The latest Fortune Magazine has an article titled: Can this man save the grid?
According to the Edison Electric Institute, utilities over the next 20 years will spend hundreds of billions of dollars on infrastructure improvements, including computers, sensors, and networking systems….
One of the players best positioned to capitalize on the rollout of the smart grid is a Silicon Valley entrepreneur named Ray Bell. Bell, 52, a veteran of Oracle (NYSE:ORCL), Cisco (NASDAQ:CSCO), and a network services company he started called SmartPipes, has focused on what may be the most profitable component in the new system: the electric meter that sits in your basement and ticks off the watts as you consume them.
I have been an owner of the market leader in smart meters, Itron (NASDAQ:ITRI), for some time. I found the article interesting because it uncovers a potential competitor I hadn’t previously worried about.
It costs roughly $300 apiece to replace them with one of Bell’s so-called smart meters. Southern California Edison will spend $1.7 billion over the next four years to equip 5.3 million homes with smart meters made largely by competitor Itron, based in Liberty Lake, Wash. Bell thinks he has made a better one.
That doesn’t bother me much. Of course Bell thinks his is better, otherwise he wouldn’t have bothered to make it. History is littered with products that are technologically better but fail in the marketplace. More worthy of concern, to me, is his sales force.
He has some important backers. His main partner is the biggest, most dependable name in the business: General Electric (NYSE:GE).
GE gives instant credibility, clout and power to the product, as well as making it possibly less likely that GE would want to acquire Itron.
There’s probably enough room in the market for both players, but it is worth keeping an eye on the potential competitive effects.
Disclosure: At time of publication, William Trent owns shares of Itron (ITRI).