May 21, 2009...Uh-oh, the big lighting
companies showed up with LED lighting!
Anytime you have a new and disruptive technology, it's handy to
take a pause and see what today can really tell you about tomorrow.
At the 2009 edition of Light Fair International, there were two
main "shockers" we found. True to predictions, this year's event
looked more like "solid state Light Fair" than "all types of Light
Fair". No shock there, since LED lighting is interesting, new and
moving forward. The incumbents are pretty much where they will be
for the foreseeable future. The first shocker was that unlike
previous years, it was not simple to tell the junk from the
quality, although I am fairly confident that 80-90% of it was
still junk. The second shocker was that the big lighting
companies showed up, and they brought good looking products
with them (see shocker #1 regarding "good looking". If you're
looking for tacit recommendations or techniques to allow you to
discern which products were the quality ones, check back into the
last editorial, as well as something like the last year's worth,
and you'll have some basic questions and knowledge points to guide
you, but the highlights are: Insist on independent LM-79 test
reports; compare the product to Energy Star standards; and insist
they prove that their LED supplier can generate good LM-80 results.
It would also make sense for you to mark your calendar now for the
SSL Design
Summit series, which includes the New York area in August and
the Los Angeles area in October. Sponsors and showcase participants
will have to meet our criteria regarding competence and
quality-orientation to even be allowed to flash a logo or show a
product. (You might get the feeling we're serious about the success
of this market, and you're right.)
Regarding that second shock, I must humbly admit that I did not
expect the "big guys" to show up this early. Yes, I expected to see
them show a product here or there, and enunciate clearly their
sincere commitment to developing their LED lighting program, but
that it was still a little too early for them to attach their
well-regarded brand names for something that was still a bit
unproven. How dramatic was the showing? It seems to have been about
16 months or so back that Philips announced it was going to finally
enter the North American market for luminaires and fixtures. We're
not talking about SSL luminaires and fixtures, but about any and
all kinds since they had previously chosen to bypass America and
spend their time on all the other world markets. So here we are 16
months later, and there was Philips with 2 or 3 of their brands,
including Lightolier and Hadco (courtesy of the Genlyte
acquisition), showing good looking SSL product lines. Are they good
yet? Despite the quality LED offerings by the Philips Lumileds
subsidiary, like all the major lighting companies, I am confident
there is a bit of corporate inertia to overcome that will hold them
back from the "leading edge" in terms of overall efficacy or design
innovation. It's a good bet that the first generation of products
will be "competent" rather than "stunning". That's also what we're
expecting from Cooper, and Acuity as well.
Is it good enough to win? If history tells us anything (as it
typically seems to, if we just shut up and listen rather than
continually blabbing on about "the totally new paradigm that has
changed the fundamental precepts" kind of thing), then the answer
is, "Yes, it's good enough". During the PC revolution, the new
paradigm that changed everything was equally in place. No one had
PCs on there desk in 1980, and by 1990, most did. In 2006,
virtually no one had LED lighting in their office. By 2012, most
will and by 2016, we all will. In the PC wave, the big guys were
maybe a half-step behind, but it was the IBM-PC that made the
business market, not "Atari-PC" or the "Tandy-PC", despite their
early moves to put decent examples of PC-ness into people's hands.
Hewlett Packard and Texas Instruments, both big in minicomputer
market, came and stayed for quite some time. Did some "little guys"
make a good showing? Absolutely. Apple led the way as a newcomer
that challenged the whole approach that the big guys took, all the
way to writing their own operating system (with easier networking
and a more stable platform, the OS allowed Apple to sneak into the
offices based almost solely on technical performance). Dell
followed the big PC guys technically, but set it's sights on
revolutionizing the market channel by going direct to the corporate
users, and later to the consumer market when the technology became
affordable there as well. Seems pretty analogous to what we might
expect from the lighting market, with one marked difference. In the
minicomputer market, the channels weren't particularly fat. Systems
flowed from the factory to the user, with maybe one value-added
stop along the way. Off-the-shelf applications hit the VARs pretty
hard, further thinning the channels.
In the lighting market, the channels are king. Distributors,
reps, specifiers, ESCOs, builders and property developers/managers
are all taking cuts above the table, and there may even be a teensy
bit going on under the table as well (oops, was that out loud?).
The big lighting companies will tell you that makes all the
difference, and it will predictably should allow those companies to
be successful with more conservative products, sold at higher
prices. Many innovative upstarts will tell their investors and
customers that this is a "technical revolution" that fundamentally
"changes the way the industry will do business". Nope. Remember how
e-commerce was going to have us all shopping from our homes inside
of 10 years, rendering brick and mortar retailers virtually
obsolete other than as product pickup centers. How did that
prediction work out here in year 9 of the 10? Will some innovative
upstarts make it big? Dell, Apple, and Compaq tell us? You bet! How
many? Probably not many, but enough to make it really interesting,
and there is plenty of market available to support a lot of niche
players in that $20M to $100M range, which is bigger than most
pure-play LED lighting companies are right now. When it comes to
the consumer market play in the next few years, I would expect a
similar story; there just aren't many brands of bulbs in Lowes,
Home Depot or Wal-Mart's supplier bin, and I wouldn't expect solid
state lighting to be any different. The first-mover with really
good replacement lamps will get on the shelves for a while, but
once the big lamp/bulb guys' muscles have a product to flex in that
channel, the newcomer likely won't find much loyalty and should
sell while they have the chance. If you would like to get a broader
picture about where the market is and where it is going you need
only read our
previous editorials.