The struggles of smart glass 1.0 in the commercial facade market can be encapsulated in one concise observation: The market price and installed risk were too high, the manufacturing costs were even higher, and the value delivered was too low. This combination created a perfect storm that hindered adoption.
In previous discussions, we've delved into the prohibitively high manufacturing costs. Now, it's time to dissect the other key factors—product price, risk, and value—each of which played a pivotal role in the friction-filled adoption process.
Understanding Market Adoption Drivers
Successful adoption of new technologies in the commercial facade market is predicated on delivering a solution with the precise combination of price, risk, and value. If any one of these factors strays beyond the industry's tolerance threshold, the path to market penetration becomes arduous, if not impossible. In the case of smart glass 1.0, all three factors were misaligned, making market acceptance as challenging as climbing a sheer cliff without gear.
The Price Factor
In today’s post-COVID economy, a standard double-glazed IGU (Insulating Glass Unit) sells for approximately $12-$14 per square foot, depending on the supplier. In stark contrast, smart glass has been introduced at a staggering $55-$65 per square foot—a 4.5x premium over traditional glazing. And that’s before considering the added labor costs associated with specialized installation and commissioning.
The price premium alone ensured that the market for this solution was small, as most developers - and their investors - were not willing to inflate the budget for their building envelope by such a premium.
The Risk Element
Risk sensitivity in building envelopes cannot be overstated. For fabricators, the stakes are high: a $14 per square foot IGU sale can quickly turn into a $45 per square foot cost if they are found liable for a warranty replacement due to performance failure. For building owners, the risks are equally daunting—imagine the disruption caused to your customers (the building tenants) by unmitigated glare for months, followed by the invasive process of cutting a hole in your building to replace a faulty smart glass window.
The performance risks associated with smart glass 1.0 were compounded by the complexity of integrating electrical components within the glass, significantly increasing potential failure points. In an industry where water penetration, seal integrity, and compliance with stringent performance specifications are paramount, the added uncertainty of smart glass was a risk many were unwilling to take.
The Value Proposition
In my assessment, the value delivered by smart glass 1.0 was incremental, not multiplicative. And yet the price for improved heat gain performance and dynamic glare control was five times higher than the cost of standard glass. This mismatch between price and delivered value created issues for prospective buyers and sellers of smart glass. Beyond the savings from the improved energy efficiency, there were a lot of questions regarding whether a tenant would be willing to pay higher lease rates for the added benefit of working in a building with smart glass, making it difficult to calculate a return on investment (ROI).
The misalignment of price, risk, and value in smart glass 1.0 serves as a cautionary tale for any new technology aiming to break into the commercial facade market. These three variables are critical indicators of market adoption. If they are not managed with precision, the result is almost certainly a failure to gain market traction.
What’s Next: The Vicious Cycle of Smart Glass 1.0
In the next installment, I will explore the vicious cycle of product failures, supply chain delays, and win-at-all-costs sales and marketing practices that became characteristic of smart glass 1.0.
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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 accelerates the transition to a net zero future. Follow Jonathan on LinkedIn
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