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Monday, September 29, 2008

Why Value the Green IT Market ? It's All About Timing

I am frequently asked what I think the green ICT market is worth. This question has always troubled me.

Market value is determined by the number of potential customers and how much they are prepared to pay. However, a company that holds that catastrophic climate change will occur if emissions are not kept below very challenging thresholds must believe that close to 100% of the market needs to go green to abate those emissions and minimize that risk.

That said, it is a necessary step in business to put a value on a market. At a strategic level, it is a contributing factor towards assessing if that market is a priority compared to others you could serve. At the operational level, it allows you to make determinations on business cases bidding for limited investment money available for individual products and services.

By articulating a green market value smaller than its total market value, a company is accepting that not all customers buy with green criteria taken into account. What troubles me is the implication that it isn’t necessary to plan energy efficiency into all product design right now. From a business perspective, if you make the investment and develop the products and services ahead of their time, you may not gain enough business to cover the investment and so lose money or even go under, albeit in a blaze of moral glory. Someone else copies you a few months later when the market is ready and reaps the benefits as the second mover. If we all leave it too long though, or if the market realizes too late, then we get catastrophic climate change, and we all lose.

This dilemma is reflected in a recent report by The Register - “Dell: We went green too early”.

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