Analysis of the development trend of the intelligent lighting market
According to a new study by Grand View Research, Inc., by 2028, the global smart lighting market is expected to reach 46.9 billion U.S. dollars, with a compound annual growth rate of 20.4% from 2021 to 2028. The market growth is attributed to the rising trend of smart cities, smart homes, smart street lighting systems, and the demand for energy-saving lighting systems. Although smart lights are more expensive than ordinary lights, their advantages outweigh the overall installation cost. However, due to the declining purchasing power of middle-class income groups during the COVID-19 pandemic, the high price of smart lights has limited market growth.
In 2020, the global smart lighting market is worth 10.85 billion U.S. dollars, and it is expected to expand at a compound annual growth rate (CAGR) of 20.4% from 2021 to 2028. Ambient lighting using only smartphones or tablets has increased its popularity and demand in commercial and residential spaces. Smart lights can be dimmed in various tones as needed, can be arranged to turn on/off, monitor the energy usage of the lighting, and connect via Wi-Fi, Bluetooth, SmartThings, Z-Wave or ZigBee.
In addition, smart lights can be voice-controlled through integration with platforms, such as Google Assistant, Amazon's Alexa, Apple's Siri or Microsoft's Cortana. In addition to lighting, these extensive functions, coupled with the increasing popularity of IoT devices and smart assistant platforms, have created a market growth path for smart lighting.
Smart lighting is also called connected lighting because it can be seamlessly integrated into IT networks in buildings or urban infrastructure to share information about operating status. For example, smart street lights in urban parking lots or roads provide extensive coverage, environmental monitoring, parking and traffic management information, and city monitoring by connecting IoT devices to ensure safety. Smart lights are usually integrated with sensors, turning them into a smart device point to collect information about activity patterns, daylight levels, occupancy rates, temperature changes, or humidity. Facts have proved that this information is essential for government agencies to take appropriate actions and monitor the city for unnecessary activities.
The government's policies to encourage energy conservation and environmental protection and strict regulations discourage the use of incandescent lamps are expected to boost the demand for LED smart lighting. The global lighting industry consumes approximately 19% of total electricity and generates approximately 6% of greenhouse gas emissions. On the contrary, LED smart lights are very efficient. They consume almost 70% of energy and connect devices to collect information for use in future processes. They have a significantly longer service life and do not contain any mercury content. Similarly, LED lights will not emit harmful greenhouse gases. Therefore, LED technology has the potential to completely change the entire lighting industry and penetrate into the field of smart lighting, where LEDs are the first choice of suppliers and consumers.
In addition, the penetration rate of smart lights is expected to increase as its advantages include controlled power usage, longer lifespan, multiple light settings in a single lamp/lamp, and the availability of a wide range of modern decorative lighting products. The use of smart lighting in residential, commercial and industrial sectors has not yet reached its full potential. Therefore, various government initiatives to promote the use of LED-based smart lights are expected to increase their demand during the forecast period.
For example, in January 2019, the New York Power Authority allocated US$7.5 million to municipalities across the state to install new smart LED street lights. In addition, China, Brazil, Colombia, Mexico, France, Spain, Germany and other countries have completely banned the sale of incandescent lamps and encouraged the use of LED lamps; among them, high-income groups tend to use LED-based smart lamps.
In addition, many smart lighting companies have reported that the COVID-19 pandemic has had a negative impact due to lockdowns, destruction of construction activities and raw material supplies. The decline in consumer purchasing power and the delay in completion of construction projects due to the COVID-19 pandemic have driven the number of smart light purchase orders, schedules and payments.
Intelligent lighting market structure
The smart lighting market is divided into three parts, namely hardware, software and services. The hardware segment leads the market with a revenue share of more than 57% in 2020. Smart lighting hardware has been further classified into lamps and smart lamps, of which the smart lamp segment will show high growth potential from 2021 to 2028. The demand in the hardware sector is attributed to the proliferation of connected light bulbs and lamps that can use control devices such as smartphones or tablets to change the color tone, dim the lights, and turn on/off.
The software segment is expected to achieve the highest compound annual growth rate during the forecast period. The demand for smart lighting is due to the increasing use of smart lighting in key areas to meet data-driven needs. In addition, every brand needs software applications to facilitate the use of smart phones or tablets to control lights. These applications also help to connect smart lights with smart platforms such as Alexa, Crotona, and Siri for control using voice commands. The huge popularity of creating an environmental atmosphere and helping data collection in smart cities is expected to drive the growth of market segments during the forecast period.
The wireless connection part is expected to achieve the fastest compound annual growth rate of over 20% during the forecast period. Consumers who need a small range of connections are very fond of wireless connections in smart lighting environments, making it the fastest growing segment during the forecast period. Wireless technologies such as Wi-Fi, Bluetooth, SmartThings, Z-Wave or ZigBee connect lighting devices with smartphone applications to control the functions of the light bulb. The residential sector mainly uses wireless technology to control the tones and colors of lamps in a limited space to achieve aesthetic purposes.
The wired connection segment has become the highest revenue contributor in 2020 and is expected to maintain its dominant position during the forecast period. A wired connection is required for ranges above 30 feet. As an exception, Ethernet can facilitate wired connections within 100 meters, while DALI, DSI, and DLVP provide connections over 1000 feet. Commercial and industrial spaces are increasingly adopting smart lighting, driving the demand for wired connectivity in the smart lighting field.
Compared with outdoor lighting applications, indoor lighting applications dominate the market and become the highest-income contributor. Indoor applications are further subdivided into residential, commercial and industrial. Due to the increasing popularity of smart bulbs and lamps that can be controlled by users to set different lighting atmospheres, the residential market segment is expected to achieve high growth rates during the forecast period.
In addition, the demand for commercial and industrial spaces is driven by the need to control lighting consumption, because office spaces or warehouses are operated 24x7 and require regular power supply throughout the day and night. Installing smart lighting with built-in sensors ensures that the lights are only used in the required areas based on the movement of people captured by the sensors. In addition, the lighting settings can be automatically dimmed according to the external lighting in the venue.
The outdoor segment is expected to achieve the highest compound annual growth rate during the forecast period. The outdoor market segment is further subdivided into highways, roads, and buildings. Outdoor architectural applications include lighting for terraces, gardens, exterior walls and outdoor venues in residential or commercial spaces. The need to provide energy-saving lamps and monitor outdoor activities has driven the rapidly growing demand for smart lighting in outdoor applications. This phenomenon is specifically used for smart street lights. The government has invested in the installation of LED-based smart lighting connected to cameras and sensors to capture and share outdoor activity data.
Europe is a leader in drafting safety and uniform performance standards for certain indoor commercial intelligent lighting for garages, roads and parking lots. With the continuous advancement of LED design and technology, dedicated LED lamps and LED replacement smart lamps are becoming a key growth area in the lighting industry. While existing smart lighting manufacturers continue to update their product offerings, existing manufacturers are expanding their product portfolios to enter the market. The emergence of a large number of dedicated smart lighting suppliers is especially suitable for applications such as downlights, task lighting, landscape lighting, general environmental lighting and outdoor general area lighting.
Due to the surge in demand in commercial and residential applications, the Asia-Pacific region is expected to become a prominent region. China is expected to become the largest source of income controlling the highest global market share. Due to economic growth and increasing investment in smart city projects, countries including Japan, India, and South Korea are expected to be at the forefront of smart lighting adoption. The demand for smart lighting in the Asia-Pacific region is largely affected by changes in lighting scenarios in the commercial sector. The growing number of office, retail and entertainment commercial buildings is creating opportunities for new demands for smart lighting. However, the COVID-19 pandemic is expected to curb the expected growth in demand for smart lighting.
Companies are competing for the largest distribution network to lead the market. Both traditional manufacturers and new players in the market are aware of the importance of distribution networks. Companies are investing heavily to strengthen their distribution network. For example, Kokilanje Philips N. V. makes good use of its well-established distribution network to distribute its LED products globally. The company is also trying to attract more distributors and retailers to increase its smart lighting sales.
The practice of forward and backward integration is increasing among manufacturers. For example, Changfang and Manulife Electronics are expanding from smart light packaging to downstream applications to control costs and increase investment in distribution networks. A strong distribution network allows LED smart lights to quickly replace traditional lights. Market leaders are focusing on manufacturing affordable smart lighting products to reduce the price of LED smart lighting products, which will lead to mass adoption. Technological innovation has helped to rapidly reduce product prices and increase the penetration rate of smart lighting in the global market. Falling prices and a strong distribution network will help smart lighting products gain high demand in the market.
In general, since lamps are an integral part of smart lighting, the hardware sector is expected to achieve the highest revenue contribution in 2020. Lamps and lamps are integrated with sensors, dimmers, and other electronic components to perform controllable functions, such as changing the color tone, dimming according to the external weather, and turning on/off at a set time.
Due to the large-scale development of smart city projects in China, Japan, and South Korea, the Asia-Pacific region is expected to have the highest growth rate during the forecast period. In addition, increased investment in the installation of energy-saving smart lighting in India, Singapore, Thailand and Malaysia will drive market growth in Asian countries.
Some of the main players operating in the market are Honeywell, Wipro, Schneider Electric, etc. These suppliers dominate the market because they offer a broad product portfolio, providing smart lights and lamps.
At present, the new trend of home automation is penetrating into households with middle and high-income consumers. The evolving smart home IoT technology has further promoted this trend; among them, smart lights can be connected to control the functions of electronic devices. In addition, personal assistants such as Alexa, Crotona, and Siri can be synchronized with smart light applications, and can control the light tone, brightness, on/off time, and other functions using only voice commands. Similar transformations using smart lights have also penetrated into commercial spaces.
The retail industry has become the biggest beneficiary of smart lighting. In addition to energy efficiency, "smart" lighting systems installed in retail stores also utilize Bluetooth Low Energy (BLE) and Visible Light Communication (VLC) technologies to enable LED lamps to communicate wirelessly with antennas and cameras in smartphones. Therefore, smart lighting technology can help retailers contact customers who visit the store and send information about discounts and product availability based on their buying patterns. It is expected that similar additional integrated functions will promote market growth in the next few years.
With the convergence of artificial intelligence (AI), the Internet of Things (IoT), and other technologies, the residential, commercial, and industrial sectors are slowly entering a rapid development path to expand the capabilities of smart lights. With the help of artificial intelligence in the local network, smart lights can create safe and sustainable lighting solutions while protecting user privacy because data is not uploaded to the cloud. When smart lighting is connected to electronic devices via Wi-Fi and other wireless methods, data privacy has always been one of the main issues. It is a way for hackers to penetrate into the network to access personal information.
In addition, during the epidemic, the incidence of hacker attacks on infrastructure connected via the Internet has increased. Therefore, building a strong security infrastructure to provide offline connections without the Internet can limit hackers and increase the efficiency and adoption rate of smart lighting during the forecast period.