As every distributor knows, LEDs are the future of lighting and are significantly impacting many lighting industry dynamics – from whom you buy from to what you stock (and how much of it) to pricing to the concept of cannibalizing future sales to marketing and training and much more. And from a lighting manufacturer viewpoint there is new competition, shipment delays, a mentality shift to thinking about electronics as well as many of the same concerns that distributors have.
Navigant Research just released a new research report entitled “LED Supply Chain Dynamics”. While we don’t know the details of the 12 page, $1500, report, we thought the synopsis was interesting (bolding added by us):
“The lighting industry is on the verge of a large-scale shift away from the traditional technologies of fluorescent, incandescent, and high-intensity discharge (HID) lighting toward light-emitting diodes (LEDs). Adoption rates of LED lighting are expected to soar in the coming years as the efficacy and quality of LEDs surpass those of competing technologies and as prices fall to enable reasonable payback periods. This transition has been widely expected for a number of years, leading to the launch of new LED-focused companies and to the re-positioning of existing lighting companies to take advantage of LED sales. Now that the rise of the LED has begun, the repercussions are rippling up and down the LED supply chain.
One effect is consolidation in this sector, driven by a desire for vertical integration among the larger lighting companies, which in turn is being driven by the relentless demand for lower prices and higher quality. While the total number of vendors involved in the LED supply chain will likely shrink, other factors – including the expiration of existing patents, new interchangeability standards, new technologies, and an expected upsurge in creative product designs will create opportunities for new entrants at each level of the supply chain. Navigant Research forecasts that annual worldwide revenue from LED lamps will grow from just over $1.5 billion in 2013 to more than $8.5 billion in 2021.”
And as we talk about consolidation and “new players”, PowerSecure, which is involved in energy efficiency and LED lighting acquired Solaris Lighting, a maker of LED lamps and fixtures for commercial and industrial applications. (Both of which are commonly recognized names by distributors?)
And, to give an indication of going mainstream, over the weekend I walked into Home Depot (sorry, was buying HVAC filters) and noticed a large Cree display … LEDs going mainstream! The price point for a 40W equivalent was about $10. Not where it will gain widespread adoption yet, but in the not too distant past CFLs were at a similar price point. And to further highlight reaching the consumer, when I logged on to www.cnn.com I was surprised to see Cree banner ads on both sides as well as a smaller ad … all on the home page.
And we hear feedback on efforts by the “lamp” companies to change their business models.
Much going on in this space. For distributors there are 2 roads to consider. Either be passive and treat LEDs like a standard lighting project and bid it (which will always be a part of the business, or, invest and become a “lighting / LED resource” to drive the market.
How do you see today’s LED marketplace? What would you project looking 2 years out?
3 Comments
LED was Pahse 1. The real impacts are just ahed. SSL is electornic and will integrate into building automation systems. Since electornic is low voltage; there will be need for pipe, conduit, steel boxes and NECA labor to install it. The integration into sophisticated control systems will position lighting naturally into CEDIA and Security system providers (Honeywell has lighting already).
There is little need to pierce a ceilign when your lamp ‘envelope’ is measured in millimeters, so plenum height can shrink.
Legacy manufacturers who brag about 15% adoption rates are already 4 years behind.
Welcome to the elctronics world.
As a manufacturer, we’re wondering if electrical distributors will be the primary channel to market for LEDs or a profitable channel to market for us. We’re seeing much opportunity being direct, through other types of distribution, through building management companies, through ESCOs, facility management companies, electronic distributors (think Anixter, Arrow, DigiKey) and more. It’s almost becoming too much for us to manage but we question if our traditional distributors can adapt to a different technology and it’s training needs, how to manage its inventory, how to market / sell it and if they are even tracking where the lamps / fixtures are going so the “hole in the ceiling” can be remarketed to? Time will tell but we can’t have all our eggs in one basket. Like Ted said, the CEDIA and security dealers are into this space. We need our share through them and we’re just learning whom they buy from … and it’s not always electrical distributors.
You all appear to be up on the LED’s. Have they been able to lessen or remove the toxicity levels lead, arsenic, nickel, copper and other metals that were apparently ok under federal standards, but a problem for California standards? If not, how are LED’s to be properly disposed of to prevent leaching of these metals into our environment?
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