In December, Philips, a global leader in lighting and Cisco, a worldwide leader in IT Networking, announced a global strategic alliance that will create new energy savings, building efficiency and employee productivity, made possible by the Internet of Things (IoT) in modern offices. This alliance brings together Philips’ LED based connected lighting system with Cisco’s IT network to address a global office market estimated to be worth around €1 billion.
While the deal in itself is not particularly large, it is in line with Cisco’s partnering strategies and reflects its firm focus on the IoT domain. Cisco has been partnering with companies that can enhance its reach in different markets, and also provide a better understanding of new industries. Its recent partnership with Ericsson and a six year old alliance with EMC and VMware on cloud computing are indicative of this.
Through this alliance with Philips, Cisco is planning to add another element to its networking solutions for enterprise customers and strengthen its IoT portfolio. The IoT domain is heating up, and many networking companies are investing in technologies that will ensure seamless connectivity between Internet-connected devices.
Interestingly, the scope for scaling IoT by focusing only on connectivity is limited, while much of the potential lies with the end devices, services and applications of the IoT environment.
This is where Cisco’s Internet connected light partnership can prove useful. However, this arena is not without challenges, as the networking company faces competition from GE Current and numerous start-ups. “The connective lighting system presents infinite possibilities. There are many unexplored lighting system functions”, said the advanced project manager of real estate firm CBRE recently.
Cisco estimates that the IoT market will be worth $19 trillion over the next decade, representing a $1.7 trillion market for service providers. McKinsey estimates that IoT could have an impact of up to $6.2 trillion on the global economy by 2025. The installed base for IoT devices is estimated to grow from around 10 billion connected devices today to as many as 30 billion devices by 2020. Clearly there is a lot of growth potential for networking companies such as Cisco in addition to network infrastructure players and semiconductor companies.
As an entrance platform for the IoT, lighting has become increasingly important. Current development of smart lighting is only beginning, the real smart lighting will combine IoT technologies, mobile data, visual psychology and visual physiology, aesthetic lighting environment, creating integrated smart and adaptive lighting applications.
Office lighting is one of the most important vertical market segments within indoor lighting applications, and the strategic alliance between Philips and Cisco holds a huge potential market share. Office lighting application has higher quality standards, reflected in the function, design, service and high added value of office lighting, while client price sensitivity is also more rational.
Compared to conventional lighting, LED lighting has more competitive specifications, while its control upon light quality and connectivity outweighs conventional illumination. Internal office lighting evolution has great potential. This may be one of the main considerations the two companies took into account prior, to establishing the partnership.
“Lighting is truly at an inflection point and the forthcoming shakeout over the next 5 years will determine the winners and losers in the game; as well as those who will be the lighting giants of the future” explains the recent Lighting Controls report from Memoori.
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LEDs are low-voltage DC devices that potentially can be powered over Ethernet (PoE) and can significantly transform conventional lighting power deployment. Compared to conventional lighting, LED lighting plays a role in direct-control and communication nodes of IoT system. This change will pose unprecedented influence to future smart building system in terms of design, implementation, and application.
The basic technical aspects of PoE technology has matured and begun commercialisation. We can be fairly certain of booming growth once price-performance ratio reaches market acceptance and the strategic alliance between Cisco and Philips will surely help accelerate this.
While the specific elements of the partnership remain unclear, the companies say that the new alliance brings together Philips’ LED based connected lighting system and Cisco’s IT network capabilities to address the growing global lighting market.
Bill Bien, SVP, Head of Strategy and Marketing, at Philips Lighting, commented, “Customers will receive the best energy efficient lighting experience in the connected world and be able to use information acquired from their connected lighting system to save energy, reduce costs, improve productivity and optimise their workspace environment. Lighting that is connected to highly secure, reliable IT infrastructure will form the backbone of the smart office of the future”.
Edwin Paalvast, SVP EMEAR, Cisco and executive sponsor of the alliance, said, “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”.