December 2015
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The Rules are Changing in the Global Lighting Controls Business

Add in the potential to at last open up the latent retrofit market and it can be seen that there are enormous opportunities for those able to understand the various market influences and how to exploit them.

Allan McHale
Allan McHale,
Director,
Memoori
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The rules are changing in the Lighting Controls business and using the past to judge the future would be very misleading. The competitive landscape is changing and companies will have to develop new strategies to grow and capture market share.

This is just one of the findings from Memoori’s latest world report Smart Buildings: The Lighting Controls Business 2015 to 2020.

Figure 2.3

The report estimates the global value of lighting product controls in non domestic buildings in 2015 at $2.208 billion at factory gate prices. It also forecasts that the global market for Lighting Controls from 2015 to 2020 will grow at a CAGR of 10.6% to 2020. Over the next five years growth in the developed markets of Europe and North America will grow at a little more than half this rate whilst China and Asia will exceed the average global growth.

This is indeed a high rate of growth particularly for a rather mature lighting business where we expect unit hardware prices to fall significantly but volume to compensate and software and value added services to make a much larger contribution over the next five years.

So what are the changes that are going to dramatically alter the competitive landscape and the structure of the business?

The Lighting industry and many in the technical building services industry now recognize that lighting is the most pervasive service within a building; it reaches parts that none of the other building services do. Combine this with the ability of solid-state lighting to convey data through IP and for the sensors in the control systems to gather data; there is a realization that lighting controls are in a strong position both technically and commercially to take a leading role in integrating most of the technical services in a building.

Add in the potential to at last open up the latent retrofit market and it can be seen that there are enormous opportunities for those able to understand the various market influences and how to exploit them.

These are just some of the subjects we discussed with Tanuj Mohan, CTO of Enlighted in our Free Webinar last month – “Shining a Light on the Internet of Things in Buildings; What part will Lighting Controls play in Future Smart Buildings?”.

The report shows, through case studies, that this strategy to develop the lighting control infrastructure to carry additional data and functionality is already in operation; driving up the overall value of a lighting control contract. However if Lighting Control companies are to take advantage of this opportunity they will have to acquire new technical skills and expand their routes to market.

Panel Fab, IncOf course this opportunity is open to other suppliers of technical building services but if you just analyse the logistics it would suggest that lighting and its control is a more likely core network to build on for convergence and integration rather than Building Energy Controls (BECS) or Plug-load. The answer lies in the numbers – and in the ceiling. Lighting in most buildings is the second largest energy load, but it easily represents the greatest number of potential control points.

And when it comes to building a reliable and scalable mesh network, the number of points involved matters. Once a wireless lighting network is in place, adding other devices and applications is simple – they piggyback on an infrastructure that’s already in place.

The key difference that we have shown in the report is that these controls applications and projects for medium and small buildings will be lighting-centric rather than HVAC-centric and that will make all the difference. The lighting-centric projects will be motivated by LEDs and many will incorporate wireless and cloud technology. This is resulting in the emergence of new players, new technologies and new application delivery mechanisms. The existing industry structure and business models will change dramatically over the next five years.

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