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Longer Life-Cycles & Price Pressure Push LED Manufacturers Towards Smart Lighting Control

May 28, 2014 By Jim McHale

Jim McHale

For LEDs, the push into the building lighting market is well under way, driven by improving energy efficiency of the technology and a longevity that is almost unmatched by competing lighting technologies. Our analysis  indicates that market penetration expressed in terms of overall revenue generation of lighting in buildings grew to around 14% at the end of 2013.

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Beyond the often cited initial cost barrier, other factors such as the incompatibility of legacy lighting systems, mixed consumer awareness and perceptions of LED lighting are still to be overcome. It seems clear that several different lighting technologies will coexist for a few years to come.

Although buying choices and procurement philosophies of both consumers and commercial facilities managers have traditionally focused on initial costs, one of the key benefits of a switch to LED lighting lies in its lower total cost of ownership.

The goal for LED manufacturers is now to convince consumers to migrate from a fixed cost of light to a service cost. Five-year payback is a very tough sell; lighting controls can move payback nearer to two to three years.

How quickly a return on investment can be made on LED lighting versus traditional lighting methods depends of course on both the application and the proportion of time the light is switched on.

The current rate of cost decline in LED lighting systems is about 18 % a year. At the time of publication of our research, the average global selling price of LED light bulbs that can replace standard 40-watt bulbs had declined to US$15, while that of 60W-equivalent LED bulbs dropped to around US$21. Prices will continue to drop significantly year on year until around 2018 before starting to level off.

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Going forward, successful revenue growth in LED lighting will be dependent not only on promises of longer life and energy efficiency, but also on effectiveness, upfront costs, consumer confidence and improved functionality.

For LED manufacturers to survive in an increasingly competitive market place they will have to embrace innovation and continue to invest in R&D.

Our research shows that smart lighting systems are today in use in only a very low percentage of buildings. The controllable nature of LED lighting makes it well suited for use with sensors in smart lighting applications for a number of purposes including increasing energy savings.

With the Internet of Things coming closer to reality and LEDs providing the potential to control every aspect of a light’s characteristics; smart lighting control systems provide another huge potential growth area for lighting companies.

Installation of new LED lighting systems is helping to stimulate increases in the installation of intelligent lighting controls such as occupancy sensors, photosensors and wireless networks that link them. Combining digital LEDs with advanced sensors, control systems and artificial intelligence will reduce the need for separate systems to manage each of these functions.

Also a growing number of innovative companies and universities have also successfully demonstrated the potential of Visual Light Communications (Li-Fi). Using light to increase the speed and rate at which data can be transferred from point to point. These experiments prove that a visible light communication system can be produced to transfer data at speeds up to 10Gbps, which is 666 times faster than average broadband speed in the UK.

Now in its 2nd Edition, Memoori’s Report “LED Lighting in Buildings 2014 to 2018” is the New Definitive Resource for LED Lighting Market Research & Investment Analysis. Combining Market Sizing Statistics with Financial Analysis of Mergers, Acquisitions and Investments – http://www.memoori.com/portfolio/led-lighting-in-buildings-2014-to-2018

Jim McHale founded Memoori in 2008, a consultancy company based in London that provides market research, business intelligence and financial deal tracking services to clients across several industries. Prior to Memoori, Jim worked as a Business Analyst for i&i Proplan researching international building controls markets. He has several years experience researching and analyzing b2b industrial markets, providing assistance to client’s strategic marketing and acquisition decisions. He has managed and delivered research projects to numerous blue chip clients including Siemens, Honeywell, 3i and Morgan Stanley.



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