Navigant Research Blog

LED Lighting for Horticulture Applications Experiences Growing Interest

— June 7, 2018

LED lighting provides numerous benefits, such as increased efficacy, energy efficiency, and controllability. Within the horticulture market, LEDs provide these benefits as well as the possibility to provide improved crop yields and greater control of quality. Lighting and technology vendors are seizing the opportunity to join this quickly growing market by launching new product offerings and expanding opportunities through acquisitions. In its recent LED Lighting for Horticulture Applications report, Navigant Research estimates global luminaire revenue for horticulture applications will reach $3.8 billion by 2027. LED luminaire revenue is expected to overtake legacy lighting technology luminaire revenue during the forecast period and grow at a 28.6% compound annual growth rate.

Company Expansion through Acquisition

Some companies have turned toward acquisitions in addition to internal expansion to gain market share. Lighting incumbent OSRAM recently announced the acquisition of Texas-based Fluence Bioengineering, a manufacturer of smart grow lights. The company offers LED horticulture systems using OSRAM’s LED chips and claims an increase of harvests by 25% and energy cost reductions up to 50%. OSRAM’s venture capital arm, Fluxunit, also recently acquired a stake in Montreal-based horticulture startup Motorleaf in a seed financing round. These two strategic expansion decisions, in addition to OSRAM’s existing horticulture offerings, shows the company’s investment in this market.

Growth of Available Products

In the past month, numerous companies have announced LED product launches for horticulture applications. Heliospectra, specializing in lighting technology for greenhouses and controlled plant growth environments, commercially launched its HelioCORE software. Designed to allow businesses to automate and connect growing environments, HelioCORE allows the grower to control the consistency of operations and crop quality. LED manufacturer Luminus Devices Inc. has expanded its LED horticulture portfolio as well with the launch of its new SST-20 series white LEDs, citing a need for improved crop yields. Additionally, Signify (formerly known as Philips Lighting), Samsung, and EVERLIGHT ELECTRONICS have all announced new LED horticulture products or expansion in the horticulture market.

Illuminating the Path to Quality Products

Despite the strong growth forecast and continued product expansion of the LED horticulture market, these products remain more expensive than non-LED lighting for horticulture applications. The promises of increased crop yields and superior quality, while enticing, have not convinced everyone. With a flood of products available on the market, differentiating quality products will need to be prioritized for growers and for market expansion. Lower quality products risk disincentivizing future adopters of LED lighting for horticulture applications. Manufacturers must back up claims of improved crop yields and superior quality to help drive the market and persuade customers to deploy LED lighting solutions for horticulture applications.


Challenges of Partnerships and Acquisitions in the IoT Lighting Market

— April 10, 2018

The commercial lighting market has new and expanded technology solution offerings that are helping to address customer pain points through new use cases. Lighting manufacturers and technology companies providing Internet of Things (IoT) solutions are focusing on optimizing space utilization, enhancing retail customers’ shopping experience, asset tracking to improve operational efficiencies, and providing energy management and visualization features to analyze building system data. Vendors have expanded their offerings through internal growth and acquisitions. As the industry is undergoing continual change and advancement, it is expected there will be challenges to overcome for vendors competing in this shifting landscape.

Interoperability and Partnership and Acquisition Integration

Interoperability is a leading challenge faced by the lighting industry. Many systems are proprietary or are a modified version of standards, which creates the same issues as a proprietary system. There are groups working to address this issue, which can provide customers with more options and eliminate the need to select all components from the same vendor.

The IoT lighting market has seen an increased number of acquisitions and partnerships as companies look to expand their solution portfolios and provide a customized solution to the customer. Partnerships and acquisitions require integrating different systems and components, which can be complicated when devices aren’t interoperable. And while the growing number of partnerships within this market have helped alleviate issues surrounding interoperability, problems remain when some components of a system use open communication standards but some devices are not interoperable at the communication level.

Partnerships and Acquisitions That Provide Value

With the growing number of partnerships and acquisitions, it can seem like companies make these moves for the sake of publicity. Partnerships must be strategic to expand the capabilities of a company’s offering. For a company to provide a complete IoT lighting solution portfolio without partnerships is difficult—likely impossible. It is best to allow each company to focus on its own area of expertise, not only to provide an improved offering to its clients, but also to increase business for the companies involved in the partnership. The IoT lighting market is in its infancy, and partnerships are still forming  as companies realize areas within their offerings may need complementing and expanding. There is even more potential to provide customers with customized solutions to address their pain points when partnerships form between multiple companies, as opposed to a siloed system where a company has multiple individual partnerships.

In some cases, a vendor may choose to expand its offerings through an acquisition rather than a partnership or internal growth. Again, there can be challenges with interoperability of new products and solutions. Caution is needed in acquisition integration, and acquiring a company and not integrating them fully can also prove a challenge. If an acquired company remains segregated from the new parent company, it begs the question of why that company was acquired instead of partnered with. Is there a benefit in one method of expansion over another? Currently, companies are showing success in both forms of go-to-market strategies, and it isn’t clear which provides greater success. As the market matures, one avenue of increased solution offerings may become preferred. In the current state of the market, it is apparent that both partnerships and acquisitions provide substantial value—but must be entered upon with caution.


A Shifting Lighting Landscape Provides New Opportunities for Vendors

— March 29, 2018

The commercial lighting market is shifting focus from hardware and the production of light sources such as lamps and luminaires to a broader set of solutions that incorporate lighting controls and value-add features beyond illumination. The Internet of Things (IoT) is helping drive this change as the number of connected devices increases and as connectivity is brought to devices that were previously not connected. To address this shift, lighting manufacturers are repositioning themselves in the market to showcase their abilities beyond lighting and traditional lighting controls.

Deepening Capabilities Creates Broader Portfolio Offerings

In the emerging market of IoT lighting solutions, new and expanded technologies are providing a different way to view the capabilities of a lighting system. Vendors can use new use cases to address specific customer challenges beyond increased energy savings such as space utilization, increasing operational efficiencies, improved employee productivity, and enhanced retail customer experience, among others. Companies are leveraging a growing number of technologies to set themselves apart by providing solutions that use these different technologies.

Many companies see value in offering solutions with a breadth of protocols as these can assist a company’s aim to provide tailed solutions for each use case and to future-proof their portfolio. Philips Lighting recently announced the release of luminaires enabled with Light Fidelity (Li-Fi) technology. Li-Fi provides a two-way wireless communication traveling at high speeds, similar to how Wi-Fi uses radio waves to transmit data, but instead relies on light waves. Icade, the French real estate investment company, is piloting this technology in its office in Paris, France.

Navigant Research’s research brief, Visible Light Communication, discusses the origin of Li-Fi technology, which was first demonstrated by Professor Harald Haas during a TED Talk in July of 2011. The technology has not gained much traction in the commercial lighting market since then, but has potential to garner more attention with Philips Lighting’s bold decision to pioneer this technology with its office portfolio. Philips Lighting recently had several other announcements that are chronicled by my colleague Paige Leuschner in her recent blog, “Trends from Light + Building 2018.”

Expanding Capabilities through Acquisition

Acuity Brands, Inc., another leading lighting manufacturer, recently acquired building analytics company Lucid Design Group, Inc. The acquisition will help expand Acuity’s already robust IoT lighting solution portfolio that includes the company’s sensory network of luminaires, components, and edge devices that are enabled with Atrius and feature advanced sensing capabilities. Lucid’s data and analytics software as a service-based platform, BuildingOS, provides building owners, operators, and occupants the ability to gain insights into building operations in order to increase employee productivity and operational efficiency. Lucid’s capabilities will assist Acuity’s strategy of increasing IoT capabilities by connecting the company’s IoT solutions with broader integrated building data.

New Opportunities

These two lighting powerhouses have demonstrated the opportunities available in the market for new solution offerings to expand IoT capabilities with lighting at the center of an intelligent building’s infrastructure. Philips Lighting and Acuity are not alone in pushing the boundaries of lighting system capabilities. The lighting industry is seeing many incumbent lighting companies seize the opportunity to expand their portfolios to align with the shifting market and new startups looking to make a place for themselves in the growing IoT ecosystem.


The Evolving Smart Home

— February 6, 2018

The growth of the Internet of Things is continually expanding the number of connected devices in our homes, offices, retail stores, and healthcare facilities, to name a few. According to Navigant Research’s recent report, The Smart Home, global smart home platform revenue is expected to increase from $4.2 billion in 2017 to $39.5 billion in 2026. This significant increase in revenue makes it clear the smart home is here to stay. With the smart home on the rise, what is the real added value these solutions offer to consumers?

Do Smart Solutions Provide Enough Value?

When you think of the smart home, it’s not uncommon to first picture Amazon’s Alexa-enabled voice activated devices, which allow users to play music, listen to the news, receive weather updates, and control compatible devices like a Philips Hue smart bulb all through voice. While devices like smart bulbs do provide additional benefits outside of voice control—such as dimming, color changing, and reducing energy use—how much additional value are these solutions really providing? Philips Lighting recently announced new software features that will sync Philips Hue lighting with gaming, movie, and music content. While this update does include additional features, how much value is this really adding? Is it helping to carry the smart home market forward? Is voice control, dimming, syncing with video games and movies, and energy savings enough? I would argue no. The added convenience of voice control and color-changing or dimming features through devices like smart bulbs do not provide enough of an advantage over more traditional products, like LEDs, for many consumers to justify paying the additional costs. The concept of voice control and changing the color of lighting through a mobile app are novel ideas that provide enough of a wow factor to intrigue consumers, but these features are not enough to carry the momentum of the smart home into the future.

Security as a Value Proposition for the Smart Home

Smart home vendors realize the need to provide additional value propositions for their products to appeal to the mass market and increase adoption of smart solutions. One of the top key trends expected in 2018 by Consumer Reports for the smart home industry is security. To be sure, this is not the only trend of the smart home this year; others range from additional connected devices to increased artificial intelligence to home healthcare, covered in a recent Navigant Research blog. Many of the trends anticipated for 2018 are about providing additional value to consumers for smart home solutions.

The desire for security is a universally shared need and one the smart home market can capitalize on. A recent example of this is Ring, a smart video doorbell company, acquiring Mr Beams, an LED lighting company offering indoor and outdoor LED fixtures. As a result of Ring’s first acquisition, the company launched a line of outdoor security lights. The new line includes pathway lights, step lights, and spotlights that will work jointly with Ring’s security cameras and doorbells. This acquisition not only highlights the growing significance of security as a use case driving progress in the smart home market, but also the importance of providing additional value to smart home products. Lighting integrated with security systems are a natural fit that can better highlight the value of smart home solutions for consumers than features like voice activation and remote control, and more logical partnerships will emerge. Security is just one example of a use case that can transform the smart home from providing additional convenience and a novelty features to a becoming a necessity for consumers.


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