The Lighting Market Change by David Gordon - Energy Watch News

The Lighting Market Change by David Gordon
David Gordon
Recently a number of lighting announcements were made that when aggregated,, represent significant change in the lighting industry … and may encourage distributors to re-evaluate their approach to the product category.
Here’s what’s happened:
• Philips announced a strategic alliance with Cisco
• Acuity acquired Geometri
• OSRAM Sylvania is being shopped to be sold (and changed its name)
• Philips is seeking a buyer for Philips Lighting
And GE Lighting evolved to “Current, powered by GE” for its LED initiatives and Acuity acquired Juno Lighting. Some thoughts on each:

Philips and Cisco. This is an alliance betting on connectivity and the potential for lighting to be the center of IoT. A portion is PoE (power over ethernet) where lighting is sold as part of an IT infrastructure. The Philips / Cisco relationship begs the question of “will Cisco VARs be able to sell lighting to end-users”. Their press release states:
• Philips’ SVP Head of Strategy and Marketing: “the focus of this alliance is on new builds and extensive retrofits, which leaves a large portion of the market to be addressed by other technologies, including copper wiring. I think that you would see that the ease of this solution makes it such that, really, existing installers could also install it. But there is still a sizable market that goes on for those installers and for our distributors, which we’ll continue to support and work with closely to make sure they have the best technology in the marketplace to be able to offer their customers.”
• CISCO’s SVP EMEAR, Cisco and executive sponsor of the Cisco – Philips Alliance, said “The world is becoming digital, and by working with Philips, we can help building owners more quickly digitize their lighting networks to drive better user experiences and efficiency. By partnering with Philips, we are delivering a reliable PoE-powered LED lighting solution using a highly secure IT network.”
So, while this is focused on PoE, new construction and extensive retrofits, it appears that Philips is creating a new channel? Can distributors play?

Acuity and Geometri. This highlights how lighting will change. Geometri is a software / services company focused on indoor mapping, positioning and analytics. Lighting, through functionality driven by LED electronics, can monitor foot traffic, collect data, share the data and more … eventually could it interact with building control systems? HVAC systems? Will data monitoring generate recurring revenue streams for Acuity? Will distributors participate? Could distributors handle the monitoring and provide analysis to end-users? Will distributor salespeople be able to sell the concept? How could analyzing foot traffic drive marketing and other consumer and office-driven behaviors? Lighting is no longer solely about visibility.

Sylvania being shopped? It’s been discussed and the parent company of Forest Lighting, MLS, has been mentioned as well as a consortium of a Chinese company and Bain. The lamp business is reported to be valued at $545M.

Philips Lighting going also?. Philips may sell off Philips Lighting. Potential buyers are Chinese companies or private equity. Reportedly Acuity “could be interested in pieces” (which says something about a company being successful and being able to invest through product development AND acquisitions with strong cash reserves, an appreciating stock price and strong cash flow.)

I spoke to an industry veteran to gain his perspective. He wrote:
LED Technology has changed the game in so many ways beyond just the pure product value proposition. It is forming new alliances for sure and merging industry segments and the players within those segments into strategic partnerships. To me, the future value is a 50/50 split moving forward, meaning this technology will produce illumination but just as importantly convey information. Cisco and Philips are one good example of that and so is the recent acquisition of GeoMetri by Acuity, their mapping and analytical software marries well with the Sensorswitch platforms in providing data in the retail segment.

The Big 3 is like much in history, once a Dynasty but now one of many key players. The simple but key question will be, which Giant technology companies by the Lighting OEMs and what will be their strategy to get to the market, direct, VARs, existing Distribution????

OSRAM has renamed it’s general lighting business. Said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG, “We have opted for a combination of the terms ‘LED’ and ‘advance’ and will call the newly established company LEDVANCE,”. “The name reflects the trend toward LED in the lighting market as well as the opportunities arising from this development – opportunities LEDVANCE will actively exploit.”

So, GE is no longer GE (it’s Current, powered by GE). Philips is ??? (in limbo. May remain the same, may not) and OSRAM is “LEDVANCE” (although they can use the Sylvania name). Big 3?
From a distributor perspective questions become::
• Are you an order taker and indifferent to these changes?
• Whom to align with relating to fixtures?
• Do you need “one of the Big 3” lamp lines as your “lamp replacement line”?
• If lighting is integral to your success, do you invest in a category management mentality as well as invest in personnel, and maybe infrastructure, to become a true solutions provider and develop recurring revenue services?
• How do you actively market your differences (and invest to do this?)
• What will the Big 3 end up being? Could Google get involved? Could Cisco buy Philips Lighting?
The lighting world … it’s changing.

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