Thoughts on the Commercial Future of Smart Lighting
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Thoughts on the Commercial Future of Smart Lighting
Many of the firms that jumped into the smart lighting space a few years back
have disappeared or been acquired under fire sale conditions. Some
apparently innovative smart lighting products have also been launched, yet
have been greeted with a yawn by the lighting marketplace.
NanoMarkets continues to see smart lighting as a major business opportunity
over the next decade. But we think it will take both a new kind of technology
and a different focus to make it happen:
Technology-- Still Some Way to Go: The “smart” in “smart lighting” might
seem to provide a way for lighting firms to differentiate themselves in the
market. Yet many smart lighting systems today use technology that is not
especially novel; these supposedly “smart” systems might be better
characterized as “lighting management systems,” a product “species” that has
been around for a couple of decades at least.
Although we think that such older technology will go into decline in the next few
years, almost 70 percent of the revenues from “smart” lighting systems in 2014
will come from these conventional lighting management systems. Using this
technology, it is hard to make lighting systems stand out in the marketplace.
Value Proposition – Not As Clear As it Seems: Most smart lighting systems
are aimed at increasing energy efficiency and this is a clear enough message in
an era of rising real energy prices. However, for many end users who have only
just switched to LEDs as a way of saving on their lighting bills, installing a smart
lighting system may be a bridge too far. Some will want to wait to see what
LEDs alone can do. Other end users – perhaps the most sophisticated – will
take a more holistic approach and may decide to eschew smart lighting. For
example, they might consider the latest generation of smart windows and highly
insulated windows as their energy-saving technology of choice.
The point here is that while cutting down on energy bills is a good thing per se,
building owners and managers are not likely to install every energy saving
technology available. They will choose among such technologies most of the
time. Smart lighting has significant competition in this sense.
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Despite these issues, NanoMarkets continues to believe that smart lighting
remains a considerable business opportunity both in terms of market size --
just over a billion dollars in revenues expected in 2014 – and in terms of growth
– NanoMarkets believes that billion dollars will turn into around 11 billion dollars
by 2019 or so.
However, bullish assertions of this kind assume that (1) the latest electronics
and sensor technology will be embedded in smart lighting in a manner that will
both impress potential customers and which can be protected as viable
intellectual property and (2) the functionality of smart lighting will evolve beyond
energy efficiency so that smart lighting has more to offer those customers than
just a saving on electricity bills:
Making lighting truly smart: The line between the lighting management
systems mentioned above and truly smart lighting is a fine one. However, it is
fair to say that ”real” smart lighting systems are smaller, lighter, more wireless
oriented and can be controlled through smart phones. This kind of smart
lighting system is attracting the attention of the semiconductor industry where a
handful of firms are designing specialized controller chips for this leading edge
kind of smart lighting. Established standards in wireless networking are also
being adapted to smart lighting requirements.
These are all important developments, but NanoMarkets suspects that it will
take more to get smart lighting into the mainstream. In particular, we are
hopeful that smart lighting will get caught up in the Internet-of-Things (IoT)
meme, with smart lighting becoming the natural extension of IoT into the
lighting sphere. The point here is that the IoT megatrend could become a
powerful force for the diffusion of smart lighting technology.
Beyond energy savings – the mood factor: Some of the latest smart lighting
technology is already showing how this kind of lighting can move beyond mere
energy efficiency and can therefore expand the addressable markets available
to smart lighting.
More specifically, while future smart lighting offerings will continue to be highly
energy efficient, we expect them to offer sophisticated mood and health
features, perhaps based on smart spectrum and brightness tuning functionality.
It has always been understood that quality of light can impact quality of life,
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work performance and even health in a significant way. This type of smart
lighting system – as it emerges – will continue to cater to the need for energy
efficiency but will provide many more reasons for building owners and
managers to buy smart lighting. It can therefore go some way to countering the
objection mentioned above that smart lighting is just one way among many to
reduce energy consumption in a building.
However, there are some important uncertainties here that in the end may
prove to be market limitations for the spread of smart lighting into the mood and
health business. On the one hand, there seems to a growing literature
“proving” that mood lighting is beneficial to health, work performance and
mood. On the other hand, NanoMarkets has discovered that there is still a
considerable amount of skepticism about such things in the medical
community. Nonetheless, NanoMarkets is still forecasting that by 2019 smart
mood lighting will be generating $2.9 billion, which is a large enough market for
any lighting firm to chase after.
The bottom line with smart lighting then is that we are just starting out. Much of
what is being branded as smart lighting today is only slightly less clunky than
the lighting management systems that were on the market a generation ago.
We think that new electronics and sensors standards designed specifically with
smart lighting in mind will make a qualitative difference, transforming smart
lighting into part of the IoT. NanoMarkets also thinks that the dominant view
that smart lighting is just another energy saving technology may not be enough
to turn smart lighting into a ubiquitous technology and that novel functionality –
such as mood and health enhancement – will be necessary to make smart
lighting all it can be.
The materials for this paper were drawn from the following NanoMarkets reports:
• Smart Lighting Markets-2014; V2. Products, Companies and Technologies
• Smart Lighting Markets-2014; V1. Market Drivers and Forecasts
Please visit www.nanomarkets.net for additional details