5 reasons why Microsoft Hohm didn’t take off

They’re dropping like flies: the big Internet companies’ online energy tools. Last week, it was Google pulling the plug on PowerMeter (s goog), and this week, it’s RIP for Microsoft and its Hohm energy tool (s msft).

So what happened with Hohm? Some of the reasons are the same ones that led to the demise of PowerMeter, but some issues seem specific for Hohm. Here’s my assessment of 5 reasons why Microsoft Hohm didn’t take off:

1. Limited initial use. One of the upsides of the Microsoft Hohm system was that any consumer could access it by putting in their zip code and adding in various other bits of information like size of home, etc. The tool then started giving you immediate feedback on how you could be more energy-efficient, based on just this data and using the algorithms Microsoft licensed from Lawrence Berkeley National Laboratory and the Department of Energy. However this initial step — before you connected it with your utility account or added in a Hohm gadget — didn’t really provide much use.

I tried out the tool several times on this limited basis and found it to be lacking. When more information was added, the tool got a whole lot better (see Kevin’s review here). While the simplicity of the initial use was an attractive idea, it didn’t really add that much value. Scott Hublou, co-founder of startup EcoFactor, says he thinks Hohm, as well as PowerMeter, suffered from “Mean Time to Kitchen Drawer,” which describes services that have high initial appeal, but lack any real sustainable interest by a homeowner, and when the initial appeal fades away, it ends up in the back of the proverbial kitchen drawer.

2. Utility barrier. Like with Google PowerMeter, utilities just didn’t seem to embrace the Microsoft Hohm tool. Microsoft launched the tool with utility partners including Xcel Energy, Sacramento Municipal Utility District, Seattle City Light, and Puget Sound Energy, and Microsoft said it had “half a dozen” utilities in the queue. But there’s a difference between a handful of utilities willing to connect customer data with the system, and utilities marketing the service to their customers or even using it as an opt-out system (like they do with OPower mailed energy bills). Similar to the problem with PowerMeter, when Hohm came to utilities, was it friend or foe? Microsoft’s large brand could have been seen as threatening by utilities, who want to own the relationship with their customer.

3. Early days. Again, similar to the problem with PowerMeter, it’s still early days for the market for home energy management. Hohm was launched in the summer of 2009. The Consumer Electronics Association found recently that 64 percent of consumers are unaware of electricity management programs, and 66 percent of consumers aren’t familiar with the smart grid. PG&E, which has one of the largest and most aggressive smart meter programs in the country, won’t even be rolling out phase one of its home wireless systems until next year, given some of the standards are taking awhile to work out.

4. Over-ambitious long-term plan. While Hohm had limited use in the initial steps, its end goal was very ambitious. Microsoft was trying to turn Hohm into an entire platform that brought in revenue for the company, and which would turn Hohm into an operating system for everything from electric cars, to homes, to home devices and appliances, to commercial buildings. There were four phases to Hohm, but Hohm didn’t ever seem to get out of phase 1. Adding value for consumers and utilities needed to be worked out before moving on to the next steps.

5. Opt-in, not opt-out. I said this with PowerMeter, but I’ll repeat it for Hohm. In this early stage of the market, it seems like programs that are opt-out (sent unless the customer says they don’t want it), not opt-in (only sent if the customer wants it), are the ones working. OPower has been successful largely because it connected with utilities early on, and OPower’s detailed energy bills and energy savings recommendations, are delivered to utility customers automatically. A utility is one of a few types of companies that can send its customers this type of information without getting an opt-in agreement, and the mailed OPower energy bills have a very high open rate, because they look just like a utility energy bill.

What do you think?