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October 15, 2009

Microsoft SERA: How Far Will They Go?



For those of you who follow me as a telecom/tech analyst, you’ll know that I comment on Microsoft’s movements in that space on my Analyst 2.0 blog, as well as my Service Provider Views column on TMCnet. They’re working hard to push into new markets, and have too much money and talent not to succeed. These days, getting the technology right isn’t always the hardest part – success depends on doing so many things well.
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The story isn’t much different in the smart grid arena, as evidenced by this week’s announcement about SERA – Smart Energy Reference Architecture. This reference architecture reflects Microsoft’s views on how smart grid build-outs should incorporate data and communications, and create an environment comparable to what Unified Communications (News - Alert) is trying to do in the enterprise market. Several data and software vendors are coming to market now with their distinct approaches that address interop issues and enable the plug and play platform that everyone wants.
 
There certainly are parallels to Cisco’s (News - Alert) smart grid ecosystem push, which I wrote about last week on this portal. With SERA, Microsoft is making the case that software-based reference architecture is the way to go. I’m not technical enough to say which model is truly best for utilities to adopt, and I’m sure they all have their merits. I really see this as more of a religious issue that will unfold in exactly the same way it has in the telecom/IT world around Unified Communications.
 
All the vendors can offer a UC solution, and I have no doubt they can do the same for utilities. It’s really more a matter of what the IT culture inside the utilities buys into. As with enterprises, the old guard of IT will be more hardware-centric, and see voice as a separate domain from data. This crowd will be more likely to keep their eggs in the incumbent basket and stick with the tried and true vendors, and when it comes to smart grid, this means the likes of Siemens and ALU from the telecom world, Cisco from the data/telecom world and IBM (News - Alert), given their deep roots in hardware.
 
The younger guard of IT decision-makers and influencers are tied less to this world, and will likely be more open to software-based solutions and architectures that draw more from the Internet world than legacy telecom. Clearly, this is where Microsoft is most at home and will get foremost consideration when utilities start to think about the big picture for the smart grid objectives. Once you are open to the notion that almost any form of data networking or communication platform can be software-based, it is not that big of a stretch to see Microsoft being at the heart of your smart grid network.
 
Microsoft clearly understands that, and their game plan is pretty well spelled out in the press release. All the data/telecom/IT vendors understand this, simply because the stakes are very high. Once you become the key driver of the smart grid network, you have a lot of sway over what partners will be included – or excluded from the network. As with Unified Communications, there is a winner-take-all scenario shaping up, and a Microsoft win becomes a Cisco loss, and vice versa.
 
No vendor has all the answers, and each must play to its native strengths. In Microsoft’s case, SERA is the next step along the way to a totally integrated, end-to-end smart grid ecosystem. SERA addresses the network environment, but also ties in neatly to Microsoft’s Hohm initiative, which my ICP partner, Shidan Gouran, wrote about here last week. On its own, Hohm competes directly against Google (News - Alert) PowerMeter, but that’s where the comparison ends. Google is not a data network play, but Microsoft is. In the scenarios where a utility is deploying both Hohm and SERA, Microsoft will truly have it all, and I have no doubt they will get their share of the end-to-end market.
 
Cisco may have a deeper, richer network-focused partner ecosystem, but they lack the consumer brand cachet that Microsoft has. With its ubiquitous presence on our home PCs, Microsoft already has a beach head from which to launch home networking and home automation applications via Hohm. This is where things get interesting, as it goes well beyond just giving consumers more control over how they consume/conserve energy. Ultimately, Hohm helps utilities build intelligence about our usage patterns, and this adds tremendous value to what smart grid can do for the utilities themselves.
 
There is a great to deal explore here in upcoming articles, and the main thought to leave you with here is that if Microsoft can gain traction with SERA, and Hohm starts to find an audience, they will be very well positioned for smart grid success. And by the way, each can be a driver for the other.
 
In other words, I’m sure that Hohm will naturally appeal to a segment of the market on its own, and as utilities come to recognize the value of the data it generates, they will also come to see that a Microsoft-based network infrastructure is the logical solution to maximize this value. As such, one validates the other, and for those utility IT Directors who are on the fence about SERA, this just might be enough to push them into the Microsoft camp altogether. Good news for Microsoft and bad news for everyone else. Not a bad strategy, I’d say, but let’s leave it at that, and I invite you to jump in with your thoughts.
 
Learn more about Smart Grid technology at the Smart Grid Summit, an event collocated with ITEXPO East 2010, to be held Jan. 20 to 22 in Miami. This is the event you need to attend if you want to understand the role that IP communications technologies will play in how the Smart Grid evolves – not just for making utilities more efficient, but also for enabling the Smart Home and a new generation of communications innovations. Register now.

Jon Arnold (News - Alert) is co-founder of Intelligent Communications Partners (ICP), a strategic advisory consultancy focused on the emerging Smart Grid opportunity. To read more of his Smart Grid articles, please visit his columnist page.

Edited by Michael Dinan
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