There is nothing new about lighting management systems. Such systems have existed for decades and the new term "smart lighting system," could be construed as just another name for "lighting management system," updated to include the term "smart;" a word that has become a "must use" in the technology world today.
Nonetheless, NanoMarkets thinks that when one digs a little deeper—beyond the purely semantic—it is possible to identify some real distinctions between the old "lighting management systems" and the new "smart lighting systems" concepts and that for manufacturers in the lighting space that understand these distinctions, there will be significant profits to be made over the coming decade.
NanoMarkets believes that there are three factors that demarcate the new smart lighting systems from the old.
(1) a greater sense of urgency about energy efficiency, which tends to expand the addressable market for light management systems in a way that is genuinely new,
(2) the growing ability to address needs beyond energy efficiency that are provided by new types of lighting,
(3) a slew of new enabling technologies, ranging from chips to clouds that NanoMarkets believes will better handle (1) and (2) and also increase the ability of smart lighting vendors to differentiate themselves in the marketplace.
Energy Efficiency: Prime Mover for Smart Lighting
That energy efficiency is the key driver for lighting management needs little explanation. Adding to energy efficiency being the prime mover here is the fact that in both residential and commercial buildings, lighting tends to use much of the energy consumed. However, for a variety of reasons, increasing energy prices now look like they are here to stay and, if this is correct, the addressable market for smart lighting is going to grow over the next decade.
This trend, NanoMarkets believes, will certainly create demand not just for more smart lighting systems, but newer kinds; improved smart lighting systems for residential buildings for example. In any case, it is a safe bet that a lot of firms are going see their fortunes being made from smart lighting.
While there is a genuine opportunity here, NanoMarkets believes that there is a danger that it could be overstated. Some firms entering the smart lighting business may do so with the thought that the rapid growth in this market will generate enough new business for them to be profitable. Such expectations may actually not be completely unrealistic at first.
But if smart lighting firms fail to find effective ways to differentiate themselves in what is already becoming a crowded marketplace, they will quickly see their business slip away from them. As a matter of fact, in NanoMarkets previous report on smart lighting—in 2012—we specifically noted that many of the smart lighting systems from firms that were purportedly innovative start-ups, actually had a certain sameness to them. They seemed to be offering features and benefits that indistinguishable from one another and we questioned whether these would be enough to build a sustainable business for smart lighting firms.