SecProbe.io

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September 29, 2004

Via Facsimile (650) 493-6811 and U.S. Mail

Larry W. Sonsini, Esq.
Page Mailliard, Esq.
John E. Aguirre, Esq.
Wilson Sonsini Goodrich & Rosati, PC
650 Page Mill Road
Palo Alto, CA  94304-1050

Re:	Echelon Corporation
      Schedule TO-I filed September 21, 2004
      Schedule TO-I/A filed September 22, 2004
      File No. 5-55409

Dear Ms. Mailliard and Messrs. Sonsini and Aguirre:

      We have the following comments on the above-referenced
filings.

General

1. We note that the company is offering to exchange all options
held by eligible employees, including those with exercise prices of
$11.99 or less.  Please advise us of the lowest exercise price of
options that are eligible for exchange.  Is it possible that you are
offering to exchange some options that are not currently underwater?
If so, tell us why you believe that you are entitled to rely upon the
Commission`s exemptive order dated March 21, 2001, for issuer
exchange offers conducted for compensatory purposes.  In other
words, tell us how offering to exchange options that are currently
in the money furthers your compensatory purposes.  We may have further
comment upon review of your response.

Offer to Exchange
Summary Term Sheet, page 1

2. Revise the disclosure on pages 10 and 11 to indicate that you
will send the promise to grant stock options promptly after the
expiration date, rather than after the cancellation date.  Refer to
Rules 13e-4(f)(5) and 14e-1(c).

Number of options; expiration date, page 42

3. We reference your statement that employees who participate in
the offer must exchange all options granted on or after March 20,
2004, including any options granted between the commencement of the
offer and the expiration date.  Does the company intend to grant
additional options after commencement but before the expiration of the
offer? If so, please confirm how you will comply with the requirements
of Rule 14e-1(b) and whether you will pay the corresponding increase
in the filing fee associated with the Schedule TO.

Acceptance of options for exchange and issuance of new options,
Page 48

4. Your disclosure in the fourth paragraph indicates that the new
options will be granted on a specified date that is at least six
months and one day after the cancellation of the options.  Please
advise us whether you anticipate there will be any delay in the
issuance of new options beyond the six month and one day period.
If so, revise to explain to employees the possible extent of and
reasons for such a delay.

Conditions of the offer, page 49

5. We believe that a tender offer may be conditioned on a variety
of events and circumstances, provided that they are drafted with
sufficient specificity to allow for objective verification that
the conditions have been satisfied.  You disclose in the last
condition that your offer may be amended or terminated if "any
rules or regulations by any governmental authority... or other
regulatory or administrative authority or any national securities
exchange have been enacted, enforced or deemed applicable to Echelon."
We presume that a multitude of rules and regulations already apply to
the company and will continue to apply throughout the offering period.
As a result, this condition appears to be overly broad and not
capable of objective verification.  Revise your disclosure to
clarify those rules and regulations that would allow amendment or
termination of the offer.

Source and amount of consideration; terms of new options, page 51

6. Revise to explain why the determination of the exercise price
of the new options granted to executive officers differs from the
basis for the exercise price of options granted to other employees
generally.

Interests of directors and officers; transactions and arrangements
concerning the options, page 59

7. State whether any executive officers who are eligible to
participate in the offer have indicated their intention to tender
their options, and disclose the details of the transactions, if
known.  See Item 1004(b) of Regulation M-A.

Material U.S. federal income tax consequences, page 61

8. Please delete the statement that the tax discussion is "a
general summary."  We believe this language might suggest that
security holders may not rely on the description of material tax
consequences included in the offering document.

Election Form - Exhibit (a)(1)(c)

9. We reference the language appearing in the Election Form
requiring option holders to acknowledge that "no claim or entitlement
to compensation or damages arises from the termination of the
exchanged options or diminution in value of the new options or the
underlying shares."  It appears that this acknowledgement may function
to inappropriately disclaim liability under the federal securities
laws.  Please advise us as to the purpose of this language or provide a
statement in your next amendment that expressly rescinds it.

Closing Information

      Please amend your filing promptly to comply with our
comments. If you do not agree with a comment, then tell us why in your
response.  If the information you provide in response to our
comments materially changes the information that you have already
provided to security holders, disseminate the revised materials in a
manner reasonably calculated to inform them of the new information.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff of
the Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

      Direct any questions to me at (202) 942-1797.  You may also
contact me via facsimile at (202) 942-9638.  Please send all
correspondence to us at the following ZIP code:  20549-0303.

								Sincerely,

								Michele M. Anderson
								Special Counsel
								Office of Mergers and
								Acquisitions

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