I couldn’t help but notice the recent unveiling of the “Bloom Box,” and the claims from its financial backers that it represents a “disruptive” play in the energy space. I asked the member of our team who knows the most about cleantech — manager Josh Suskewicz (pictured below) — to give his view on Bloom. Over to Josh…

Bloom Energy finally revealed its Bloom Box to the public last week to great fanfare. The much-hyped product is a fuel cell that produces electricity from any fuel source and can also store it like a battery. None other than Internet investor extraordinaire John Doerr, a Bloom board member, said the company was the next Google — and he would know, since he was behind the first Google. Company spokespeople, observers, and even John Donahoe, the CEO of eBay, called the Bloom Box “disruptive” — and forecast that its impact would be similar to the disruption cell phones caused landlines. (Editor’s note: We mistakenly attributed an idea to John Doerr which was not his and have removed the reference from this post. We regret the error.)

Detractors, on the other hand, are quick to point out that the Bloom Box is just the latest fuel cell to get the public all excited. Fuel cells have been around for a long time but have yet to find mainstream applications (as the stock performances of former tech darlings Fuel Cell Energy and Ballard Power attest.) What makes Bloom different? Is it truly disruptive?

First of all, whether or not Bloom, or any company, is disruptive is more than just semantics; it matters because disruptive strategies unfold in particular ways: they start at the low end of an existing market or in an entirely new one; they find a way to make money that existing companies can’t or choose not to match; and from that perch proceed to upend suddenly obsolete incumbents. Entrants who find themselves in conditions ripe for disruption and stick to the disruptive path have a great chance of success.

A disruptive approach contrasts to what we call a sustaining strategy, which is essentially trying to leapfrog existing competitors with an improved offering. The best hope for an entrant embarking on this path is to “build to flip” — to create a business that looks like an attractive acquisition target to market leaders.

Of course, as Scott Anthony noted a few posts back in this space, the question of whether or not something is disruptive most often masks the real question, which is, Are we dealing with a game-changing opportunity? That question aside, understanding the implications of disruptive innovation helps companies map out how to achieve game-changing success — and helps us assess the potential of an innovation like the Bloom Box.

So, back to the question: is Bloom truly disruptive? It might be too early to tell, though Bloom certainly has disruptive potential. Let’s examine some of its claims.

The company says that its cells are inherently cheaper and more scalable than anything we’ve seen to-date due to their reliance on low cost and abundant materials, but that’s just marketing spin until they get prices way down (their pilot boxes, sold to the likes of eBay and Google, come in at $700,000 to $800,000, which is 20 times the fuel cell price targets set by U.S. research labs to achieve widespread adoption). As it is, most analysts predict that electricity from Bloom boxes will require subsidies to meet and beat the rates provided by the grid. Bloom, like any startup, claims that prices will drop with economies of scale, but numerous technology questions will need to be answered to realize that claim.

Put it this way: if Bloom can indeed produce much cheaper electricity than the grid, we’ll have a home run on our hands. But if we assume that it can’t (for the forseeable future at least) the company is faced with a set of strategic choices that will determine its ultimate disruptive impact.

The first choice is where to play. The company’s pilot customers are using the cells, essentially, as backup generators. An all out effort in the generator market would represent a very expensive leap forward — a leap that many customers may not actually value. In disruptive terms, this is a dangerous strategy that risks overshooting the mark.

Alternately, Bloom could target the utility market, providing backup capacity for power companies that could be deployed closer to their customers than new power plants. Doing so could help utilities solve an important job to be done — managing capacity — but it would also pit the company directly against major suppliers of capital equipment to utilities like GE and Siemens. Unless Bloom’s technology is truly differentiated from competitors’ ultimate offerings, such a strategy could get ugly quickly.

Two more intriguing ideas have floated out of the Bloom buzz. The first is the notion that Bloom might not sell boxes, but rather the electricity they produce. In this case, customers would not have to take on the risk of the upfront capital investment, which could enable a more rapid ramp up and faster achievement of economies of scale.

This business model innovation — akin to Xerox leasing its copiers for next to nothing while selling the copies for cents each — would position Bloom much differently, and, depending on the inherent profit model, could pose a serious disruptive threat to utilities.

The key, in our view, to successfully going down either of the two disruptive routes laid out here, is to think at the level of systems (see “How to Jump-Start the Clean-Tech Economy”.) To achieve its true potential, Bloom should not simply plug its boxes into existing energy systems — where they’d become nothing more than a sustaining component in a competitive ecosystem — but instead should focus on positioning its boxes as the linchpin of an entirely new energy ecosystem.

This approach requires managing series of technologies — fuel sources, solar panels, electric cars — and innovating industry business models. It also requires working proactively with regulators and policymakers, and finding niche applications in which to test, and advance, component technologies and sub-systems.

Bloom is off to a good start on this last point. Working with early adopters like Google and eBay gives the company valuable in-market experience with real customers and real circumstances that no amount of lab work could match.

Beyond tech companies eager to be associated with cutting edge green technologies, though, I’d love to see Bloom take its box to contexts in which no good alternative exists today — places with more expensive, less reliable, or totally undeveloped electric grids, like much of the developing world. Creating a business model that worked in, say, rural India, would give Doerr’s prediction, that this is the next Google, would give Bloom a fighting chance to live up to the hype.