A difficulty of fundamental research is that scientists rarely know exactly how a discovery will be manifested in the marketplace, that is, if it ever reaches the market. In business, we make technological advances to fulfill latent market demands. Sometimes however, even business finds technology has to be repositioned.
In March of 2002, the 2-way ReFLEX peer-to-peer telemetry technology was separated from Motorola and purchased by SmartSynch. This change of direction in technological deployment met two needs. For Motorola, 2-way telemetry was the technology behind their 2-way pagers. The market demand for 2-way pagers is declining precipitously in light of the increase in mobile telephony. Thus, Motorola no longer saw 2-way telemetry as a core corporate asset deserving much further investment. For SmartSynch, 2-way telemetry is the technology behind Commercial and Industrial (C&I) utility meters used to generate interval billing, curtailment, peak threshold measurements, and power quality monitoring. SmartSynch realizes that 2-way telemetry is a core asset of their future revenue stream.
2-way telemetry is a wireless technology. It allows for machine-to-machine communication, can be deployed over any public wireless network, and can be customized to meet a variety of applications. CreataLink 2XT of SmartSynch is a hardware module about the size of a credit card that includes Analog-to-Digital converters, 8 I /Os, a microprocessor, and flash memory – everything that is required to deploy a software solution for wirelessly managing a remote asset. For utility metering, this module is placed in ABB, Siemens, and other polyphase meters. While most press covers consumer wireless products such as cell phones and NIC cards, the telemetry industry is significant. The Yankee Group forecasts revenue from Telemetry applications, including hardware, software, and service, to increase from $2.9 B in ’01 to $6.6 B in ’06.
The demand for 2-way telemetry solutions in the energy market is related to industry changes associated with deregulation, globalization, and distributed generation. C&I utility billing is very different from our well know residential bills. Besides being billed for total usage, C&I customers have different bill rates dependent upon the time of day and highest load demand. Also, industrial energy customers will sell their power demand back to generating companies during high-load periods to lower the overall demand required on the grid. This allows for the generating company to lower its required investment in new generation capacity, thus lowering its overall cost structure. Alternatively, C&I customers are increasingly demanding interval metering and billing. This allows C&I customers to better monitor their energy usage and plan their finances, activities and demand accordingly. The overall financial impact for both the power supplier and the C&I consumer is significant.
When SmartSynch learned of the availability of this key asset, they raised the necessary capital and purchased this division. Scott Davis, long time employee of Motorola, made the switch along with the technology and assumed the role of VP of Telemetry Business Development.
At this point, Mr. Davis is in high business development mode. In May, SmartSynch closed a deal with Chicago’s own ComEd, an Exelon Company. By the end of June, 300 meters were anticipated to be deployed with SmartSynch’s solution. This is on top of SmartSynch’s current install base.
Besides selling modules that can be deployed in meters, Mr. Davis is also licensing the technology to third party developers. To date, he has over 350 developers integrating unique solutions such as a product/service to automatically update multiple lottery signs in reporting the jackpot size or a product/service to remotely warm-up a diesel engine on a fishing boat at 5 am. To facilitate this line of business, the telemetry division of SmartSynch has a group of engineers prepared to train teams in how to deploy solutions using SmartSynch’s platform.
This story is a case study of the second start of a successful line-of-business. This repositioning of the telemetry technology met both party’s needs. Motorola was able to shed a non-strategic asset while SmartSynch was able to gain both a strategic technology and a growth market. While the original market for 2-way telemetry of 2-way paging is at the mature to declining stage, the new market of machine-to-machine communication offers a high growth potential as well as a higher value-add. As we consider the deployment of our technology and services, bold strategic moves are potentially highly profitable for all parties involved.
The May Report, TECH BUSINESS BRIEFS, July 11, 2002
Energy Central, July 17, 2002