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.
Tags: Building Innovations, Internet of Things, Lighting Technologies, Mergers & Acquisitions
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