The market for light-emitting diodes (LEDs) has reached the turning point from “promising technology” to “practical mainstream solution.”  The replacement of 125-plus years of vacuum tube lighting by LEDs seems as inevitable as the transition from TV tubes to flat screen LED monitors, though it won’t happen nearly as quickly.  But even as we witness this shift, I wonder if we really perceive the revolution taking place.

That revolution was evident at last month’s Strategies in Light conference, in Santa Clara, which focused on LED  technologies and, more specifically, LEDs applied to lighting applications.  Since this year marks the 50^th anniversary of the invention of the visible LED, the program included an awards ceremony honoring industry pioneers Nick Holonyak Jr., M. George Craford, Roland Haitz, and Shuji Nakamura.  It was a rare window into history.

The conference also demonstrated that LED lighting R&D activity is overwhelmingly focused on achieving some degree of parity with conventional lighting in terms of light quality and cost, while still delivering on the energy efficiency and long life-cycle potential of LEDs.  Just as anyone seeking “plain white paint” is confronted by thousands of options at their neighborhood paint shop, “white light” is far from a neutral, standard attribute for lighting.  How a given light source’s color temperature maps against the standard Planck curve is just the beginning of a light quality assessment.  The facts are that LED lighting can be made very efficient, have good light quality, last a very long time, and be cost-effective.  But it’s exceedingly rare that all four of these goals are met simultaneously in a given application. Hence there’s much work to be done, justifying the focus on achieving parity and conventional lamp replacement.

Beyond Tubes

Beyond the focus on parity and replacement, however, are opportunities that are potentially much more transformative. Although the transistor radios of my youth seemed a major innovation compared with the vacuum-tube radios of a decade earlier, the real power of transistors came in the form of integrated circuits that unleashed a much larger information and communications revolution.  In a presentation titled “The Next Evolution of Lighting,” Brad Koerner, director of experience design at Philips Lighting, showed how LEDs are ushering in a new paradigm for lighting design, controllability, and occupant experience.  LED lighting form factors that mimic fluorescent tubes might make sense for today’s lamp replacement market, but they’ll probably look silly in retrospect when lighting is integrated into the very surfaces of next-generation buildings.  Today’s lighting programmability essentially means on, off, or dim – but what happens when lighting color temperature is also programmable, allowing sunlight’s subtle differences by time of day, season, or geographic location to be carried indoors to our work and living spaces?

We are only at the cusp of these revolutions today.  In the meantime, all those concerned with smart buildings, from architects to facility managers, should balance their healthy skepticism with a dreamer’s wonder at what may soon be.

Two recent acquisitions by lighting company giants reveal an important trend in the broader lighting industry.  In late November, General Electric acquired Colorado-based Albeo Technologies, a manufacturer of LED lighting with a focus on integrated wireless controls.  In early January, Acuity Brands purchased California-based Adura Technologies, a startup company specializing in wireless lighting control.  As detailed in Pike Research’s 2012 report on Intelligent Lighting Controls, all of the major lighting companies have made one or more acquisitions in the last few years that give them access to new and innovative means of controlling the lighting products that they already offer.

It’s no secret that the rapidly dropping cost of LED lighting is proving to be a major disrupter in the lighting industry.  While actual adoption rates are still modest, the promise of a lamp type that will be more efficient as well as fully dimmable, easily controllable, and mercury-free has resulted in a focus on the technology that far exceeds current sales.  R&D dollars are shifting and product lines are quickly expanding, as no big lighting company can afford to ignore the light source that is broadly acknowledged to represent the future.

The Larger Threat

The acquisition of companies that are focused on controls, however, exposes a larger and much more challenging threat to big lighting companies: the overall pie is shrinking.  As Pike Research forecast in our 2011 report, Energy Efficient Lighting for Commercial Markets (update coming in March 2013), global revenue from the sales of lamps and luminaires in commercial buildings is expected to drop significantly in the coming decade, from a peak $54 billion in 2012 down to $30 billion by 2021.  This decline will be primarily driven by the much longer life of newer fluorescents and LEDs.  While revenue from LED sales will increase, those sales will not even come close to offsetting the inexorable contraction of the market.  So, for big lighting companies, updating their product lines with new LED lights will not be enough.

Seen in this light, the frequent acquisitions over the past couple years of startups that focus on lighting controls is an indicator of a long-term shift in strategy.  General Electric and Acuity have traditionally been known for lamps and luminaires, not for lighting controls.  But these big players can no longer afford to simply maintain their traditional roles in a changing industry.  Expanding to new types of products and revenue streams has become a necessity, and lighting controls are the logical choice.

This promises to be a boon to the wide range of new and innovative methods for controlling lights, from the local strategies of providing just the right amount of light based on current occupancy and daylight levels, to the networked strategies of providing detailed analysis and complex control to building managers in remote offices.  The shift will surely be challenging for the big lighting companies; but it’s an exciting signal for the broader adoption of smart lighting control strategies that can be expected to ensue.