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September 2017
Interview

AutomatedBuildings.com

Babel Buster Network Gateways: Big Features. Small Price.
Control Solutions, Inc. - Minnesota

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EMAIL INTERVIEWErik Davidson and Ken Sinclair

Erik Davidson, Director of Marketing & Product Management - Cortet by CEL

Erik Davidson is Director of Marketing & Product Management at California Eastern Laboratories (CEL) driving go-to-market and product strategies for end-to-end Internet of Things control products, systems, and solutions.



How Can Lighting Manufacturers Grow their Business and Expand their Profits 

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.

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Control Solutions, Inc

SinclairWhat is the opportunity for Lighting OEMS and Manufacturers to generate revenue from lighting controls?

Davidson:  Our research is showing that IoT-enabled Smart Lighting Control market 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 successful 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.

Lighting Control Solution 

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) there are several reasons why we think it’s the right time for you to dive (back) in.

The latest data show that the Smart Lighting Control market is poised to grow by over 30% to $3.7 billion in revenue by 2020.  This means that luminaire and lamp OEMs can use their market advantages to add controls to the portfolio and enjoy the large opportunity and growth rate.

With these 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, these new players don’t have the same advantages that luminaire and lamp OEMs have.

SinclairWhat is the advantage that current luminaire and lamp OEMs have over other Smart or IoT tech companies?

Davidson:  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.

These OEMs understand better than anyone what it really takes to design, manufacture, install, troubleshoot, upkeep, and upgrade the lights themselves.

And, perhaps most importantly, these OEMs have gained this understanding from a real, widespread, hard-won customer base.

This gives the OEMs a tremendous advantage in defining the right strategy.  It gives them 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 the second major advantage that lighting OEMs have over IoT newcomers: they have already built and optimized a successful and far-reaching sales and distribution network for targeted market segments.

These OEMs 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 that luminaire and lamps OEMs already have and other types of lighting players may not have these relationships either.

Many luminaire and lamp OEMs realize this, but they question whether this is, in fact, the right time to exploit the advantage.  Our data suggests that it is in fact time.

Cortet Solution

Caption: Cortet by CEL provides a platform, an ecosystem of lamps, luminaires and lighting accessories, all certified to work together and able to be controlled by a single Smart Lighting Control technology.

SinclairWhy should lighting and luminaire manufacturers jump on this opportunity now?

Davidson:  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 have continued to increase rapidly.

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. These OEMs 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 an OEM made an unsuccessful attempt to enter the market in the past, most of the roadblocks and pitfalls they 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:

  1. You will now gain revenue from selling an SLC system; and
  2. 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.

SinclairWhat is the latest market data? What do the numbers show?

Davidson:  Yes. There are more questions OEMs ask us such as: Is the opportunity big enough?  Should I care?  How fast is the SLC opportunity growing relative to luminaire sales otherwise?

Let’s dive into some numbers.

Reliable Controls The latest data from numerous sources show that the SLC market is poised to grow at an impressive 25-30% CAGR (Compound Annual Growth Rate). According to one analyst report, the market for just lighting control products alone is expected to reach $3.7 billion in revenue by 2020. Within five years, by 2022, another analyst report projects that the TAM for SLC systems will exceed a whopping $19 billion.

By comparison, data from Strategies Unlimited suggest that the LED luminaire market has been rapidly growing at an 11% CAGR and will reach a TAM of approximately $40 billion by 2020 and $45 billion by 2022.

What’s interesting, exciting, and very important about this data is that it suggests that the TAM for SLC systems will rapidly become a very high percentage of the overall LED lighting industry TAM: $19 billion for SLC systems within a $45 billion LED luminaire market.

Most notably, this is because CAGR for SLC system sales will likely be more than double the already-impressive growth rate of LED luminaire sales over at least the next several years.

With all this data in mind, it is not hard to see that if you are manufacturing luminaires, hitching your wagon to a solid SLC system sets you up for an increased growth rate in a cutting-edge market segment on the rise.

If you are hoping to beat the market as a manufacturer of LED luminaires, you might be currently targeting an ambitious 15-20% CAGR.  But, with an SLC play, you could be targeting something more aggressive: 30-35% perhaps.

Now is the time to for OEMs to expand their business beyond lamps, luminaires, and accessories. Industrial, office and manufacturing plants and facilities are rapidly moving to an IoT model. Smart Lighting Control technology is here, and for an OEM’s business to be competitive and successful, they need to be able to take advantage of this new wave of market opportunity. 

Check out this article for the nuts and bolts on how to expand your company’s lighting sales and profits.  https://www.cortet.com/resources/blog/post/is-iot-smart-lighting-worth-it-growing-and-diversifying-your-revenue-through-smart-lighting-control

More info at https://www.cortet.com/solutions

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