technologies made from them.

That is why the DOE has issued an RFI and why it feels the urgent need to draft a strategic plan. In a keynote address at the Technology and Rare Earth Metals Conference 2010, David Sandalow, the DOE’s assistant secretary for policy and International affairs, said that it was imperative to globalize supply chains, to develop substitutes for rare-earth metals, and “to promote recycling, re-use and more efficient use of strategic materials.”

Fortunately, rare-earth materials aren’t especially rare. They’re widely found in the earth’s crust. The problem isn’t so much that they can’t be found, but that they’re not being mined, refined, processed, and manufactured outside China. With crisis comes opportunity, of course, and several mining companies in the U.S.A. have plans to reopen abandoned or disused mines.

It’s worth noting that rare-earth materials differ in their commercial applicability and market value. Although not openly traded — not yet, anyway — recent valuations in China suggest “heavy” rare-earth metals are worth more than their “light” rare-earth counterparts. As mentioned in an article in The Australian, covering the recent Toronto convention of the Prospectors & Developers Association of Canada:

Among the “heavy” rare earths, europium (which gives you red on your TV or computer screen) was bringing over $US475/kg; terbium (used in magnets) was worth at least $US340/kg; and dysprosium (magnets and lasers) could bring upwards of $US107/kg.

By contrast, the “light” rare earths are in a different price bracket. Lanthanum (used in re-chargeable batteries) brought under $US6/kg, cerium (used in glass) under $US4/kg, with neodymium (magnets, lasers, glass) fetching around $US14/kg.

If the concerns of the DOE are well founded, market prices for all of the above will rise. If you’re in cleantech or information-technology hardware vendor, you’ll probably want to track these developments closely.

It’s interesting to note that China has used its rare-earth advantage as a lever to draw companies and projects onto its soil. Facing the threat of supply bottlenecks and export controls, some U.S. and European technology vendors have relocated some initiatives to China.