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LEDs’ long life expectancy can shrink business for players

LEDs’ long life expectancy can shrink business for players

By BizLED Bureau

Oct 7, 2016: LED lighting has indeed changed the face of lighting business. Not only do they conserve energy, but also last for a long period of time. However, LED lights’long durability factor can actually become a ‘curse’ for companies who produce and sell them, as they can’t make good business from products that require no replacement.

Although LED lighting is quickly becoming a part of homes and offices across the globe, a number of companies are slowly drifting away from the lighting business. The main concern is, if LED lighting products would last forever, how would companies making LED lights do business? Would any company want to make a product that is not designed to fall apart or become outdated?

In order to put some control over such a situation, companies such as Cree (based in US) and UrbanVolt (based in Ireland), have come up with an innovative solution. They claim that they no longer sell light bulbs but “light”.

Cree’s approach

The company’s model turns light into a gadget. Cree has introduced new LED bulbs in September 2016, which not only promise more energy-efficienct lights but also better and enhanced light  that makes the colors in the object that is illuminated more accurate and vivid.

This new line of LED bulbs has analogue of a 60 watt incandescent with a rating in the high eighties. However, Cree has also manufactured higher-priced products that provide equal anticipated life spans with superior light quality.

Cree’s recent LED linecan be seen as a strategic negotiation at a price point that moves bulbs out of the hardware store. On the other hand, Cree is making LED lights as products like smartphones, which people will frequently upgrade to benefit from new features. These may range from color quality to app-driven connected bulbs and so on.

Cree’s answer to socket diffusion is gadgetization, which easily obsoletes, product’s life span gets limited. Alternatively, it does oppose the alternative trend: ever-cheaper LED bulbs that cast the type of light that may burn out in a few months, converting a durable technology into a disposable one. And ironically, disposability was a major issue that LED technology was supposed to put an end.

UrbanVolt’s approach

UrbanVolt’s approach is very different from Cree’s. It sells light as a service and not as a product. You can hire UrbanVolt from where authorized electricians will come and replace your light bulbs with fixtures designed by UrbanVolt and made in China, and the service would not require any extra payment.As of now, the service is being given to businesses only. However, the company has plans to start a package for residential customers as well.

Changing to high-quality LED lighting normally cuts these companies’ energy use by 80%, but the first timeexpense of making the swap in the first place can be unaffordable. UrbanVolt solves the problem by replacing its customers’ lights at no initial cost; each client then pays UrbanVolt a monthly share of the savings on its electrical bills.

During the contract term, which lasts five years, UrbanVolt must pay for any maintenance of the light fixtures. This is an incentive for UrbanVolt to eschew obsolescence in favor of durable lights, and, indeed, its most popular product lasts nearly 20 years under typical usage.

Once the contract expires, the client keeps the fixtures and can then pocket all future savings, or extend the service agreement with UrbanVolt at a substantial discount, given that the original fixtures by then will have paid for themselves.

Although, today, there is a huge market to cater to, but the LED market is shrinking, as with every building or every resident shifting to LED lighting, it is one less customer t cater to. So in the next five to 10 years LED business will boom, but after that it will start shrinking, unless the players find out innovative ways to cater to. UrbanVolt is already researching to find out other technology products in case the LED market in Ireland dies out in the next 10 years.

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