It seems as though the lighting market has been at an inflection point for some time now. After more than a century of contentment with various forms of the traditional lightbulb for various forms of illumination, the LED was born to save the world with unprecedented energy efficiency. LED’s could do more than just illuminate at low-power, however, and the subsequent flood of health, productivity, and connectivity applications has kept the sector at a tipping point to many exciting directions ever since. The journey of the industry to this point may shed some light on when and where it will tip.
“In the lighting industry, the creative aspects involve high-efficiency LEDs that have long lifetimes and can offer new lighting based services, and the integration of various “Internet of Things” or IoT services that both depend upon and add new services to lighting systems,” said Robert Karlicek, Director for Center for Lighting Enabled Systems & Applications at Rensselaer Polytechnic Institute in a 2017 interview. “The disruption is to all forms of old, non-LED lighting, disruption of legacy business structures, supply chains, and distribution channels and more, such as lighting control systems.”
Last week, Karlicek was speaking at the Strategies in Light event in San Diego with a keynote titled “The End of the SSL Revolution, or is it the Beginning?” Like in previous years, he brought up the economics concept of “Creative Destruction” to explain the state of the lighting industry today. The term was originally derived from Marxian theory where it linked the processes of accumulation and annihilation of wealth under capitalism but was later adopted and popularised by Austrian economist Joseph Schumpeter in the 1940s to describe the disruptive process of transformation that is associated with innovation.
“The gale of creative destruction is the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one," wrote Schumpeter, in his 1942 book Capitalism, Socialism and Democracy. According to Karlicek, that gale is now blowing through the lighting industry as new innovations destroy the old to create a new lighting landscape.
Creative destruction is different from disruptive innovation in that it destroys what came before it. Consider Uber, for example, which is disrupting the taxi industry. By fighting back with Uber-style services and regulatory pressure, the taxi industry has avoided destruction by adapting to the disruption. On the other hand, the creation of the LED is now well into the process of destroying the traditional lightbulb business. Incandescent lighting has little defense to the fact that LEDs offer better illumination for less with improved energy efficiency and a longer lifespan.
The gradual destruction of traditional lighting then triggered disruption in the lighting controls business, with a wide range of new features to traverse but also the need to adjust to a vastly different energy-savings payback period. The lighting controls industry has become open to those firms that are able to harness the powerful new features available. Those that selected the right applications and verticals, and managed their risk well are better able to thrive in the new value-add driven lighting market. Suddenly the power was in the controls business.
“Control systems are indeed in a particularly interesting situation,” says Karlicek. “For the time being, regulations will drive the installation of some forms of lighting control regardless of their inability to pay for themselves through energy savings over a practical period of time. Gradually, however, control system benefits will be through managing the many capabilities of advanced LED lighting systems to deliver new value-added services.”
This is where lighting met the IoT and our current situation of emerging smart lighting systems linked to sensor networks, user interfaces, and big data analytics systems that combine to make the smart building. However, as sensor-enabled and highly controllable LEDs increasingly offer everything from improved circadian health of occupants, to optimal worker productivity, to “100 times faster than Wi-Fi” data communications, the power demands of lighting increase. The creation of the multifunctional LED is starting to challenge the energy efficiency proposition that LED technology was built on.
“Smarter, networked control systems will, however, face another challenge, because as lighting becomes more connected, use more sensors to figure out how to light a particular space, and employs greater computer power to be able to make those decisions, power consumption will go up,” says Karlicek. “Control companies will, as always, need to show that the value of controls is justified by new benefits of proper control, but it will be much harder to do because the currently emerging benefits are qualitative and may not offer value to many facilities managers. Gradually, with continued research on lighting and human health and wellbeing, the value proposition will be proven, but much more research is required.”
The industry certainly believes that the value of these new features far outweighs the value of energy efficiency and that smart lighting applications are still efficient relative to incandescent lightbulbs. “The energy era of lighting is officially over,” stated Jim Benya of the Benya Burnett Consultancy in his keynote at Strategies in Light last week. And while the green lobby may have something to say about that, the lighting controls business has other concerns. Namely, how to maintain the value of low-cost, low-power, long-life products in an era of new features, applications, and specifications.
The creation of the LED destroyed the lightbulb by doing the same thing but better, offering a cheap and simple form of illumination for every environment. However, as lighting goes beyond illumination, the LED specs required also change, moving away from cheap and simple to advanced and powerful. Furthermore, the rate these new IoT-driven applications develop is now beginning to disrupt the LED sales channels, from white goods that are sold off-the-shelf or as preinstalled fixtures in real estate to one that is increasingly spec-grade, carefully chosen for advanced features like consumer electronics.
“Perhaps one of the biggest near-term challenges is that the rate of innovation is so fast, product lifecycles can be short – so the availability of a given LED light source may be time-limited — replaced quickly by a newer version with slightly different specifications,” says Karlicek. “Over time, however, I would expect to see growth in the spec-grade markets at the expense of white goods as color tuning and IoT control concepts continue to enter the market, and lighting companies move to offering more sophisticated LED lighting capabilities and features in order to survive.”
Lighting is no longer just about illumination. The IoT now looks at lighting as a ubiquitous platform to power its sensors and transmit sensor data to intelligent systems. To adapt to this disruptive change, the lighting industry that traditionally worked with simple power and light has been forced to become network savvy, introducing Power-over-Ethernet (PoE) and various wired and wireless networking protocols. The location of fixtures is no longer about where light is needed but also about positioning sensors for occupancy tracking, HVAC control, and mesh connectivity. And then there is the issue of cybersecurity to contend with in this strange new world for the lighting industry.
The emergence of Lighting-as-a-Service might seem crazy to those in the lighting industry just a few decades ago but now seems like an obvious choice to tie together the continuously evolving range of features. Imagine what the past lighting players would have thought of LiFi communication putting lighting in direct competition with WiFi and cellular connectivity, the emergence of lasers for lighting, or the introduction of artificial intelligence through the IoT that promises further disruption by bringing the power of AI to edge systems like lighting. “The artificial intelligence of things (AIoT) will be necessary for truly smart, connected lighting,” stated Karlicek during his keynote last week.
The destruction of lightbulbs may seem like old news but the emergence of LEDs is still creating. The straight road of lighting-for-illumination has come to an end with this sudden technology shift, a wide-open space now lies ahead, and while the lighting industry has tentatively continued to walk-the-line it is becoming increasingly aware that there may be better paths to follow.
Which directions the industry turns, how it spreads out to explore this new open space, and what new models it creates to navigate this newfound freedom are still unfolding. Some lighting firms have taken risks in the driver’s seat, some follow from the backseat, while others seem frozen in place, unsure which way to go. The destruction of traditional lighting has left a creative environment of potential new winners and losers.
“We are only at the beginning of a long and challenging process of redefining of lighting, networking and complex integrated systems. The winners will be agile in developing the skills and/or business partnerships to meet customer needs and alert enough to avoid picking the wrong technology horses in a rapidly changing industry,” said Karlicek. “Striking the right balance between being on the cutting edge for some things or being a fast follower for others will be critical to success.”