from the "did you really think this through?" department...

The press contingent had a briefing yesterday with Ayman Ibrahim, who is a Corrosion Sales Specialist for the Middle East region for Honeywell. Ayman gave an impassioned plea for us to tell you all how wonderful the corrosion sensor that Honeywell acquired two years ago is. "Corrosion," he said, "should be a process control variable, like pH, ORP, conductivity, and so on." And it is. Wonderful, that is. From a techno-toy perspective, it gets this particular technojunkie all hot and bothered. But. Yeah, there's a but here. The process industries outsourced industrial water treatment, including corrosion protection two generations ago. There is an entire industry built around industrial water treatment. These companies, commonly called "water doctors" or even "water criminals" include some of the biggest names in the automation and controls space: GE, Siemens, and Nalco among others. The business model that all these companies operate is entirely antithetical to the business model Honeywell intends to use to market these sensors. This is NOT a good thing. All the water doctors operate on the following business model (I know this because Seametrics, the company I was director of marketing and sales of in the late 1990s did about 50% of its business selling to these "water criminals" as the CEO called them). The first approximately 12 months of a new contract to provide water treatment chemicals to a plant is unprofitable, used to make up cost of sales and the expense of providing chemical feeding equipment to the plant. Typically a contract runs for somewhere on the order of 28 to 36 months before the water treater is replaced by another one. So, each water doctor uses the combination of the 16-24 month period where they do not lose money and the common practice of overfeeding chemicals continuously to provide profit margin on the sales to the customer. Now, along comes Honeywell, and they tell the customer that, if he or she puts in the corrosion sensor and runs the corrosion control software Honeywell will provide, they can finely control the amount of chemical fed. What is this? If the end user is controlling the chemical, and maybe even not feeding it when it is unnecessary, this is a shot to the profit jugular of people like GE and Siemens. Luckily, Honeywell realizes this, and both Dan Sheflin and Harsh Chitale both told me that Honeywell is not overly invested in the technology, and sales are far above expectations. I hope they are right, because this could be "Babes in the Woods" when Honeywell meets the water criminals.