Itron's Acquisition Of Silver Spring Networks Is A Win For The Company And The Smart Grid Industry
The acquisition of Silver Springs networks by Itron Inc. earlier this week will not only boost the latter company’s bottom line but, also, benefit the smart grid industry. There are a couple of reasons for this.
First, the acquisition will bring more than 90 million of deployed smart grid endpoints within Itron’s purview. Those endpoints should be a handy addition to the company’s gross margins as well as bottom line. In the last quarter, Itron’s electricity business’ gross margins rose to 31.4% primarily on the back of growth in smart connected devices businesses, which grew 15% year-over-year. Even otherwise, the acquisition translates to a combination of complementary capabilities. While Itron’s platform Riva is primarily targeted at smart grids, Silver Spring Network’s Starfish is used to connect cities and connected devices. It also has a growing Software-as-a-Service business for utilities that helps them deploy smart meter applications. The acquisition, therefore, significantly expands the scope of Itron’s business and enables it to extend its product portfolio and scope.
Second, the acquisition will potentially resolve interoperability issues for customers. A significant hindrance in adoption of smart technologies has been the multiplicity of competing standards. Both Itron and Silver Spring Networks are significant players in the space and have adopted open standards for their IoT platforms. While announcing the acquisition, Itron CEO Philip Mezey said a combination of technologies from both companies will boost analytics, device optimization, and networking tools. In turn, this will simplify the IoT ecosystem for customers and could translate to increased adoption of IoT devices. According to Navigant research, the overall revenues from residential IoT devices is expected to increase to $67.7 billion in 2025 from $7.3 billion in 2015.