Speculation About Lighting as a Service

By Scott McMahan, Editor of SolidStateLighting.net

Several companies have begun selling products that employ Visual Light Communication that uses LED lamps to transmit data. Using this modulated light to transmit data from the Internet is known as LiFi. Professor Harald Haas who founded pureLiFi speculated about the future of the lighting industry when faced with LED lamps and luminaires that last for twenty years. He also envisioned bandwidth requirements for IoT applications that might go beyond the capabilities of WiFi and even 5G.

He said that eventually, he thinks the industry will begin to offer lighting as a service to continue gaining profits. I will speculate on how such a business model might work.

Lighting as a service is not to be confused with Lunera Lighting’s unique financing plan known as a Lighting As A Service (LAAS) in which the savings from the installation of LED lighting go towards financing the initial cost and installation. So a company can do such an installation with no money down. While Lunera’s financingy plan is a great idea, this is not what I am discussing.

The lighting industry makes a significant portion of its profits from relamping and maintenance. I’ve heard estimates from experts on the order of 25 to 40%.

What if you could continuously profit from not just the light, but the Visible Light Communication (VLC) that could provide LiFi? I could see several possible ways in which such a business model might work.

A company could purchase LED-based lighting for its offices. In addition to offering smart lighting controls, lighting energy optimization, and data analytics, the lighting company could provide LiFi that could securely connect to the Internet.

One potential business model would involve the lighting company offering a LiFi usage subscription that a client company would pay monthly or annually like they do with maintenance and lamp replacement contracts.

This contract could potentially be quite lucrative. However, it would have one drawback. The lighting company would have to offer the VLC by itself. While appealing, this could be done less expensively with WiFi.

If however, the lighting company licensed the technology to Internet service providers with a royalty-based agreement, then the lighting company could continue to benefit from the technology it provides year after year.

A third possibility is for the lighting company to offer a subscription to use LiFi in addition to other energy, HVAC, air quality, and other services that it could offer on a subscription basis. This could be for companies that don’t have the money to purchase such services from the start but would still like to utilize them.

A third possibility is that lighting companies could offer rent-to-own lease terms for LiFi equipment along lighting controls, monitoring, data analytics, as well as other sensing applications. Such a service model could help the lighting industry compensate for customers not needing to buy lighting for twenty years after purchasing and installing LED lamps and luminaires.

All of these possibilities would firmly entrench the lighting industry in providing a means for people to connect with the Internet of Things, and all of them could at least in theory help the lighting industry maintain its profits despite not selling as many new LED lamps as it did before.

Lighting as a Service and the Future of the Lighting Industry

Companies that produce LED lighting will continue to try to acquire the companies that manufacture sensor technology and data analytics, regardless of whether or not they pursue lighting as a service. Other companies will form partnerships to offer lighting control and optimization, data analytics, and LiFi. These acquisitions and partnerships will give lighting companies an additional product offering beyond lighting. This product offering might be purchased, leased, or licensed. Leasing and royalty-based licensing of such products could help extend the profit potential beyond a one-time purchase.

The lighting industry still has to provide a value to its customers through saving more money and giving them access to data and analysis of energy usage for lighting, HVAC systems, and space utilization, and other potential applications such as monitoring of air quality and particulates. LED lighting companies can profit from all of these applications if they want to.

Luxeon Color

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