Cisco Pulls Out Of Home Energy Management

Cisco has become the latest high-tech vendor to withdraw from the energy management sector

Cisco has quietly shut down its energy management program for buildings, amid reports of a lack of consumer interest.

Cisco’s announcement was tucked away in its forth quarter earnings call, and follows hot on the heels of rivals Microsoft (Hohm) and Google (PowerMeter), both of which also decided to exit the same sector last month.

Specifically it seems that Cisco is pulling out of the building-energy tools as well as its Home Energy Controller (i.e. an energy dashboard) segments.

Two Year Effort

It was back in July 2009 when Cisco officials unveiled its Smart Connected Buildings programme, which included the first product, a device designed to bring greater intelligence to building systems such as heating, ventilation and air-conditioning (HVAC), lighting, electricity and security.

This device was dubbed the Network Building Mediator, and was designed to tap into Cisco’s networking expertise and enable building managers or home owners to monitor and measure energy systems throughout the building. The idea was that they would use the information to institute various energy-saving programmes.

The Network Building Mediator was part of Cisco’s larger EnergyWise push, designed to apply the company’s technology to the growing problem of energy consumption and its related effect on the environment.

Cisco Explanation

A blog posting by Cisco’s Laura Ipsen, senior vice president of global policy and government affairs, revealed the thinking behind the decision.

“Over the past two years the home and building energy management markets have evolved in such a way that we believe we can provide more value to our customers and the industry by enabling interoperability through our core networking products and solutions (for example, EnergyWise) as part of our integrated architecture within the broader smart grid effort,” Ipsen wrote.

Ipsen hinted that Cisco will likely sell its building management software suite, Mediator. She also hinted that Cisco will likely axe its household offerings.

“For building energy management, this means we are actively pursuing several strategic options for Cisco’s Network Building Mediator and Mediator Manager product line, with an emphasis on minimising the impact on current customers, partners and employees, she wrote.

“For energy management in the home, we will transition our focus from creating premise energy management devices to using the network as the platform for supporting innovative applications and architectures that will improve our customers’ value proposition in the consumer energy management market,” Ipsen wrote.

Poor Consumer Interest?

Ipsen’s comments do little to explain the main reasons why Cisco joined Microsoft and Google in exiting the home energy market.

However a likely possible explanation was suggested by Katie Fehrenbacher at GigaOm.

“Throughout 2009 and 2010, Internet companies like Microsoft, Google and even router giant Cisco launched experimental software and hardware to help building managers and home owners monitor and control their energy consumption,” Fehrenbacher wrote. “While Microsoft and Google focused on consumer-facing software, Cisco decided it would build a home-energy dashboard and also sell building-energy-management products.

“But now, 12 to 24 months later, all three of these players have ultimately made the decision to abandon those projects,” she wrote. Fehrenbacher said that Google’s PowerMeter and Microsoft’s Holm were minor projects, but basically they were shut down because of lack of consumer interest.

“Ultimately Google and Microsoft shut down PowerMeter and Hohm, partly because not enough consumers signed up to use the service. The tools were free and easily available on their websites, but at this point consumers just lack the fundamental interest in spending time managing their home energy consumption,” she wrote.

“Cisco was selling its home energy controller through utilities rather than to consumers, but it indirectly faced this problem, too. I’m not sure what Cisco found via its pilot projects, but it likely wasn’t overwhelming consumer interest in the dashboard,” she wrote.

Cisco Restructuring

Of course it does not help that Cisco is currently undergoing a painful restructuring.

This includes streamlining its sales, services and engineering units, getting rid of businesses that do not address Cisco’s key markets (it axed its profitable Flip video camera unit), and reducing the workforce by about nine percent by cutting about 6,500 jobs.

The goal is to cut $1 billion (£615m) in annual operating expenses and the result will be a more competitive and more focused Cisco.