LEDs have already reached a sufficient “price/performance” level to enable massive adoption in LCD display applications. General Lighting applications will be the next and largest market for LED light sources. But the fact is that General Lighting can only take off if the cost/performance of LED based products can beat incumbent technologies. In that context, many of the lighting domain actors are developing new services in order to add innovation and value to Solid State Lighting, and differentiate them from traditional technologies. Will 2012 be the rise of Lighting Solutions?
 Pars Mukish works at Yole Développement as a Market and Technology Analyst in the fields of LED and Compound Semiconductors where he makes technical, economic and marketing analyses. He holds a Master’s degree in Engineering (ITECH – France) and a Master’s degree in Innovation and Technology Management (EM Lyon – France). He has worked as a Marketing Analyst and Techno-Economic Analyst for the past several years at the CEA (French Research Center).
The total General Lighting market (including lamps, ballasts, controls and fixtures) was estimated at nearly $55B in 2010 and is expected to grow at an annual rate of 5-6% to approximately $75B by 2015. The leading market segments are residential (41%), commercial (25%), outdoor (19%) and industrial (8%). During that period, unit shipments of incandescent, fluorescent and HID lamps should decline as a result of the better efficiency of LED lamps, global cost decrease (packaged LEDs, fixtures), standardization, growing demand for sustainable and energy saving lighting (regulations and government policies), and development of new lighting products/services.
In 2010, the market started to see major outdoor area (public and architectural) and commercial retrofit adoptions using LED modules, pushing LED penetration of General Lighting to nearly 2% of the total market. In 2011, this penetration rate has reached approximately 5% on the basis of product quality improvement and cost decrease which, combined, have enticed more and more professional customers. Total cost of ownership, remaining the main driver for most professional segments, LED lighting sources offer a real advantage toward traditional technologies: better payback. Concerning the residential segment which represents the main
trigger for LEDs massive deployment in General Lighting, penetration rate was still low due to high upfront cost of LED bulbs compared to incumbent technologies. Most people are still not willing to pay the higher upfront cost of an LED bulb even though it can last up to 50,000 hours (incandescent bulbs having an average lifetime of 1,000 hours).
If we take a look at 2012, the LED penetration rate should double and access 10% of the total market, “surfing” mainly on the increasing interest of professional customers for “cheaper technology”. On the other hand, even if upfront costs decrease due to manufacturing efficiency improvements (epitaxy and packaging levels), it will not be sufficient to trigger the residential segment for which sensitive customers buy LED based products. But even if 2012 isn’t the year that LEDs take off on the General Lighting market, it should be interesting because of the development of new services allowing increased functionality: Lighting Solutions.
Lighting solutions are defined as an enhancement of the lighting fixture / luminaire by attachment of external control units, providing functional lighting (through fully integrated systems). Previously, system controls consisted of a simple switch. Recently, lighting system controls integrate a number of advanced features such as enhanced RGB color changeability, dimming and color temperature control.
Most major players (Philips Lighting, Osram, and others) are tending to access (through acquisitions) this new level now that they have fully integrated the LED lighting value chain. For example, Philips Lighting proposed a portfolio of lighting solutions targeting professional segments and based on the complementarities of advisory, project and capital services.
Even if the market was still “marginal” for Lighting Solutions in 2011 due to the necessary development of adequate business models and business proposals, it could represent a strong lever of development for LEDs in General Lighting in 2012.
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