- Building Innovations
- Home Energy Management
- Smart Lighting
Who Will Lead the Lighting as a Service Charge?
The rapidly evolving lighting industry has recently given birth to a new and exciting development—lighting as a service (LaaS). The manifestation of lighting controls services to optimize lighting use is helping customers save energy and money. The emergence of the LED system as a major technological player in the lighting world has opened the doors to countless opportunities for efficiency and cost reduction by tapping into the Internet of Things (IoT) world. These two stories have led to the development of a new industry: third-party management of lighting systems, otherwise known as LaaS. Management services include technical, maintenance, financial, and many other lighting services.
LaaS Revenue Is Expected to Triple by 2025
The underlying technological advancement that has made the new industry possible is connected or smart lighting. The ability to communicate with a lighting network allows users to control and optimize their lighting use on the fly. Opportunistic companies and startups have caught on to this trend and have begun to offer third-party lighting management services. The LaaS industry is just starting to make waves in the industry. However, it’s expected to become a booming business over the next decade. LaaS generated $35.2 million in revenue in 2016. By 2025, it’s expected reach $1.6 billion.
As the LaaS industry is still in its infancy and a clear market strategy has yet to be established, there haven’t been any companies that have emerged as LaaS-focused companies. Most projects to date have been pilots and test cases. Thus, it has mostly been the larger incumbents that have paved the way in this fledgling industry:
- Current, a startup within lighting heavyweight GE, is wrapping data and digital solutions around lighting upgrades with optional financing to provide a full suite of LaaS possibilities. It recently partnered with AT&T on a massive smart cities venture.
- Enlighted, a Sunnyvale, California-based startup, has developed a LaaS platform that combines sensors, analytics, and controls. Unlike other LaaS competitors, Enlighted does not use this platform to sell lighting hardware. Instead, the company partners with luminaire manufacturers, facilities management companies, and electrical contractors to create an ecosystem of lighting systems.
- Several other companies are exploring the LaaS space, including Philips, Siemens spinoff OSRAM, and Acuity. Acuity has made a number of acquisitions in the last few years in order to facilitate its expansion into the IoT market. These companies are still just testing the LaaS waters at this point.
The Race for the Best Marketing Strategy Is On
It appears that the trail for LaaS will be set and guided by the larger lighting incumbents. The window for small startups to emerge as leaders in the growing industry is shrinking, but opportunities are still available. Lighting giants such as GE and Philips sell through the facilities department of a company. If a solution is found that goes beyond building operations and is sold directly to the IT department, that could certainly cause a large enough shakeup in the market to influence decision makers and unseat the incumbents.
This is more easily said than done. There are no signs that this is being taken on by any new or established companies. LaaS is a new and exciting industry that is still very much in flux. The first company able to hone in on an effective market strategy will have the chance to grab the LaaS industry by the reins and lead it in exciting new directions.