State of the Industry Survey reveals optimism for SSL and applications (MAGAZINE)

For the first time in our history, LEDs Magazine has fielded a State of the Industry survey covering the outlook of our audience working both in product development and in the design/specification process for solid-state lighting (SSL) products. The survey reveals your outlook on the industry and details on trends you are seeing in technology ranging from the packaged LED, to evolving technologies such as connected lighting, to applications such as smart cities and lighting for health and wellbeing. We will get to the details in a moment, but we can report a general state of optimism in our LED and SSL sectors.

We do need to make one point about this survey data, and it’s a point you will find echoed elsewhere in this issue. We developed the survey questions before we understood the seriousness of the COVID-19 coronavirus. We did not mention the coronavirus in the survey. And we will again state that it’s more important for global society to control the coronavirus than it is to ponder our industry outlook. But we do note that had the survey been fielded a month or so later, we would have asked about the coronavirus and the spread of the virus may have impacted optimism. That said, the global situation could change for the better or worse between the time we wrote this article and when it is deployed in our April issue.

Industry optimism

But now let’s get to the optimism, which, by the way, you will find spread throughout this article. We will consider both one of the simplest questions that we asked and one of the most complicated. We asked whether you expected your own organization to add workforce, reduce workforce, or stay roughly the same over the course of the next year. Almost 40% of you expect your organization to add workforce and almost 60% expect no change. Less than 5% of you responded that you expect a reduction in workforce.

We asked the more complicated question to try and discern how our audience sees the LED and SSL opportunities looking
forward, and we based the question around the so-called LEDification process or the process of replacing existing legacy sources with LED-based products. We presented four potential scenarios that are revealed in Fig. 1. And we asked respondents to choose which of the four statements most closely represents their outlook on the near-term prospects for our industry.

Based on market research performed by our own sister business Strategies Unlimited and by others such as the US Department of Energy (DOE), we know that LED penetration has still only reached around the 30–40% level of the total lighting market. So clearly there remain a lot of LED products to be sold. And more than half of the respondents see that situation opportunistically. A very small number, well under 5%, see socket saturation as a near-term obstacle to business opportunity in the sector.

Instead, our audience sees the significant obstacles as being from outside factors that interfere with the lighting business. Examples could be tariffs and trade wars, and we will discuss those issues in more detail later. We also offered another positive scenario based on emerging technology such as connected lighting that could enable new business opportunities for lighting companies. And it was a positive result to see around 15% of the respondents select that scenario as a likely path forward. Again, that foreshadows messages to come.

Outside influence and low quality

Given the number of respondents that selected outside influences as an obstacle to positive LED and SSL markets, it’s fortuitous that we also asked a question about outside influences (Fig. 2). We had a relatively short list of such influences identified. Still, the number one culprit identified by 50% of respondents was low-quality products. We suppose it’s arguable whether that should have been listed as an outside influence. But the survey putting the target squarely on product quality is interesting.

Consider that the second-most-identified negative influence was price erosion at almost 25%. Price erosion and low-product
quality are inexorably linked. Price erosion can lead directly to lower-quality products and the end result is an impact on revenue, margins, and profits up and down the supply chain. We continue to believe that there will be a renaissance of sorts that pervades the industry to drive better light quality. Such a movement would clearly be good for the industry.

Still, we were surprised by the answers to the question about outside influences. Tariffs were identified by just under 15% of the respondents, yet we have been hearing so much about tariffs as holding back the industry over the course of the last year. Moreover, the supply chain has regularly been identified as a problem with too many parties expecting a slice of the revenue, but few respondents consider the supply chain an issue, at least relative to the impact of the other mentioned factors.

LED technology

Now let’s turn to technology — we started with questions about packaged LEDs. We asked product developers to answer based on the LEDs that they were specifying in new product designs. We asked designers/specifiers to answer based on the LEDs integrated in the end SSL products that they were using in projects.

Our first question was focused on the type of LEDs, light engines, and even OLED panels that were being utilized by respondents. We first asked which of a list of technologies were being utilized and followed up by asking which single technology was being used most frequently (Fig. 3).

Going into this research project, we knew from work done by our Strategies Unlimited unit that mid-power LEDs would be the most prominently identified light source. More than 50% of respondents said they often used mid-power LEDs and almost 20% more said they always use mid-power LEDs. Still, high-power LEDs clearly have advocates. Even more respondents than in the mid-power case — almost 30% — said they always use high-power LEDs.

CSPs have fans but...

We were most curious about how our audience would respond about chip-scale package (CSP) LEDs. Strategies Unlimited has continued to document relatively low adoption of CSP LEDs. Yet we have firsthand conversations with industry participants that indicate an enthusiastic yet small fan base for CSP technology. Our new research pretty much confirms what Strategies Unlimited has reported. Almost 20% of our respondents said they always utilize CSP technology, but nearly as many said they never use CSP technology.

The second question in the series confirmed the fact that mid- and high-power LED usage is much closer than one might guess in perusing data from, say, the Strategies Unlimited worldwide LED report. Stepping back, however, the data isn’t necessarily conflicting. Strategies Unlimited reports data based on revenue. Our questions would be answered based on technology used in projects and not infer any information as to revenue or number of components used. And we know that inherently there would be far fewer brighter, high-power LEDs used in a specific application relative to cheaper, less-bright mid-power LEDs.

We did also ask about selection criteria for LEDs. And we’d have to admit some surprise when it came to those results. We have our Strategies in Light coverage in this issue. And two key messages that came across during the conference were that the energy era for LEDs is dead and light quality matters. Still, our respondents identified the stalwarts — efficacy and lifetime — as leading the way in selection criteria. We did not limit respondents to one choice. Color uniformity and rendering did show up in the results but not as strongly as we might have expected.

Serviceable luminaires

Following our questions about LEDs and light source technology, we asked a couple of questions about serviceability in integral luminaires. Frankly, these questions were headed to the cutting-room floor a couple of times as we tried to keep the length of the survey manageable. We are sure glad now that somehow we did include them.

When we asked how important it was in development or specification projects to have a serviceable or upgradable luminaire,
almost 75% said it was important or extremely important (Fig. 4). Those results run counter to the growing throwaway mentality of society. Still, developers and specifiers do face the reality of installed products failing and the need to remedy that failure with a product that matches those installed. Serviceable luminaires solve that issue.

We also asked respondents about technology approaches they use to allow for servicing a luminaire. We specifically asked if subsystems with Zhaga Consortium compliance were used, but that option did not score highly. The most popular approaches in the 33–40% range were modular replaceable light engines, LED drivers that could be accessed from below the ceiling, and modular sensors and connectivity.

White-point tunable lighting

Now let’s finish our coverage of the survey looking at some potential growth areas. One such area is tunable white lighting. Such technology can be deployed for ambience, although it’s often used specifically to try and coerce a positive response from humans exposed to such light. The positive response could be increased productivity, better sleep patterns, increased alertness, and more. The practice has been called lighting for health and wellbeing, human-centric lighting, and integrative lighting. We’ve covered the science in reporting on our Lighting for Health and Wellbeing conferences.

Tunable white lighting, however, has been relatively slow to take off in broad general lighting applications. The tunable capability adds cost because two or more LED channels are required along with more complicated drivers, although driver companies are making progress on reducing complexity, as we covered recently.

We would have suspected that relatively few in our audience would have worked with tunable white lighting despite the fact that we believe it has a bright future. But we asked if respondents had worked with tunable lighting and almost 60% responded positively. Moreover, about the same number indicated that the goal of the work was lighting for health and wellbeing and not just ambience.

We asked a third question to gauge how significant our audience views the market potential for tunable lighting. More than 50% indicated that they expect tunable lighting to be deployed in broad general lighting applications. Another 30% said it will be broadly deployed in schools. Not a single respondent chose either of the two categories that we added as essentially negative on the application — inconsistent research data or lack of success with research subject outcomes.

Networking and controls

Right about now, you are probably wondering when we will get to discussing networks, controls, and smart lighting. These technologies have been championed as saviors of the lighting industry. The industry is adding network connectivity either to automate building operation or meet building codes. The recurring theme has been that we may as well run other applications across this connected infrastructure, with lighting offering ubiquitous nodes across spaces.

We first asked respondents whether their work had involved the use of autonomous or programmatic controls of networked lighting. The response was a strong yes from almost 70% of the respondents. We then tried to characterize the complexity of the networked systems involved and the audience split roughly into thirds. About 35% said their experience was mainly focused on simple lighting controls and sensing. Another 28% had experience with a larger network encompassing multiple spaces or an entire facility. And about 35% had worked on campuses or multiple geographically- diverse facilities and utilized Internet of Things (IoT) technology. These results do not align with the vendor-centric research done by Strategies Unlimited and reflect broader use of networks than we expected.

And the respondents are very bullish on the technology, as you can see in Fig. 5. More than 70% (a combination of very likely and somewhat likely) believe that there will indeed be lucrative secondary business opportunities for lighting manufacturers tied to connected-lighting-enabled applications such as indoor wayfinding, space optimization, security, and more. If they are correct, the results will be extremely important for the health of our industry.

Smart city applications

Moving outdoors, the news was not quite so positive. We asked how many of our respondents had been involved in what they would consider a project with a smart-city angle. Fewer than 30% responded positively. We did not ask how many of our respondents work in outdoor lighting in general. So we can’t draw a strong judgment about the response to the question.

Still, when we asked about the respondents’ outlook on smart city applications, the results flipped completely. Almost 90% of the respondents said that it was either very likely or somewhat likely that municipalities and utilities will be able to develop secondary revenue streams by using their street lights to host smart city applications, ranging from wireless communications to parking services to security and more. Again, if our respondents are correct, there is a bright path forward for our industry.

There is still more data to be mined from our survey. We did dig deep in areas such as SSL power and driver schemes. Expect us to share additional data in specific articles and other content about different SSL sector technologies. Meanwhile, we send our thanks to all who participated.