The idea of selling service rather than a product is not a new concept however it has gained more traction in recent times than when it first came into existence in the late 1970s.

Lighting as a traditional and mature industry has always been about commodity lamp supply where lamps are a commodity purchase with a routine schedule of maintenance and replacement. Nonetheless, with rapid rise of LED solutions, lighting technologies and IoT, the industry has been through an enormous transformation over the past few years.

Today lamp suppliers are transformed into strategic lighting partners and the old financial structures and purchasing patterns are no longer fit for purpose – changing the conventional business model altogether.

Pay per Lux

Light as a service – a new business model that has emerged in recent years aims to capitalise on ‘performance economy’. Manufacturers retain greater control over the products they manufacture enabling better maintenance, reconditioning and recovery and customers only pay for the “lux” they require and use.

As consumers hesitate to invest due to the higher up-front cost of LEDs, Light as a service is a great alternative business model. Nonetheless, cost is not the only driver for light as a service to thrive.

IoT enabling Light as a Service to Drive Better Benefits

IoT-driven opportunities in connected living are promoting changes in lighting designs to accommodate the technical requirements of linking light points. Light as a Service (cloud-based networks) are used for efficient and customised application management, thus resulting in better connectivity and energy and facility management.

Under light as a service arrangement, the lighting company provides entire system management along with the products offering a complete turnkey solution including design, financing, installation, maintenance, monitoring and responsive performance adjustments (such as mood setting and dimming).

Nonetheless, the most significant benefit of light as a service is that it allows the service provider to upgrade the lighting system, potentially enabling performance improvements to be made throughout the contractual period.

Hence, as technology continues to get more sophisticated, value added features such as embedded WiFi, data gathering technology and smart software upgrades can be incorporated into the lighting provision as needed.

Unbeatable Value Preposition

With light as a service, a continual expense (for maintenance and upgrades) turns into an asset that continuously maximises on-going innovation without having to commit capital expenditure.

Besides, lighting begins to offer much more than simply energy and financial savings. It becomes a vehicle through which organisations can grow and develop their very core business through the application of smart services.

Strong Competitive Winner in APAC

LED lighting has grown exponentially in Asia over the last 3 years with revenues almost doubling. However the market is still very fragmented with significant variations among the Asian countries.

Rapidly growing market and chaotic competitive landscape often results in price and product performance becoming the strongest differentiating factors for companies.

Light as a service can be the strongest differentiator today for lighting companies in Asia offering customers the best possible outcome in the new digital era.

Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at | +603 6204 5830