Section Title
IBM takes role in ‘smart grid’ projects
March 20, 2009. Big Blue is getting big green ideas.
Through its Menlo Park-based Venture Capital Group, Armonk, N.Y.-based IBM Corp. has partnered with venture-backed Northern California companies like San Mateo-based eMeter, Redwood City-based Silver Spring Networks and Sacramento-based SynapSense and is informally working with dozens of other startups to develop business in clean technologies.
The giant computer company is working with companies in network and smart grid management, wireless sensors and controls, energy management and monitoring, water monitoring and others.
In smart grid technology deals, IBM generally acts as a systems integrator and provides services to utilities that are installing new ways to monitor electricity use. IBM has been called upon by utilities to manage entire transmission systems upgrades.
IBM’s hardware and technology, for example, will underlie eMeter’s meter data management system for 2 million smart meters purchased by Houston-based CenterPoint Energy beginning this month. IBM is involved with 50 smart grid projects globally including PG&E’s $2 billion installation of 5 billion electric and gas meters.
IBM doesn’t take an equity stake in the companies it works with and hasn’t generally formed exclusive contracts with other vendors.
“We think it’s a much better situation for us if we leave that opportunity to partner with thousands of smart companies innovating at light speed rather than say, ‘We’re going to go out and try to do all of this,’” said Drew Clark, director of strategy for the Venture Capital Group. “Companies who do it take all the risks of doing all the innovation and pay all the costs. IBM decided some time ago we were deliberately not going to do all of it and would leave that for our partners.”
IBM’s partnership strategy is nevertheless lucrative. Clark said partner channels generated business representing one-third of IBM’s $103 billion in 2008 revenue. The energy and utility sector for IBM is “one of our fastest growing” business lines, Clark said. Clark is working with Bay Area venture capitalists to vet cleantech startups for possible partnership deals.
“We’re seeing a lot of interest right now in smart grid,” said Richard Lechner, vice president of energy and environment for IBM.
Lechner said IBM’s focus on electric transmission and energy management has sharpened — as the government’s economic stimulus has dedicated billions to invest in smart grid, and as utility customers become more keen on increasing efficiency and decreasing electricity use and therefore the need for as many new power plants.
Partner companies say IBM’s software is often the fabric that ties their system together with utilities’ systems.
“These projects involve lots of software, services and hardware to bring a whole solution together,” said Eric Miller of intelligent networking company Trilliant.
San Francisco Business Times - by Lindsay Riddell