The LED Czars 2014

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Singapore, 24^th September 2014

I often talk about the LED Cowboys, but way up in their ivory tower the LED Czars are planning and plotting the future of LED while you and I are going about our daily work implementing LED’s in our projects. I am on to this because of the latest announcement from Philips lighting that has taken the financial world somehow by surprise. Philips is going to sell off their LED components manufacturing with the aim to create an independent stand-alone unit. They will not sell everything though, maintaining a 40% share, this I understand to maintain some control over the production and delivery as they themselves are the users of about 20% of the worldwide factory outputs. The deal is reported to be worth around 2 billion dollars.

There are a few interesting aspect to this decision. First of all Philips has acknowledge that today the LED market is a cut throat mass production market and that maintaining market share costs a lot of effort with little margins. Secondly the market has also dramatically changed. In the incandescent days the filament lamps had a limited lifespan guaranteeing manufacturers a continued demand for new lamps, Today however LED lamps have a near indefinite life so manufacturing depends on innovation rather ten replacement creating a total new ball game for manufacturers. It is therefore interesting and perhaps telling that Philips is eyeing to become an Apple-styled entity globally focussed on developing new trends and style concepts rather than being a mass producing manufacturer of LEDs. Let’s not forget also that Philips is one of the 5 initial LED manufacturers that holds key patents and copyrights in the LED technology and earns a solid part of their income through licencing. Focussing on a role as innovator and pursuing trendsetting projects therefore seems a choice with a clear vision. There is an obvious belief that there is still a way to go and innovate in LED world…

It will be interesting to see who follows this example. We already saw Siemens de-investing themselves from Osram with success and other may follow the same path. As I mentioned yesterday fact is that new LED start-up companies are popping up that give the established lighting manufacturers a run for their money with ultra-competitive pricing and surprisingly reasonable quality. Moving away from manufacturing lauds a new era in the development of the LED technology…

Light Watch 5-161: Philips has a whole website dedicated to the future of lighting full with concepts and ideas. Some of the concepts are open for crowd funding…http://origin.www.futureoflight.philips.com