Microsoft announced it will partner with German utility E.ON to develop a smart home platform to manage everything in a house that runs on electricity — from washing machines to HVAC thermostats to the charging stations for electric cars.
The two companies want to tap into the growing market for the internet of things (IoT) — the networking of machines that communicate with each other. The partnership will combine Microsoft’s powerful cloud and chip products with E.ON’s vast distribution network. This enables the utility to add profitable services to its basic provision of power.
Microsoft CEO Satya Nadella announced the linkup on the first day of Microsoft Ignite in Orlando, the company’s annual presentation to 30,000 participants.
A growing sector
Many homes have smart meters, usually linked to smart grids, to help manage energy use. When solar panels produce energy, these tools decide when to draw energy from the grid and when to feed it back. RWE unit Innogy, which E.ON plans to take over next year, is a provider of these technologies. But the smart home technology takes it one step further by networking all appliances to save on energy costs, reduce energy use and increase comfort.
Some 40,000 smart home systems are sold annually in Europe. That number is expected to rise to 200,000 in the next three years. The market’s potential, however, is much higher and is expected to grow quickly as homes use the energy generated from its own solar panels and wind turbines in decentralized distribution. Likewise, the popularity of electric cars will make centralized energy management more attractive.
Microsoft’s smart home system uses artificial intelligence to make decisions, such as when to feed surplus energy from the car battery or the solar panels into the grid. The software company developed an energy management box with a special chip that links to its Azure Sphere cloud while protecting against hackers.
The path to the partnership was no doubt eased by the fact that the current director for E.ON distribution in Germany, Victoria Ossadnik, previously worked as an IT specialist for Microsoft.
A premium partnership
The smart home platform fits in with E.ON’s strategy to develop services that leverage its distribution base. The simple provision of electricity is hard-fought and E.ON competes with discount providers. The premium service gives it a chance to differentiate itself from its competitors, earning more with its current customer base while attracting new customers. Also, the addition of smart customers provides the utility with data that helps it manage its own network more efficiently.
Microsoft also benefits from the partnership. It gains a large, well-known partner to showcase its IoT technology. That market is expected to grow 15 percent this year to $770 billion. It is largely the transportation and utility industries that are currently investing in machine-to-machine communication.
The US software giant emphasizes it is not trying to compete with these industries. Its platform combining cloud computing, internet of things and artificial intelligence can be used in many sectors. “We see ourselves as a partner for industry, not a competitor,” Sabine Bendiek, head of Microsoft for Germany, told Handelsblatt.
Jürgen Flauger covers the energy industry for Handelsblatt. Christof Kerkmann covers IT and digital technology. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: email@example.com and firstname.lastname@example.org.