Cisco on Wednesday announced a strategic alliance with power metering vendor Itron, through which it will develop IP technology products and a platform for smart energy grids.
Specifically, Cisco and Itron will come up with a reference design, based on IPv6 technology, for standards-based smart grid technology. Their relationship won't be exclusive; Cisco expects to sell that technology to other vendors developing smart grid products, too.
The alliance is "a major step forward in the realization of a modern, more intelligent energy infrastructure," said Laura Ipsen, general manager of Cisco's Smart Grid unit, in a statement.
So-called smart grids are theoretically able to better manage how energy is distributed from utilities and networks to consumers, homes and businesses. Cisco Chairman and CEO John Chambers has previously described smart grid not only as a key market segment, or "adjacency," for Cisco, but also as a potentially $20 billion-a-year business by 2014. In a recent study, ABI Research projected the global investment in smart grids and smart meters to be about $45 billion by 2015.
IP networking technologies will play a key role in creating smart grid infrastructure, and while Cisco has invested in the space already -- including the debut of its Smart Grid Ecosystem last fall and beefing up its smart grid portfolio in May -- it's alliance with Itron represents one of its biggest moves to date.
Under the terms of the deal, Itron will license and integrate Cisco's IP networking technology within its OpenWay meters, and also plans to distribute Cisco networking equipment and software in deployments to utility customers.
Financial terms of the partnership were not disclosed. On a conference call to discuss the relationship, Cisco and Itron executives declined to provide an exact timeframe for when the reference architecture and platform would be completed.
One of the big questions for the emerging smart grid market is how solution providers -- especially Cisco VARs -- can expect to play.
According to Paul DeMartini, vice president and CTO of Cisco's Smart Grid team, it's the emerging ecosystem around smart grid deployments where solution providers will find rich opportunities: not only the metering technologies, but the communications systems, security, data management and software development needed to make the infrastructure work.
"From my own experience, there's an enormous amount of money and effort and basically mindshare being spent on getting the basic systems working," DeMartini said in an interview with CRN Wednesday. "Moving to a standards-based platform, there's much more attention and energy that can be focused on getting solutions integrators to create business value for these customers."
"The smart grid is a very broad area," added Philip Mezey, senior vice president and chief operating officer for North America at Itron. "The partners that are going to benefit are the ones that can deliver new insights into how we're going to deliver that value. There will be a systems integration [play], but ultimately we're going to need very specialized skills to make this infrastructure more manageable, and operate these networks."