Recently, in a collaboration between Egret Consulting, IMARK Group and the Georgia Institute of Technology, a survey was created to gauge the current rate of adoption for solid-state or “smart” lighting within the electrical industry channel. It also sought IMARK member insights on the topics of light-emitting diodes (LEDs), “smart lighting” and the so-called Internet of Things (IoT). The survey developers included Ted Konnerth, PhD, CEO, Egret Consulting; Bill Astary, director of industry partnerships, and Russell Clark, PhD, professor of IT, Georgia Institute of Technology; and Steve Ruane, vice president of marketing, IMARK.
Executives from 177 IMARK member companies completed the survey on these issues.
The lighting industry is in the early stages of a seismic change. The transition of legacy lighting sources to LEDs represented a fundamental change that, from the outset, was largely propelled by the energy-savings benefit. But as lighting has become digitized, the entire market is transforming rapidly. In a recent book, How to Go Big, Create Wealth and Impact the World, authors Peter Diamandis and Steven Kotlerby propose that once something is digitized, the market surrounding the product goes through rapid stages of change that they define as the six Ds:
- Digitization
- Deception (to maintain and defend the status quo)
- Disruption
- Demonetization
- Dematerialization
- Democratization
In recent years, the lighting industry has seen dynamic changes that mimic some of the six Ds. For example, when electronic ballasts entered the market, the ballast industry was highly concentrated and relatively impervious to imports due to the manufacturing processes and barriers to entry. The largest electronic ballast manufacturer was bought by one of the major players and largely shelved for several years to prolong the transfer of old technology to new technology. In many ways, this mirrors Diamandis’ second stage of adoption, which is deception.
Insulation Contact (IC) thermal regulation was similarly battled by major manufacturers of recessed cans as the code change would inevitably render their requirement of buying trims and cans from the same manufacturer moot. Historically, the electronic ballast and IC changes could best be described as dynamic changes to the industry, which introduced some level of disruption. As a result of IC changes, off-shore manufacturers had easier access to selling recessed trims and electronic ballasts into the United States. Prices fell, margins eroded, new players emerged and the lighting market became largely commoditized for a period of time.
And then LEDs emerged from the research lab as commercially-viable emitter sources of light. LEDs are digitized lights. The initial response from most major manufacturers back in the mid-2000s was that LEDs were deemed too hot, too expensive and too inefficient with color problems and binning issues to be ready for commercial applications. That changed quickly. All of the major manufacturers are now 100 percent committed to LEDs as the light emitters of the present and future. So the next question is, what about the remaining Ds?
We are now in stage three: disruption. The market has changed forever. The emergence of technologies that transcend LEDs has quickened in pace and we now talk about solid-state lighting and IoT and controls and nodes of communication.
Stage four, or demonetization, is imminent. Demonetization reflects the process that occurred with cell phones: e.g. your current smart phone is a functioning laptop, camera, GPS way finder, watch, flashlight, video recorder, music player, video game console, alarm clock, calendar and a phone too! For around $700 (or less), users now have access to all these functions included for “free.” The next two steps are the result of efficiencies in cost reduction. With dropping prices for the components, you can dematerialize a lot of those systems (e.g. the camera is significantly smaller in material than a hand-held camera) and democratization reflects that the end product becomes so relatively cheap that the entire world can have it. Cell phone use has expanded across the globe into populations that have never seen a cell phone before on remote distributed generation grids with no phone line or fiber optic infrastructure expenses.
So now we have smart lighting and the IoT. Lighting is considered a trojan horse for the IoT. With the sheer geography of lighting fixtures and the attendant power supply they connect to, it’s economically efficient to pair lighting and sensors into a cohesive smart platform. Current applications include asset management, health monitoring, security, space planning, retail sales, predictive maintenance, access control, temperature regulation, etc. We are at the cusp of the movement to smart cities, smart buildings and smart homes. But is the electrical distribution channel ready for all of that “smartness?”
177 IMARK MEMBERS RESPOND TO SURVEY ABOUT LED, SOLID-STATE, ‘SMART’ AND ‘CONNECTED’ LIGHTING
How would you assess the knowledge level of LED LIGHTING among your sales and customer service teams?
How would you assess the knowledge level of LIGHTING CONTROLS among your sales and customer service teams?
Are you aware of any of your CURRENT CUSTOMERS utilizing any of the following examples of applications related to solid-state lighting and controls? Please select any/all that apply.
Daylight sensing and harvesting
76.8%
Remote customizing of light levels throughout the facility (to enhance safety, comfort)
46.3%
Room occupancy tracking and/or space utilization
70.6%
Monitoring room temperature/air quality
18.6%
Energy use monitoring/metrics throughout areas of the facility
42.4%
Retail shopper location services, customer navigation aids, promotional tracking
10.2%
Testing emergency lighting system compliance
39.5%
Remote diagnostics of fixture performance indoor/outdoor
28.8%
First responder notification, i.e. gunshot location
5.6%
How would you assess your current customer demand for lighting/control products that will be deployed as part of a ‘smart’ lighting system?
We get requests on a DAILY basis
11.9%
We get requests on a WEEKLY basis
36.2%
We get requests on a MONTHLY basis
24.3%
We get requests on a QUARTERLY basis
22.6%
We NEVER get requests
5.1%
Over the next 18-24 months, do you expect to see an increase (among customers and prospects) in demand for solidstate lighting and controls that will be deployed as part of a ‘smart’ lighting system?
At present, how would you assess the overall ability of your current sales, marketing and customer service teams to sell, market and support ‘smart’ lighting applications such as those described in question No. 7?
Within the last 12 months, has your company conducted or provided any formal training
(in-person or online) on this topic for your sales and/or customer service personnel?
Given other company priorities, please assess the value of effective training resources designed to increase employee knowledge and selling skills related to ‘smart’ lighting.
Will your company need to hire additional staff to enhance your capability to sell and service customer demand for ‘smart’ lighting?
Yes, we have done so already
13%
Yes, we are currently looking for people
10.2%
Yes, we plan to do so
30.5%
Has your company sold LED and/or lighting controls to an indoor agricultural or ‘urban farming’ facility?
A quick impression? More than 75 percent of the members surveyed agree that smart lighting use is increasing, but only 13 percent feel their sales teams are capable of selling or supporting those technologies. While 60 percent have provided some training, only 13 percent believe their staff can sell or support it. Forty-six percent don’t believe they need to hire anybody, but 70 percent are aware that their customers are buying or using daylight harvesting or room occupancy systems. Technology does not grow slowly. If a company’s staff can’t sell or support customers who want to deploy “smart” systems, the customers will go elsewhere.
While the opportunities associated with “smart” connected lighting are great—so are the challenges, including standards of interoperability (particularly standards of communication protocols). Security is a huge issue and the technical requirements for training are ever increasing. But three big issues are pertinent to the channel:
- Specification of lighting
- Expansion of the market
- Leadership skills for the increasing levels of complexity
LEDs have created new markets: ultraviolet sterilization, indoor farming, poultry farming, aqua farming, biological lighting, color/health effects and more. The opportunity to become an expert in a jumble of new emerging markets is wide open. The potential opportunity to target a niche market and own a significant market share is available now with technology that is ready now. Investors have moved back into the LED space with huge amounts of investment dollars. The major companies are investing in small companies for the intellectual property (IP) rights as the future of legal battles loom ahead.
Lighting has become far more influenced by other trades: HVAC, data/communications, security and tech companies are all becoming more influential in the definition of lighting as a complement to their core businesses. This could result in a disintermediation of the traditional professional specification influences of lighting design. The biggest risk is that the definition of quality lighting may become depreciated.
And then there’s leadership and people issues to consider. The current employment market is near full employment. The unemployment rate for college educated people is under 3 percent. There are few companies that have large numbers of leaders that understand both tech and lighting. And yet, the future leaders will be required to respect the legacy relationships of old while marching forward into a market that will have different and fewer boundaries.
New leadership threats will include IP battles, margin declines (demonetization), global competition and diversity of competition with competitors never before imagined (Cisco, Amazon, Ferguson, ESCOs, etc.).
All of this is going on while we are in the early stages of the largest transfer of leadership talent in our history, as baby boomers march to the sunset. Millennials have different approaches to employment with the expectation to move every two to three years to expand skills and get more money and improve quality of lifestyles that include fewer hours, remote offices and freedom to chill out.
Many people believe our communication skills are eroding. Text, social media, Twitter and emojis shorten communications, worsen spelling skills and reduce the overall quantity and quality of our professional communications.
All of this leaves us with the good news. Change is good for everybody. Market expansion means more players can enter and more markets are available to develop. The shiniest object on the planet from a career perspective is IoT. It is attracting droves of talented, well-educated people who are eager to exploit an emerging market that may be bigger than any previous market. That talent will largely define the rules of the road ahead. The opportunity to capitalize on emerging trends and markets is evident and open to all comers. The diversity of our industry will expand considerably; the international perspective will bring fresh ideas and concepts to the fore. And the interaction of lighting with other emerging technologies is certain to expand our market even more. Drones, electric vehicle chargers, solar power with storage capabilities, DC power generation and even autonomous cars and trucks will have a connection with lighting. Add in the race to artificial intelligence and our market will find itself at the forefront of technology.
The only people who will miss out on this wave will be those who are unprepared or uninterested in learning the new capabilities. And, ironically, legacy lighting expertise will be highly valued as the new entrants find themselves boxed out of potential markets due to the lack of understanding the channel intricacies. There is no better time to seize this opportunity. The time to act is now.