Why Landis + Gyr Is a Good Bet for Toshiba, Japan

Can the country where modern greentech started get back in the game through the grid?

Photo Credit: Michael Kanellos

In the '70s and '80s, Japanese companies became global household brands.

In the current decade, they could put more emphasis on being background brands -- and in the process pave the way back to profitability.

Toshiba is close to buying Landis + Gyr, one of the large meter manufacturers, for $2 billion, according to various news reports. General Electric was rumored to be an earlier bidder, but has dropped out. (Interestingly, sources at our Networked Grid symposium last week amid the 'GE will buy Landis' rumors said that a deal with GE would not likely go through.) With Landis under its belt, Toshiba would become one of the primary players for smart meters and utility infrastructure equipment.

Most consumers don't associate Toshiba with heavy equipment. Instead, they think of TVs and notebooks. (This story is being written on a Toshiba laptop.) But somewhat faceless components and electronics sold to other large businesses, however, will increasingly become the way Japanese companies capitalize on the energy boom.

Why? Japanese companies have phenomenal engineering capabilities. Flash memory, carbon fiber and LCD TVs are three of the inventions in recent decades that in large part colonized the world because of Japanese research. (Flash came out of Toshiba, in fact.) Modern hybrid cars were first invented in the U.S. but Toyota and Honda popularized them. Project Sunshine in the 1970s paved the way for the global solar industry.

Many of these conglomerates, however, just aren't as good at product marketing anymore. Samsung and LG from South Korea not sit atop the TV market. Apple took digital music away from Sony. Amazon took e-books away from Sony. Sure, the Wii and the Prius came out of Japan, but the brand cache of Japan Inc. has been in a tailspin for decades. I travel to Japan approximately once a year. You see some of the most stylish household appliances in the world in Tokyo -- tabletop dishwashers, automatic light dimming systems, ultra-thin household insulation, air conditioners that sense occupants and refrigerators that try to save you energy by adapting dynamically to your lifestyle -- but manufacturers are hesitant to try to aggressively export many of these items.

By focusing on selling equipment to utilities and industrial customers, the conglomerates will play to their strengths: precision engineering, a strong focus on cutting-edge R&D, a long history in energy efficiency, and a willingness to conduct trial after trial until a product works.

The conglomerates have been in the grid equipment business for years. Mitsubishi and NEC showed me some of their latest technology back in 2008. But momentum has been picking up. A concerted push into the U.S. smart grid market began in early 2010 when 33 companies -- including Mitsubishi, Sharp, NTT Docomo, Kyocera and Panasonic -- unfurled a research collaboration with Los Alamos National Labs on smart grid and home networking.

Since then, Hitachi and Panasonic formed a partnership to explore neighborhood and home-area networking. Hitachi also participates in the Singapore-Tianjin Eco City Project, a planned community outside of Tianjin in China. (Hitachi has some interesting sociological applications, too. Geomation crunches satellite data to determine the best time to harvest wheat or rice. Life Microscope probes your vital signs to help you lose weight (back in 2008, Hitachi employees lost a collective 5.1 kilograms with the program).

Other interesting developments:

Sony has started to sell lithium phosphate batteries for grid storage.

Panasonic has vowed to become number one in green electronics by 2018. They have also placed a big bet on energy efficient homes.

Fujitsu is promoting wireless protocols for smart grid.

And Nissan and Mitsubishi want to be leaders in electric cars.