Navigant Research Blog

A Lighting Control Vendor Venn Diagram

Mike Wapner — February 14, 2011

In a recent post to this blog, I pointed out that competitors in the lighting controls market include very different types of companies in both size and overall business scope. I decided to create a graphic view of the situation using everyone’s friend from elementary school math, the Venn diagram.

To examine the business scope angle, I have identified three major businesses that are all directly building-related and have at least some significant connection to lighting controls. Companies that develop lighting control products and systems may be in all, some, or none of these other businesses:

  • Lighting: Especially luminaires and integrated LED based products.
  • Building Management Systems: Energy management, such as HVAC, and other systems including fire, alarm, and access control.
  • Electrical Products: Electrical panels, switch gear, circuit breakers, power meters, wiring systems, etc.

Each of these three businesses is represented by a colored circle in the diagram below. I haven’t tried to include all of the companies that participate in the lighting controls market on this chart. Rather, I have selected some that illustrate the many combinations of businesses that exist out there. The companies outside of the circles are primarily focused on lighting controls. Most of the companies named in the diagram are profiled in Pike Research’s upcoming report on Intelligent Lighting Controls.

My number one conclusion from the above diagram and the status of the lighting controls market is that there is no particular combination of businesses that has so far determined success in lighting controls. In fact, while there are a few industry leaders in terms of revenue, including Lutron and WattStopper, the market for lighting controls is actually quite fragmented. Given the traditional distribution channels for lighting controls, this shouldn’t be surprising.

Lighting controls have largely been sold in much the same way as lighting products and systems, and there are hundreds of companies that participate in that business around the world. Lighting specifications are established by architects and/or lighting engineers and/or lighting designers. If not explicit in the design, specific product decisions are usually made by general or electrical contractors or system integrators. The products are then most often sold through distributors. This type of distribution has made it difficult for lighting or lighting control vendors to establish dominant positions in multiple geographic regions.

Unlike lighting products, however, the market for lighting controls is far from saturated. It is theoretically possible for any company or companies to significantly expand their revenues without having to steal market share from other vendors. Of course, earning revenue comes down to winning each deal and plenty of factors influence those outcomes.

Going forward, I don’t think that synergy among a company’s businesses will have a decisive impact on determining which companies are most successful. Siemens, the only company there in the center of the diagram, is a global leader in all three of the related businesses. This won’t necessarily result in leadership in lighting controls, though. GE is a global giant in lighting, Schneider Electric is a force in building controls, and both are major players in electrical products. However, neither should assume that these positions will automatically provide a special boost to their lighting control businesses. Beneficial synergy is certainly possible, but achieving that takes concerted effort around product coordination and integration. Even more important is a focus on high levels of integration in the distribution and installation aspects of the business.

Many of the companies named in the diagram and some others, no doubt, will go on to be winners in lighting controls. Some companies will not fare so well and may exit the business. Some companies with unique offerings may be purchased by others. I can’t specifically say what the future holds for any of these companies. I’m pretty sure, however, that when the view in my crystal ball becomes clearer, it won’t be the color of the related business circle(s) each company is in that will have determined success in the lighting controls market.

One Response to “A Lighting Control Vendor Venn Diagram”

  1. So if you were a very small company with new technology for lighting control, which part of the diagram would you focus on, or would you try to hit it all?

    http://www.youtube.com/watch?v=q9lxEOMyoeU&feature=youtu.be

    Thanks.

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