In theory, Echelon's product upgrade cycle should be extremely
competitive since they can push almost all the development cost onto
the OEM. In the HVAC controller world (my expertise), Echelon's has to
design the neuron chip - the brains of any LON device - and then
contract chip manufactures to produce them. These chips are then sold
to Siemens, Honeywell, Johnson Controls, TAC, Loytec, etc, and those
companies then have to design their own controllers around the chip.
I've routinely put together LON networks where not a single device -
controllers, routers, front-end, etc - was manufactured by Echelon.
Only the neuron chip in each device made it a LON network.

This is what I like about the position Echelon is in. The company
doesn't have to deal with the end user, they merely have to get their
network standard accepted over BACnet (the major competition) and then
sit back and take a cut of every profit made on each LON device
produced by someone else! Unfortunately, from my vantage point, I
don't see Echelon doing much in the way of selling their product over
the competitors. Fortunately, as I mentioned in my last post , LON
often times sells itself because it is truly open, but it worries me
that BACnet is gaining significant traction because ASHRAE is behind
it.

Getting back to the stock - be very careful about valuation in
relative terms. True, ELON has dropped significantly since its high
last fall, but what makes you think that spike was anything other than
the market's exuberance of everything "energy" related? I feel Echelon
has a good foundation and will be around for decades to come, but
until they can make a profit for a year or two, I just can't bring
myself to invest.

One exception- if the stock dropped into the single digits, I might
consider buying a little simply because I wouldn't be risking much and
the payoff - if they do start being profitable - is just too good to
pass up. Like buying a lottery ticket but with slightly better odds.

Caveat Emptor