At NEXT Energy Technologies, we are dedicated to changing the world by developing groundbreaking clean energy solutions for the built environment, with a key focus on the commercial architectural glass market. 2024 is proving to be a difficult year for architectural glass technology companies, with electrochromic “smart glass” providers View, Inc. and Halio, Inc. declaring bankruptcy and shutting their doors respectively.
Since we share a target market with this technology, we see value in understanding the root cause of these failures so that NEXT and other promising technology providers coming into this market are better prepared to succeed.
The failures of View and Halio symbolically mark an end to what I’m calling Smart Glass 1.0, which represents the first major push to commercialize electrochromic technology. This effort was led by three companies - Sage (originally Sun Active Glass Electrochromics), View, Inc. (originally Soladigm), and HALIO, Inc. (originally Kinestral).
Collectively, these 3 companies raised a staggering $3 billion dollars over the course of 15 years, and yet in their peak production never collectively produced more than .05% of the annual volume in commercial glass. And now 2 of them are defunct or out of business, and it is an open industry “secret” that if Sage was not funded by a large multi-billion dollar conglomerate, they would have ceased operations a while ago.
If you are unfamiliar with the technology and would like a primer to the tech and market, read on. If you want to skip to the root causes of this spectacular market failure, jump down to the post-mortem.
Background on EC Technology
Electrochromic (EC) technology, also known as switchable glass, dynamic glass, or more commonly smart glass, is defined by its method of changing optical properties from clear to tinted in response to electrical signals. EC has been a work in process since the late 80s, initially by scientists collaborating at the Lawrence Berkeley National Laboratory.
The promise of smart glass was - and still is - tremendous. It promises the best of both worlds – optimally tinted windows when the sun is on the building to block glare and heat gain from UV and IR, and clear glass when the sun is behind a cloud or has moved to another part of the building. This solution promised to maximize energy efficiency and occupant comfort dynamically throughout the day, delivering unprecedented performance with an unmatched occupant experience.
Global market forecasts tend to agree that about 50% of the market for electrochromic technology applies to automotive and about 40% to architectural glass, but market size and CAGR vary significantly with 2030 forecasts ranging from $3.4 Billion to $12 Billion. Averaging the forecasts and applying insight from years in the market, I place the market at about $6.6 Billion in 2030, with architectural glass contributing about $3 Billion. The size of the commercial and residential architectural glass markets are roughly equal with each ship about 1 billion square feet of glass a year.
This had all of the ingredients of a classic Silicon Valley story - a huge market with a groundbreaking technology that threatened to disrupt the incumbent players. Funding flowed from a number of sources including venture capital, private equity, public markets, institutional debt, and strategic corporations.
The Post-Mortem
So how did a well-funded, groundbreaking technology, in a large market fail to gain even 1% of the market share over the course of 15 years?
I’ve identified 3 root causes that led to the demise of Smart Glass 1.0:
● Mismatch Between Technology, Product Design, and Go-to-Market Strategy: Poor alignment led to lower chances of success.
● High Manufacturing CapEx and OpEx: Staggering costs of standing up a factory and manufacturing low-volume, made-to-order products.
● Low Delivered Value and Product-Market Fit: Pricing, tangible benefits, features, and delivered value did not align with market needs.
These root issues created additional downstream challenges including:
● Reliability Issues: Frequent warranty claims and high failure rates plagued the industry.
● Supply Chain Problems: Costly delays impacted project budgets and success.
● Misleading Marketing Claims and Win-at-All-Cost Sales Tactics: These practices lowered trust, damaged reputations, and made it more difficult to sell the next project.
Over the next few weeks, I will share my thoughts about each of these areas in more depth with the goal of understanding what we can learn from these failures and how we can make things better for the entire built environment and the next wave of players who are working hard to bring promising new facade technologies to this market.
Before we take a close look at what went wrong, I’d like to highlight the positive impacts this effort had on the industry.
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About the Author:
Jonathan Hafemann is the Vice President Growth and Commercialization at NEXT Energy Technologies. He is an expert at developing scalable go to market strategies for early-stage property and climate technology solutions. His focus on sustainable solutions for the built market helps shape the climate of the planet and accelerates the direction of architects, developers, owners, and builders to a net zero future.