Not today, not tomorrow, not next year, but Illumigeddon is coming. SSL (solid-state lighting) is changing everything. Exciting changes for many, disastrous for some. Great opportunities for electrical and lighting distributors but only those who can adapt to a new reality. This ain’t your grandpa’s lighting business!
Since my original brief “Forecast Calls for Pain” posted last summer at www.electricalwatchnews.com, Philips, Samsung and Siemens announced they are leaving the lighting business. What do they know that we don’t? And what are Apple, Google, Cisco and Intel thinking about, coming into our business? And is Opple (not Apple!) coming to the U.S.? And let’s not forget Amazon Supply and its impact on physical distribution of lighting and electrical products.
Illumigeddon won’t happen in a Hollywood instant, but it’s a process already underway. How many of us were even aware of smart lighting and The Internet of Things (IoT) two years ago? Was “disintermediation” in our vocabulary? How about selling lighting as a service and that at least two major lighting manufacturers are talking about doing it? What will be distribution’s role in that? The same question applies if lighting products are developed by the GE/Armstrong and Osram/Corning relationships. And according to EdisonReport, GE Lighting is moving away from a direct sales force and towards a network of independent reps. Is there a long-term implication to that move?
Think about how tough a sell the first couple of generations of LED lamps were. Now there is a general acceptance of A, PAR and MR16 lamps in the market. And we are still converting the proverbial low-hanging fruit. However, as we do that, fewer and fewer available sockets will be targeted by more and more manufacturers, reps, distributors, big box home centers and other retailers, ESCOs and other service providers. More and tougher competition along with lower priced LED product is not a positive development.
There will be some opportunity for LED-LED retrofit as product gets even more efficient. But I don’t agree with the analogy of LED-LED retrofits compared to how people dispose of working phones every two years for a new phone with more bells and whistles. That analogy just doesn’t compare to how business retrofit decisions will be made, especially with significant warranty hours left on the original LED install. And yes, smart lighting products will offer new opportunities, but who will be selling them? The Internet of Things and the integration of smart lighting products into building systems have enormous potential, but for whom?
Traditional electrical distributors and lighting distributors will need new levels of high technical competencies and new services/solutions to elbow their way to the table. And who will they be competing against in addition to traditional competitors? Do the new technology players in our business respect our 100-year-old business model? Should they? Are we as efficient as their distribution models? Here is where I can envision a major shift in how lighting products get into a ceiling, and the most threatening disruption electrical distributors/lighting distributors will face. I’m reminded again of a phrase from another recent conflict: “We don’t know what we don’t know.”
So, while I agree with Sunshine Bill Attardi’s optimism about great opportunities ahead, at some point we need to deal with the harsh reality of Illumigeddon. Whether three, five or 10 years out, it’s coming and we need to start dealing with it now. Let’s have an ongoing conversation dealing with the new lighting industry issues. Let’s share and talk about the faint signals and distant thunder we’re hearing, if we’re listening. For instance, what do you make of the fact that GE and Osram had no lighting products in their large booths at the recent LuxLive Lighting trade show in London. As also reported by the EdisonReport, Osram focused its efforts on cultivating relationships with customers, while GE was discussing Smart Cities, Connectivity and the Internet of Things.
A hint of disintermediation to come?
If you’re a lighting distributor, what keeps you awake at night, besides excitement about new technology and the opportunity to reinvent your business? Again, let’s have a conversation. Let’s not be passive observers of SSL disruption. I’m not Chicken Little, at least not yet. I love that the disruption that’s going on in lighting is once-in-a-career cool. And, our businesses don’t have to end up becoming this generation’s Kodak.
Bill Attardi of Attardi Marketing, and the owner of www.energymarketnews.com and Chris Brown agree that LEDs are radically changing the lighting business, but have a difference of opinion on just how dire the situation may be for distributors of lighting equipment. Bill will respond to Chris’ comments next month in his blog post “Get Real – Transitions Are Always Messy.” Want to get in on the conversation? Follow Chris on Twitter at @illumigeddon, check out Bill’s blog at www.energywatchnews.com, or send him an email at [email protected]