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Mundie on Microsoft's 'Hohm' energy push

Chief research and strategy officer explains why the software maker finds itself in the energy monitoring business.

Microsoft's move into the energy monitoring business may sound like a stretch, but to Craig Mundie, it's one of several natural new businesses for the software maker.

Mundie, Microsoft's chief research and strategy officer, said the company has its eye on any area that can be helped by technology and in which society is spending a lot of money and not seeing the return it would like.

Microsoft's Hohm service lets users enter information about their home and energy use to get tips on cutting their gas and electric bills. Microsoft

Energy consumption specifically, and environmental issues more broadly, were natural areas for the company to delve into, he said, and follow Microsoft's moves into other thorny challenges such as education and health care. On Wednesday, Microsoft is officially announcing Hohm, a free service that households can use to monitor their household energy use and get tips on how they can cut their gas and electric bills.

Mundie said Microsoft started with the residential market because it accounts for $160 billion of the $365 billion that the U.S. spends on electricity use.

"The big industrial guys have already entered into special contracts," Mundie said, noting that businesses often have done energy audits and agreed to cut their use in exchange for lower rates. "To some extent, they don't need it so much."

Hohm, which was code-named Niagara, is the culmination of about two years of work in the area, Mundie said. It's also one of the first commercial services to launch running on Windows Azure, the cloud-based operating system that Microsoft introduced last year.

One of the big questions though, is whether the issue is that people don't know what is using energy in their home, or if they just don't care.

"I don't think anybody can tell," Mundie said. "So you give it a try."

But Gartner analyst Martin Reynolds notes that we have seen signs that apathy rather than ignorance may be the biggest hurdle when it comes to cutting energy consumption. Reynolds noted that even when gas prices tripled, most Americans opted to pay more rather than to dramatically change their energy use.

That same attitude will be a challenge in the home, Reynolds said, noting that he gets a chilly reception when he suggests a family member put on a sweater rather than turn on the heat.

For its part, Microsoft is betting there are enough people who are focused either on their energy consumption or their bills to make the investment pay off.

While the business model isn't totally clear, Mundie said there is potentially money to be made both from advertising as well as from connecting consumers to products and services that might cut their energy use.

There are other reasons Microsoft may be interested in energy, including the fact that its chief nemesis, Google, has also made a move in the arena.

The big difference in approach, Microsoft said, is that unlike services from other big companies and start-ups, Hohm works without needing any sort of special smart plugs or other gear, though it can work with such products as well.

"We didn't want to start with something predicated on some major infrastructural change," Mundie said. Microsoft is partnering with utilities so that consumers can get their energy use data directly imported into Hohm, but for those whose provider isn't one of the early partners, Mundie said consumers can enter information from their bill.

Hohm works by asking people a series of questions about their home and energy use. Consumers can enter as little as their zip code. But the more information a consumer gives, the more detailed the recommendations.

"You can answer one question or a hundred questions," Mundie said.

To hear more from Mundie, check out our video interview above.