Is lighting a service, a product, a concept or illumination?

Over the past couple of months we’ve touched on the changes that the lighting industry is undergoing. While much of it relates to LEDs, the “lamp” business, lighting controls and connectivity, we also mentioned how lighting can become a data collector and now it is being considered as “lighting as a service” (LaaS).  A recurring message was that electrical and lighting distributors needed to give consideration to what role they want to retain in the lighting space … as a product fulfillment center or a value-added, solution provider.

Now comes a research report from Navigant Research on lighting as a service (LaaS).  Today it is a $35M market.  In ten years it is expected to be a $1.6 BILLION market (albeit globally).  Navigant said:

The lighting industry is in the midst of two concurrent upheavals. LED lighting is rapidly taking over from incumbent technologies and lighting controls systems are greatly expanding the abilities of the technology that operates the lights. The lack of experience with new lighting and lighting controls products is one of the primary barriers to a more complete adoption of these beneficial technologies. In this atmosphere, the lighting industry is primed for yet another change—a shift in how all the solutions involved in a modern lighting system are provided to building end users. The stage is set for the rise of lighting as a service (LaaS).

Navigant Research defines LaaS as the third-party management of a lighting system that may include additional technical, maintenance, financial, or other services. These offerings can begin with the installation of a lighting system, continue through maintenance and management, and even include the recycling or disposal of equipment at the end of its life. Several companies are beginning to offer combinations of these services as they experiment with how best to meet their customers’ needs. Navigant Research anticipates that these efforts represent the beginning of a trend that will mature and grow rapidly over the next 10 years. According to Navigant Research, global LaaS revenue is expected to grow from $35.2 million in 2016 to $1.6 billion in 2025.

Navigant is selling the report for $3600. We’re not suggesting that anyone should run out to purchase the report, however, distributors who want to play in the growing lighting segment need to be aware of the changing marketplace and the opportunity to provide services that add value to a product sale.

Positioning yourself as ‘your market’s “local’ resource can pay dividends but it will take a different level of investment in your lighting market. Rather than solely quotation staff or sales personnel focused on lighting, individuals who understand controls, who can program systems or whom you can invest into and train (or can help with lighting design and more … maybe even engineers) can capture lighting sales market share.

Consider … ESCOs have earned significant lighting business (and sometimes bypass distribution to procure product). Those who use a LaaS model could have a different way to finance lighting projects for end-users (and we’ve seen a company in India who is financing lighting projects through a LaaS model) or could offer LaaS as a turnkey service to customers … or develop a vertical specialty and partner with a marketing company to drive advertising utilizing additional software … or offer monitoring services … or …

And if electrical or lighting distributors don’t get involved, whom will fill the void? Lighting / lighting control manufacturers developing standalone service companies? IT VARs? Building automation distributors? Commercial integrators? Contractors focused on smart homes (for the resi market)?

Given the increased functionality of lighting, are you thinking about how this could differentiate your company?