NanoMarkets believes that in the past year or so the smart lighting industry has begun to grow up. It has begun to focus on what the opportunities are for its products rather than simply dwelling on technical issues. Our sense of the market is that in the past, next-generation smart lighting firms have been uncourageous about saying how their systems differ from each other and from the previous generation of lighting management systems. We now appear to have reached a stage in the evolution of the smart lighting business, where firms in this space must think hard about what they really have to offer.

Smart lighting has for years been controlled by lighting control systems firms, companies focused on lighting systems rather than individual luminaires or building-wide energy management. What is different in 2014 is the extent to which multiple industries are actively pursuing smart lighting, a factor NanoMarkets emphasizes in our most recent report on the topic. We are seeing increased interest in smart lighting from large lighting companies, building automation firms, LED chip makers, and even software companies and network communications firms. All these sectors have the chance to benefit from growth in smart lighting, but they will need to focus on more than merely energy efficiency.

The companies most likely to find success in the next few years are those targeting advances that are poised for growth, such as lighting specifically designed to improve mood or health. Initial revenues in health and mood lighting are likely to come from the medical sector, which is not as cost-conscious as other industries.

NanoMarkets has been following the fortunes of the smart windows sector for six years now.  In that time we have seen few if any great leaps forward either in terms of market expansion or in terms of technology.  This judgment remains true whether one considers “smart windows” to include only “self-tinting” windows (the most common definition) or whether one adopts a broader definition of smart windows that includes self-healing and self-cleaning windows.  

The smart lighting market is undergoing a transition that we expect will lead to expanded opportunities for many different types of companies. The older generation of so-called smart lighting systems—really no more than lighting management systems—that were not much more than motion sensors and timers has evolved into systems that are much smarter. The smart home and smart office of the future that has existed in the imagination of writers and futurists seems really to now be on the horizon, thanks to advances in technology that are leading to the availability of more features at lower prices. 

Until very recently, the addressable market for smart auto glass has never seemed to extend much beyond luxury vehicles or (in a few cases) car enthusiasts who buy aftermarket products.  And the low performance of many smart auto glass products makes it quite difficult for many smart auto glass products to penetrate to any great degree even the small addressable markets.

This rather pessimistic appraisal of the here and now for smart auto glass seems to contrast with the high level of interest that NanoMarkets is seeing in smart auto glass at major glass makers, electronics firms, and car companies. 

The reason for NanoMarkets being bullish on smart windows in this sense is primarily our belief that there are widespread consumer expectations that the real price of energy will continue to rise for years to come.  This will promote the sales of products that promote energy savings; smart windows being one such product type. Buildings need smart windows to comply with LEED or zero-energy requirements.  Automobiles adopt smart windows to keep interiors cool and cut down on the need for air-conditioning on sunny days, while letting as much light as possible through on gloomy ones.

We expect these novel market drivers for smart windows to combine with more traditional ones—especially the need to reduce glare in the summer while not obscuring visibility in the winter.  But the new market drivers for smart windows based on energy prices, NanoMarkets believes, will help grow the smart windows business dramatically.

For smart windows to replace dumb ones, they are going to have to achieve improved price points.  And the business models adopted by smart windows suppliers are going to have to recognize where the opportunities are and where they are not.

NanoMarkets has provided coverage of the smart lighting sector since the sector’s earliest days.   Our definition of smart lighting comprises adding intelligence – in the form of additional electronics – to enhance the capabilities of lighting systems in useful ways.  Smart lighting, the way that NanoMarkets has discussed it, does not specify the light source and it could use CFL, LED or even incandescent lighting theoretically.  However, almost all commercially viable smart lighting that is likely to be sold going forward is likely to use LEDs.  So it is in LED-based smart lighting systems that the potential for chipmakers lies.

In an era of increasing environmental awareness, consumers and corporations are seeking ways to make their homes and offices more energy efficient.  In the U.S., energy consumption in buildings represents one-third of all the energy used in the country and NanoMarkets believes that in other countries statistics of this kind would not be all that different from what we see in the U.S.

Windows are notoriously leaky in terms of energy.  This represents an opportunity to produce more energy-efficient windows.  Much of the technology being developed in this space relates to better insulated windows, but so-called smart windows (a.k.a. self-dimming windows) are also likely to be an important part of the mix and an important contributor to the revenue stream.

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.