By Matthew Madden
Are the same strategies and market dynamics that characterized the growth of the telecom industry in the late 1990’s surfacing in the emerging smart grid and electric vehicle infrastructure market? For much of the telecom boom, Cisco Systems was admired for their ability to identify, invest and acquire promising technology from early stage ventures – effectively outsourcing their research and development. Cisco was the best practitioner of this strategy, but all of their competitors at the time – Lucent, Alcatel, Nortel and Fujitsu – established partnerships with entrepreneurial organizations to harness the motivation of both visionaries and executives with the promise of significant, financial rewards, hedge their risk on competing technologies, and – most importantly – bring innovative technology to market faster than the larger companies could if developed internally. Of course, the history of mergers and acquisitions will detail similar business trends in a variety of industries but the technology industry of the internet boom – particularly the telecom industry – may present the best precedent when considering the emerging smart grid and electric vehicle infrastructure markets.
Three of the most dominant equipment suppliers to the utility industry have been employing similar strategies within the increasingly competitive smart grid and electric vehicle infrastructure sectors. GE, Siemens and ABB have a long history of competing in the well-understood markets of power generation, transmission and distribution. Their customers – particularly investor owned utilities – are now demanding more from their long-time suppliers and, as the vision and definition of a smart grid-enabled future becomes better understood, these companies are augmenting their own internal development projects with both investments into and partnerships with many entrepreneurial companies seeking to bring innovative software and hardware to the utilities market. Two additional commonalities exist between today’s smart grid market and yesterday’s telecom boom. GE, Siemens and ABB all understand that time-to-market is critical when approaching a competitive market. By effectively outsourcing some of their development projects, these companies can bet on multiple, competing technologies, circumvent the bureaucracy so often associated with such large corporations and introduce new technologies to the market faster. Additionally, these competitors realize that – while utilities have recently demonstrated a willingness to purchase from smaller companies – the long track record, relationships and trust that exists between vendors such as GE, Siemens and ABB and their utility customers can certainly be leveraged to encourage these customers to purchase products from their partners.
Synergy may be one of the most over-used buzzwords in business parlance but it certainly exists in the developing smart grid market. GE, Siemens and ABB need small companies for their cutting edge technology and ability to add to their product mix as the organizations seek to offer a complete solution. The start-up companies need GE, Siemens and ABB for the long-standing relationships they have with their target utility customers.
Below is a snapshot of some of the most interesting relationships developing in the smart grid and electric vehicle infrastructure market:
Matthew Madden has 15 years of sales and business development experience including nearly a decade selling communications networks to the largest utilities in the country. He can be reached at email@example.com