High-End Lighting Markets for Solid State Lighting

Lighting has always been seen as a commodity market. In fact, most people buy their light bulbs from the same place they buy their milk. It is a price war out there with slim profit margins on lighting products; meanwhile, the market keeps demanding higher quality. The general indoor lighting market mostly consists of the following form factors: downlights, troffers, suspended pendants, track lights, and high bay lights (a detailed market report of general lighting luminaires with these form factors along with all technologies will be released this November). Downlights and troffers make up the majority of the installed luminaire base for all regions. In order to compete for penetration in these installed luminaire bases, LED lighting has had to slash its prices while making sure it can sustain the light output levels of halogens, incandescent, and fluorescent technologies.

Sep 30th, 2014
Shonika Vijay
Shonika Vijay

Lighting has always been seen as a commodity market. In fact, most people buy their light bulbs from the same place they buy their milk. It is a price war out there with slim profit margins on lighting products; meanwhile, the market keeps demanding higher quality. The general indoor lighting market mostly consists of the following form factors: downlights, troffers, suspended pendants, track lights, and high bay lights (a detailed market report of general lighting luminaires with these form factors along with all technologies will be released this November). Downlights and troffers make up the majority of the installed luminaire base for all regions. In order to compete for penetration in these installed luminaire bases, LED lighting has had to slash its prices while making sure it can sustain the light output levels of halogens, incandescent, and fluorescent technologies.

But let’s talk about other sectors of the lighting market that aren’t fully commoditized, markets that aren’t solely controlled by the lowest price, where customers are willing to pay more to show off their lights; we classified this as the “high-end” lighting product market. High-end markets are great for SSL technologies where manufacturers can showcase all the advantages that SSL has to offer while not taking a huge hit on margins as they have to with commoditized general lighting. Our evaluation of the “high-end” lighting market is still on-going, but here are a few initial findings and survey results:

  • It is not confined to any one application such as hospitality, residential, healthcare, office, retail, industrial, or outdoor (all these applications will be covered in the global luminaire report to be released this November). High-end products can be found in all applications and in many different form factors
  • High-end lighting is just good lighting when it comes to SSL. When doing high-end lighting projects such as interior design and custom projects, some designers voiced that, for SSL, they still had to go the extra mile to make sure that the controls side of the luminaire was compatible with the light source of the luminaire
  • Though there aren’t concrete price, quality, or other indicators that separate high-end lighting from mid to low-end lighting, high-end lights are products that are of high light quality (above current industry requirements and even average industry standards) and performance (smooth dimming, compatible with the building controls, and the customer can easily operate the lighting system without any training)
  • There was also some concern amongst designers that manufacturers are so concerned with competing in the commodity market that they are forced to slash their prices and in turn end up reducing lighting quality and performance. This can make it very difficult for designers to find the precise solid state light source to use in their projects
  • When designers work with SSL technologies, especially in large projects, they will mostly pick from lighting products that have at least a 5 year warranty. Products with anything less are considered risky, and designers are more hesitant to recommend these products to customers who are willing to invest in their lighting.

What has been striking with our initial evaluation of the high-end market is that high-end lighting products seem to be on the natural technological and performance evolution path for solid state lighting; they have a higher price premium, but the lighting experience can be exceptional. However, in order to get the volumes and penetrate into the majority of the installed base, SSL will likely have to be dumbed down so that customers will pay for it.

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