Opportunities in Smart Lighting

Published: January 26, 2012    Category: Electronics and Devices

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Government mandates, subsidies and cultural influences:  Any discussion of the evolution towards energy efficient lighting systems cannot be divorced from government policies favoring energy efficiency in general and lighting efficiency in particular.  As far as the latter is concerned the main impact comes from the implementation of policies around the world to replace incandescent bulbs with CFLs and LEDs. 
Also of some importance—although considerably less importance than incandescent bulb mandates—are other government policies designed to favor energy efficiency and environmentalism more generally.  For example, many governments around the world are funding smart electricity grids and some of the smart lighting systems of the not-too-distant future may derive many of their benefits by plugging into these Smart Grids. 

Beyond these specific government policies is a culture that is more concerned with waste and environmental issues and which bred some of the policies outlined above.  This is all quite friendly to the future of smart lighting.  However, all this needs to be balanced against the fact that in the current worldwide economic environment, environmental concerns are not always the primary focus of energy, employment or industrial policy.

Ongoing development of electronics and sensor technology: A number of ongoing technological developments seem to have important consequence for the future of smart lighting. Moore’s Law ensures that tomorrow’s smart lighting systems will have more functionality than today’s system, or yesterday’s.  Similarly, developments in sensor technology—especially those related to nanotechnology have similar consequences for smart lighting systems.

NanoMarkets’ view on the market is that this means in the future smart lighting systems will bring with them a lot more functionality designed to address broader addressable markets.  The situation is reminiscent of what happened to business telephone systems in the 1980s, when microelectronics technology evolved to a point that old key systems could be replaced with electronic small business telephone systems.  Suddenly, it was possible to supply small business customers—and eventually residential customers—with PBX-like features.  And it seemed, these new customers were willing to pay for these new features.

Could something like this happen in the smart lighting sector?  And will this added functionality take smart lighting systems beyond being machines for producing higher levels of energy efficiency to ones that provide enhanced mood and healthier lighting?  The answers to these questions seem most likely to be, “Yes.”  But, it may also be worth bearing in mind that the small business “revolution” eventually delivered overkill, with so many features that it was difficult for consumers to differentiate one from the other.

Smart Lighting in Search of a Champion

What the previous section indicates is that smart lighting can no longer be viewed as just an extension of early technology and product developments and that addressable markets for this type of technology have expanded.  However, NanoMarkets believes that for the smart lighting business to evolve to full bloom, the nascent smart lighting industry will need a champion of some kind; a firm who makes it its business to create an industry by effectively messaging the smart lighting story to both building owners and managers (end users) and the lighting and building automation industries as well. 

The most effective champion of this kind would be a large lighting or control/automation firm who could not only promote the smart lighting industry, but also add credibility and make it seem like it is not just another fad.  So far no such firm is clearly identifiable although there are plenty of hints that some of the majors in the lighting space are beginning to be interested in smart lighting. 

There are also more than just a handful of smaller firms that usually bill themselves as selling advanced lighting control systems.  These firms could certainly also take the initiative to build the smart lighting industry, but generally lack the financial and business development tools to accomplish this task.  In addition, their brand names are seldom powerful enough to effectively generate credibility for smart lighting in the way that (say) a Philips or Honeywell could.

NanoMarkets believes that the smart lighting opportunity, although not much discussed at the present time could ultimately lead to significant revenues for manufacturing of lighting fixtures and sensing and control equipment; perhaps even for firms that make the lights themselves.  The fundamental difference between conventional lighting systems and smart lighting systems also suggests new supply channels and a careful attention to pricing strategies.  None of these aspects of smart lighting, it seems, have been well thought through as yet. 

Beyond the lighting community proper, chip makers see in smart lighting a potentially high volume market for control, sensing and wireless interface chips; exactly the kind of market that they actively seek to build substantial businesses from.  This is all exciting news and—not unsurprisingly—considerable attention has been paid to smart lighting by industry journalists and pundits.  It is, however, high time to think through smart lighting opportunities from a strategic perspective.

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