By Erik Davidson (Director, Marketing & Products – Cortet by CEL)
This article regarding Smart Building Control product strategy provides industrial, commercial and office lighting equipment OEMs, manufacturers, integrators and installers with valuable insights from across the Internet of Things (IoT) landscape in order to help create the best, most profitable marketing strategies possible, and then keep them up to date with the latest trends to ensure that they never miss these new emerging smart lighting opportunities.
This article will focus on the IoT-enabled Smart Lighting Control opportunity, which our research shows is one of largest opportunities in the rapidly growing commercial-grade IoT control space.
Our parent company, CEL, has been doing wireless control and component-based technology innovation for more than 50 years. Over those many decades, we’ve established tens-of-thousands of relationships across numerous industries.
In combination with our own market research, we rely heavily on these relationships to gain insights into what’s going on in the market and to identify the next big opportunity wave for our OEM partners.
What we’re clearly seeing and hearing right now is that there is a uniquely strong opportunity for lighting luminaire and lamp OEMs to enter the Smart Building Control market with their own IoT-based lighting control solutions.
If you are a luminaire/lamp OEM that has been hesitating to take the plunge into Smart Lighting Control (or perhaps if you’ve already made a run at it in the past but it didn’t go so well) here’s several reasons why we think it’s the right time for you to dive (back) in.
The latest data shows that the Smart Lighting Control market is poised to grow by over 35% to $3.7 Billion in revenue by 2020.
With those kinds of figures, there will be a growing number of new startups being formed specifically to take a run at the opportunity. We are already starting to see this today. It seems that almost every week I learn about a new smart building or smart lighting control company.
However, lighting luminaire or lamp OEMs have two unique competitive advantages over these “newcomers” – unmatched knowledge of the “things” that are being controlled and deep, long-standing industry relationships.
You understand better than anyone what it really takes to design, manufacture, install, troubleshoot, upkeep, and upgrade the lights themselves.
And, perhaps most importantly, you’ve gained this understanding from a real, widespread, hard-won customer base.
This gives you a tremendous advantage in defining the right strategy. It gives you something that is the most difficult thing to attain: an in-depth understanding of the customer and what it takes to deliver a superior experience to them.
This in turn leads to your second major advantage over newcomers: You’ve already built and optimized a successful and far-reaching sales and distribution network for targeted market segments.
You have an enormous head start. For one thing, lighting agents are regional and have regional exclusivities, and it takes years to establish national and international reach. Dealing directly with electrical distributors and electrical contractors can be just as complex and just as fragmented. If you are a successful lighting OEM, you have likely already built these challenging but highly valuable channels.
Startups and new entrants don’t have the robust channels you have, other lighting players may not have these either, but you, as an established OEM, do.
At this point you may be thinking, “yes, we know, but is now really the right time?” And, maybe you have already made a play in lighting controls or even in IoT-enabled lighting controls, but it wasn’t very successful.
There are three primary reasons why we so strongly believe that NOW is the right time to make a play in IoT lighting control.
1) Features and capabilities of lighting control systems have become much more sophisticated, and the technology behind them has become far more accessible. As is often typical in new, disruptive industries, early IoT technologies were, in many cases, overly complex, difficult to integrate, not supported well and in limited supply. The good news is that all of these circumstances have improved significantly over the past several years as the industry and the technology space have matured.
IoT technologies have become steadily more accessible, reliable, and simple to integrate and use — even as the sophistication and functionality has continued to rapidly increase.
One way that things have improved in the IoT technology space is the increased engineering rigor that is now being applied to certain IoT systems. At the dawn of the IoT, many companies were fast and loose with their development and test methods. While this is certainly still the case for some, many professional companies with strong engineering processes have emerged and have started to dominate certain sectors of the IoT.
2) The many new entrants and new approaches in the lighting control space have vastly increased the number of partners available. The ecosystem is there. Just a few years ago, the IoT control ecosystem was relatively fragmented with just a small number of serious companies, few partnering opportunities and even fewer mature technology choices.
That has changed. There are now hundreds or maybe even thousands of IoT hardware, software and services companies across an increasingly crowded landscape. Among them, there are a growing number of serious players that can be trusted.
This is now giving OEMs with successful non-IoT products an easier and more profitable way to enter new markets with IoT-enabled products while introducing much less risk. You can now focus on what you know and do best – luminaires and lamps – while providing the opportunity to easily expand sales, increase margins and create new revenue streams by adding IoT control.
3) If you made an unsuccessful attempt to enter the market in the past, most of the roadblocks and pitfalls you may have faced are going away.
This is the result of the expanding partner ecosystem mentioned above. With a growing number of experienced, capable partners to choose from, the days of “going it alone” are over.
Today there are an increasing number of companies that offer OEMs support and guidance in the critical areas that history has shown to be the most difficult for IoT newcomers — and notorious for torpedoing even the best go-to-market strategies.
Examples of some of these functions include after-sale support, technology integration, ongoing system upgrades and maintenance, adjusting to rapidly evolving standards, development of long-term strategic product roadmaps, and more.
The real question is “How can a strategically designed SLC portfolio expand overall sales, increase profit margins, and begin building recurring, subscription-based revenue?”
If you produce and sell luminaires and/or lamps, you have an immediate opportunity to add a Smart Lighting Control (SLC) system to your portfolio to increase your top line sales. This increase will be primarily generated by two factors:
- You will now gain revenue from selling an SLC system; and
- You will also pull along more luminaire & lamp sales and perhaps even increase your share of a given contract by owning the selected SLC system.
But, is the opportunity big enough? Should you care? How fast is the SLC opportunity growing relative to luminaire sales otherwise?