Eaton’s Del Misenheimer: ‘We’re Not Doing IoT. We’re Going To Enable IoT’

In a wide-ranging interview with CRN, Misenheimer, president of Eaton’s Control and Protection Division, says that UPSes and power distribution units have been ‘smart’ devices for the last 10 or 15 years. What’s new, he says, is that the applications that use those devices locally need to be able to derive value from having that data and analytics.

Thinking Outside The Data Center Box

Logically, a sustained move by IT customers to the cloud might lead to a hollowing out of data centers, resulting in a drop in demand for data center infrastructure including the UPS and power distribution units needed to manage and protect power.

However, according to Del Misenheimer, president of Eaton's Control and Protection Division, that is not the case. In fact, the opposite is happening, as the move to cloud computing, the Internet of Things and edge computing is creating demand for new ways to manage and protect power and provide security to mission-critical infrastructure. And as customers move workloads to the cloud and the edge, not only are those new infrastructures growing opportunities for power management and protection, customers are also investing in more efficient technology to replace what is often no longer suitable for smaller on-premises workloads.

CRN recently sat down with Misenheimer to discuss power protection and management trends as well as new technologies that will impact how related equipment is manufactured. Here’s how Misenheimer sees the future of the data center.

How would you describe the state of the UPS business?

I think overall very good. There's a lot of dynamics going on right now. If you look at the growth in hyper-scale, growth in multi-tenant data centers, and the emergence of cost-effective lithium ion, there's really a shift in the industry. It's a shift doing a couple different things. No. 1, it gives you new opportunities, if you look at where do you reduce footprint, where can you drive savings.

It's also enabling a lot of opportunities for converging energy storage and UPS for backup power. ... We had published our award for the partnership that we did with Microsoft on improving our frequency regulation working with PJM Interconnection, the transmission ISO [independent system operator] in eastern U.S. Looking at how we help large data centers utilize their assets to actually generate revenue or save costs as opposed to just backing up power, which is usually sometimes looked at as a necessary evil, is very strong.

Where else?

If everything's going to move to the cloud, then what happens to all the network closets, or is that going to go down? We're actually seeing the opposite. As you read through some of the studies, what we're seeing is people are buying just as many appliances. When I say ‘appliances,’ they're the overall IT assets, but they're not going to a data center, they're going into a lot more of their edge applications. We're starting to see more and more as those solutions roll out. It's good to hear of all the different types of appliances that are coming out.

You're saying that, despite the fact that more workloads are going to the cloud and multi-tenant data centers, the actual sales volume of UPS and power management equipment still has the potential to rise?

Absolutely. The multi-tenant and hyper-scalers still buy, and they're still some of our biggest customers as well in the large space. But then if you get into even the smaller space, you have a couple phenomenons. We talked about the edge, which is driving up [sales]. Singe-phase UPS last year saw one of the highest-growth markets we've had in the last four or five years. We didn't see anything slowing. If anything, we saw it accelerating out of last year. That's very strong.

Any other proof points?

In the midsized range, [about] 100 to, say, 200 or 250 KW, [we're seeing] people go in and where they're moving stuff to the cloud, they're still deciding to keep something on-prem. They have the assets there, but they're going in and changing out and removing 500 or 750 KW units, and they're back-filling and replacing with much smaller [models]. So they're reducing the footprint, moving stuff to the cloud because they don't need all that extra capacity, but they're still keeping some installed footprint there.

When I think of hyper-scalers and multi-tenant data centers, there's less of a channel play. How do solution providers benefit from the shift?

I don't disagree. If you look at some channel partners, especially system integrators that play in that space, a lot of what we're selling could be into some kind of containerized or rack solutions in which they're doing those programs for one of these large types of customer. That's one opportunity.

The other was the edge. Our single-phase growth really is all based on channel partners. [There's real] growth in the channel. Then, we grew over 2X of that, so we're taking some nice share last year as we're developing out solutions, and it's really targeting that edge.

We're seeing so many more IT applications in non-IT areas. Whether that'd be retail, whether it's manufacturing, whether it's some type of material handling for logistics, we're starting to see that continue to grow.

One trend happening outside the IT industry is a push of power production away from coal and oil towards new alternatives. Does how the power is generated have any impact on how you develop your products?

I would say as you get into renewables, it does some. Now, the challenge is if it's utility-based renewables, say it's a 200-megawatt solar farm in Arizona, that really doesn't have much play on [UPS sales] from a standpoint of an application. … So, if there is local power or on-site renewables, there's opportunities there actually.

To start, how do you tie in together between that convergence of, well, I call it a microgrid and energy storage, where you get the most out of those renewable assets, and then utilizing it with your backup power?

How?

If you look from the channel, and then go to that scale, I think it gets back to one of our biggest opportunities, the emergence of lithium. It started more in the larger space, but it's continuing now. You see [we've launched our] 120-volt 5P with lithium. We're going to launch everything up to 6 KVA through this year. What that allows us to do is help customers use those assets to either save money or, if they already have renewables installed, they can actually use the backup power. If they were to add extra lithium-ion content, that battery gives you the ability to charge and discharge so many more times than what VRLA [valve-regulated lead-acid] does, enabling them to potentially save some money whether it's peak load or time of use, or [maybe by even using] frequency regulation to get savings back from the grid.

And how is the lithium supply situation?

It's improving. I would say last year, probably middle of last year, was a very tight situation. All suppliers were tight because there's only a few in the world that are really qualified selling lithium. As we sit right now, we have a very ample supply. We've got commitments out from all of our suppliers, plus we have very stocked inventories. We've got a lot of key projects, but one of the main things customers ask is, ‘What's your supply?’ which is most critical in this market. Once they do that conversion, they want to be sure that they are partnered with somebody that can deliver.

Speaking about supplies and supply chains, how about the trade talks between U.S. and China? If tariffs were to increase to 25 percent, would that be an impact on your industry?

Oh, absolutely. I think it's an impact across the entire IT industry. Some of the numbers were billion dollars a day for some estimates that I've seen for the overall IT industry. And if you look at us particularly, and even within the UPS space, it varies depending on product, and it varies depending on vendor. But each of the vendors are hit with some level of impact. Us the same.

Is there a lot of demand elasticity in the UPS business?

That's what we're waiting to see. I think if you look, some of the IT installations, some of the demand for data, I don't think those are going to go anywhere. The question's going to be in some of the smaller rollouts: Do people delay? Do they postpone? Do they scale back? We haven't seen that. If I look through last year, whether you're looking at the NPD [Group] data or any of the others, you really see a ramp-up starting in May of last year that really held true of some strong year-over-year growth carrying all the way into this year through January. We're still seeing it continue, but I think everyone's globally waiting to see what impact that's going to have, and how can we be prepared for that as a transition.

For UPS and PDU products, in general, is there much more vendors can do in terms of increasing power efficiency? Or are we reaching any limits in terms of efficiency?

We're looking at a lot of technologies like Wide Bandgap power electronics, or using new materials like silicon carbide, to enhance and drive more power. We're looking at high-frequency magnetics. There's a lot of areas [where] you can continue to drive efficiency. But it's really that paradigm between cost, size and efficiency. It's always going to be balancing what's the right need. For a long time, especially going from [power efficiency ratings in] the high 80s up to where now most UPSes are in the 97s, it was all around getting that efficiency.

I really do think we're at a precipice going from 97 to 98. [That,] and because of the eco modes and other things that [vendors are doing], at this point, you're probably more looking at saying, ‘Where can I reduce size or reduce cost?’ with that being a bigger driver than just continuing to drive efficiency. That's where a lot of our focus is. It's what customers really need.

It's easy to think of Eaton as a stable UPS and the PDU producer. How does the company work with the buzzwords like IoT, cloud, and so on?

I think IoT's the best buzzword. Whether it's IoT, whether it's industrial IoT, the message is always there's a lot of Eaton products that are focused on IoT. We do wiring devices, we do components, electrical sockets, switches, hoses, all these different devices we're looking to make smarter.

When I look at our power quality business, my message has always been back to the organization, and now, I'll say externally, 'We're not doing IoT. We're going to enable IoT.' Because if you look at most of the power quality, whether it's a UPS, whether it's a PDU, it's been a smart, intelligent device for the last 10 or 15 years. So it's really not new. What the 'new' is [is that the] applications [that] use those devices locally [need] to be able to derive some type of value from having that data and analytics.

So this will take more of Eaton's technology out of the data center ...

Our intent is we're not going to be creating those devices. But all of those devices [will be] taking the IT infrastructure out of data centers and moving it out into these very remote and less secure locations. So, from our standpoint, it's really around how do we help customers, No. 1, be backed up and protected, but No. 2, have the security, both cyber and physical. And then help them find a way to monitor and measure and be able to manage it because those are some of the biggest challenges when you have DDIM [distributed digital infrastructure management] out there. How do they actually manage it and still keep the same resiliency that they would have otherwise? We're not driving [the technology]. It's what are we doing to enable it.

How about the cybersecurity part?

If we're going to be connected and we're going to do monitoring, if we're going to do any type of interaction, the future's going to be how you do remote services? How are you doing firmware upgrades? All of those pieces you want to have as value drivers. Whether they're going through a partner providing those values to the end user, or whether they're direct, it depends on what the solutions are. But no one sees value if they can't first be safe and build security.