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Adoption of system on a chip (SoC) in smart metering will be a consequence of technological evolution but will be slower than some utilities would like, according to a new report by IDC Energy Insights.

The report - "Smart Meter on a Chip - Could This Be the Answer for Less Expensive Smart Meters?" - says that for many categories of electronic devices, as sales volumes increase, their core components shift from a design consisting of integrated individual chips to larger, more functional chips that incorporate many of the core, required functions on a single, more complex chip.

IDC says this trend toward SoC has delivered significant reductions in bill of materials (BOM) costs for manufacturers of such devices as smartphones, tablets and computers.

According to the report, while SoC will deliver some savings to the BOM for smart meters, the overall potential for savings is significantly more tied to meters' total production volume.

In Europe, fragmented markets and differing standards mean that the cost of customization for each smart meter design to meet local requirements, such as communications protocol, sometimes resulted in limited benefits of scale to meter manufacturers, the research firm reports. In North America, the current deployment by large investor-owned utilities means that the remaining markets are individually much smaller and equally fragmented. In Asia, the Chinese market is huge, and requirements are simple and standardized. This translates into much lower prices than in other regions, IDC adds.

Nevertheless, IDC notes that a smart meter on a chip is appealing from utilities' perspective because it could improve product reliability during its operational life - that is, fewer components means lower risk of single component failure.

Although IDC says that SoC will be adopted in smart metering as technology progresses, a smart meter on a chip would need two years to be commercially available and certified and requires significant additional investment from meter manufacturers that would have to be justified in terms of return on investment.

"While system on a chip can deliver some savings to the bill of materials for a smart meter, the overall potential for savings is more significantly tied to total production volume, or, to put it into the perspective of utilities, to the purchased volume," comments IDC's Roberta Bigliani. "SoC is not the 'silver bullet' that will dramatically reduce metering prices. Nevertheless, we expect SoC to be adopted for its intrinsic technological value, albeit slowly."

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