European lighting manufacturers are facing up to almost a ‘Perfect Storm’ in which the looming price war for LED bulbs is set to bite into profits just at the time when a period of low growth is expected as the long-life bulbs become more common.
Although falling rapidly, the cost of buying LED bulbs for home use still remains higher than compact fluorescent lighting (CFL) or halogen alternatives. as a result consumers continue to be hesitant to adopt the LED technology. As a result lighting manufacturers continue to cut prices while looking for new product features to replace lost business.
Philips, U.S.-based Cree and Germany’s Osram have all been cutting retail prices of LED light bulbs as they compete for the residential sector which will account for about a third of the overall LED lighting market. The ultimate aim is to drive LED lighting to the same price level as traditional lighting.
"In the residential area, costs are still seen as relatively high," explained Osram Chief Technology Officer Peter Laier. "You’re also getting a product that lasts at least 10 times longer."
The penny has certainly dropped in some of the HQs of Europe’s leading lighting companies this week. In fact several pennies (or more precisely euros) have dropped and it looks like they might continue to do so for the next few years. As a result of the dawning revelation that a technology switchover is hurtling towards them Osram, Philips and Zumbotel all revealed a variety of plans, initiatives and strategies this week to try and become more competitive in the LED lighting sector under the growing commerical and technological pressure being imposed largely by their Asian rivals.
First up to the plate was German lighting manufacturer Osram Licht AG which declared that the company’s 2014 growth target had become more challenging which was forcing a revamp of the organization’s biggest business in an attempt to keep up with a rapid shift to new LED-based technologies.
This week Osram revealed plans to split the company’s Lamps & Components business, which accounts for about half of its sales, into a business focused on traditional lamps and another business that will direct its efforts squarely at light-emitting diode (LED) technologies.
Osram, which is the world’s No.2 lighting manufacturer after Philips, is already busy implementing a restructuring exercise that includes thousands of job cuts while it tries to adjust to the shift taking place from traditional light bulbs to newer technologies like LEDs.
Dwindling demand for traditional lamps has reduced revenues at Osram’s Lamps & Components business by more than seven percent in its fiscal first quarter to the end of December 2013. Osram revealed this week that the first two months of its second quarter also show a continued decline.
Osram forecasts that group revenue growth in its current financial year will exceed global economic growth, estimated at about three percent for 2014, but is warning that the increase would be only modest in the first half of the year.
Another European lighting group trying to steer a profitable path from traditional lighting to LED-based lighting is the Austrian company, Zumtobel, which also announced plans this week to chop about eight percent of the company’s workforce (600 people) to try and double the company’s operating profit margin by 2016/17.
Like Osram and Philips, Zumtobel is trying to, as painlessly as possible, switch to LED lighting from traditional lighting. In Zumtobel’s case necessary cost-cutting exercise will involved restructuring costs of 15 to 20 million euros in this quarter with a similar degree of savings required in the forthcoming financial year. Given that Zumbotel’s US sales represent single digit percentage points it looks that the company faces the stark choice between closing the US operation down or quickly finding a willing partner to work with.
LED technology – Broadening the influence of lighting
Price competitiveness of LED lighting products is always going to be an uphill struggle for European manufacturers compared with their Asian rivals. A key obstacle being that a lot of the Asian businesses are relative newcomers to the lighting sector and are not encumbered with traditional lighting portfolios.
So to try and improve their competivieness the European companies are looking to optimize one of the inherent benefits of LED technology, namely, its ability to be integrated into ‘smart’ solutions.
An example of this approach is Philips announcement this week that it plans to collaborate with power and automation technology provider ABB to simplify the integration of connected lighting systems and building device control for commercial buildings.
The collaboration, which features two of Europe’s major multinationals, sees Philips combining the company’s expertise in LED lighting systems with ABB’s building automation skills to benefit systems integrators, commercial building owners and facility managers.
‘Smart’ connected lighting systems developed by Philips will be able to interface seamlessly with ABB’s automation software to offer the ability to control a commercial environment including lighting, blinds, building access and heating, ventilation and air conditioning (HVAC).
Eric Rondolat, CEO of Philips Lighting, said: "Philips’ LED lighting combined with controls can deliver up to 80% energy savings compared to conventional lighting, while providing high quality light for a comfortable, more productive work environment."
Smartphone control of lighting for home and office
At the recent Light+Building 2014 event Osram spotlighted the company’s smarter approach to lighting with the Lightify lighting system which is designed to offer dealers and installers a product for their customers that enables almost all possibilities with light to be exploited using a smartphone app. By simply using a smartpnone as a controller users can created an artificial sunrise in the morning, a relaxing mood during evening hours or the green of a spring meadow.
The system is able to identify Lightify-compliant light sources and integrate these automatically into the lighting system, both at home and in offices. Lightify can also be simply integrated into existing WLAN networks. The system configures and maintains itself automatically. The complete portfolio ranges from light in corridors, living rooms and professional lighting in offices to outdoors with terraces and gardens.
"Connected light is yet another important step for us towards the digital light era. With Lightify we have transformed an idea into an innovation that contains almost everything that light is able to do today," explained Peter Laier, Osram’s Chief Technology Officer and executive board member responsible for the company’s general illumination business. Lightify will be available from the start of the coming lighting season in Germany and other European markets.
Lightify enables living rooms and workrooms as well as balconies and gardens to be bathed in a wide variety of light atmospheres using a smartphone or tablet. The scenes can be freely configured and also controlled while on the move. In addition, the app also provides programmed light scenes such as a realistic sunrise for example, and selection can also be based on photos. Lightify is not only able to design rooms in light differently each day, the light itself can also be useful for the sense of well-being.
The complete Lightify range of LED lamps and luminaires can be controlled independent of the location, whether this is for corridors or living rooms, terraces and gardens or professional lighting in offices. Osram with its Lightify system is following an integrative approach and provides corresponding products from a single source. Installed lighting systems and products from other manufacturers that support the common ZigBee Light Link standard or Home Automation standard can also be simply integrated into the system. In addition, the lightify system offers an interface for the so called DALI standard. DALI is widely used in professional applications in Europe.
Power-over-Ethernet connects office lighting systems
Philips also revealed at Light + Building a breakthrough in connected office lighting system that claims to deliver value to facility managers, office workers, and building owners.
The system uses Power-over-Ethernet (PoE) to connect office lighting fixtures to a building’s IT network. The lighting system acts as an information pathway, enabling workers to control and access other building services via their smartphones, allowing them to enjoy greater visual comfort and productivity.
The office lighting fixtures, when outfitted with sensors, are able to capture anonymous data on room occupancy, temperature and humidity. They connect to the IT network and interface with other building systems such as heating, ventilation and IT services. This benefits the facility manager who has a single system showing real time and historical views of building utilization. For example, he or she could see that on a Friday afternoon a particular floor is not used and adjust the temperature, lighting, and cleaning roster accordingly. Having an integrated view of a building’s occupancy patterns and energy usage provides for more informed decision making with unprecedented levels of energy and operational efficiency.
The Philips system allows office workers to control the lighting in open plan offices as well as temperature in meeting rooms, to suit their individual preferences. Their smartphones will detect their location from overhead lighting fixtures via an app.
“The LED lighting alone is 80% more efficient than conventional lighting. Personal control of the lighting by employees actually increases efficiency as general lighting levels can be kept lower.’’ said Jeff Cassis from Philips Lighting. “The potential savings on a building’s operational costs will be significant, given that heating, cooling and lighting together account for 70% of a building’s energy usage.¹”
The fixtures, outfitted with wireless communications devices, form a dense indoor positioning grid, like an indoor GPS, that support a range of location-based services, such as wayfinding. Through a smartphone app, the system could also provide workers with useful information such as the nearest empty meeting room.
3D-printed connected luminaires
Smartphone control was also in evidence when Philips revealed another ‘smart’ innovation with the world’s first 3D-printed connected luminaires, a design addition to the expanding Philips Hue range. Fusing the worlds of light, art and technology, these luminaires claim to allow limitless light effects, bringing a piece of art to your living room. The innovative Philips Hue 3D-printed table and pendant luminaires were co-created with globally-renowned design teams WertelOberfell and Strand+Hvass.
With Hue, a simple finger swipe on your smartphone or tablet can create infinite personal light effects from a palette of over 16 million colors, shades of white and programmable light scenes. The Philips Hue 3D-printed luminaires can be tuned in with the setting sun, by connecting it automated internet services.
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