The evolution of Silver Spring Networks  

Smart Grid News has a look at the evolving business model of smart grid technology provider Silver Spring Networks - The evolution of Silver Spring Networks.

No, I don't know why Silver Spring Networks (SSN) failed to go public last year as widely expected. And yes, I asked during my latest briefing. And no, Executive Vice President Eric Dresselhuys wouldn't answer my IPO questions.

But I do know that the delay could end up for the best. In that intervening year, SSN has matured its vision in a way that could increase its valuation. And it all comes down to one word: Platform.

The evolution of a vision

Take a look at SSN's self description circa 2005:

Silver Spring Networks connects utilities with their customers over a two-way, real-time network...

And how it described itself a year ago at the height of the IPO speculation:

Silver Spring Networks is a leading smart grid solution provider...

Now look at how it describes itself today:

Silver Spring Networks is a leading smart grid platform provider...

You can see the evolution visually as well. Look at the nearby drawing taken from SSN's Web site. In its early days, SSN thought of itself as a communications provider -- the blue layer at the bottom. Today, its vision embraces the blue layer plus the platform in the middle. It even reaches up into the green applications layer with the help of more than 40 companies now certified as SSN partners.

So what's the big deal about platforms?

Smart Grid News has been preaching about the value of platforms for years. I think they are essential to smart grid progress. (For a primer, review our survival guide to the smart grid platform by professor Geoffrey Parker, Director of the Tulane Energy Institute). Done right, platforms are good for the provider and good for customers too.

And they're really good if you want to go public. IPO underwriters and investors love the word "platform." To them it stands for high growth and high barriers to competition. Microsoft has a computing platform. Cisco has a network platform. Qualcomm has a cellular platform. Google has a search platform.

If I were going public, that's the kind of company I would want to keep. Smart grid platform has a very nice ring.

There's another aspect to SSN's evolution: It has moved away from an over-reliance on smart metering. Look back at SSN's platform drawing. It now shows five applications. Not just metering, but also distribution automation, demand response, smart home and electric vehicles. Of those five, metering is nearing a plateau but the other four are growing, especially DA and DR.

By expanding its vision, SSN has inserted itself into those growth paths. Most market researchers expect smart meter sales to plateau in 2012. But they expect both OT (operational technology including distribution automation) and IT (information technology) to surge, with each one climbing to tens of billions in annual sales worldwide. They have equally cheerful predictions for the demand response sector.