LEDinside Commentary: Is MiPow’s Low Priced Smart Bulb Strategy Reasonable?

The LED industry has seen bulb prices nose-dive in recent years. When Walmart sold its 60W LED bulb two years ago for under $9, it was considered at the time an “aggressive pricing strategy.” But the same GE 60W LED bulb prices today has lost almost more than two thirds of its value, with three pack LED bulbs expecting to be sold for $3 each in August 2015. Over competition from Chinese manufacturers and the maturing technology has led to plunging prices in the LED bulb market, but has smart LED bulbs arrived to similar crossroads?

Apparently, Chinese LED manufacturer MiPow believes the timing is right to introduce cheaper smart LED bulbs. The company kickstarted a crowdfunding campaign on Chinese platform Hi Taobao on July 8, 2015 for its RMB 49 (US $8) smart LED bulb, although price ranges can be quite large in China, this is the lowest priced smart LED bulb as of date. In comparison, Cree’s lowest priced smart LED bulb is still priced at US $15, nearly double the price. MiPow justifies its pricing strategy as an incentive to encourage more consumers to purchase smart lighting products. Reasoning seems justified, since LED bulbs in the last two years has mostly appealed to the tech savvy or gadget lovers.

MiPow Blue Label LED bulb is targeting a retail price of RMB 49 (US $7.89). (Photo courtesy of MiPow)

If MiPow’s intentions of introducing smart lighting to the masses takes off, the LED industry could benefit as a whole. The incentive for the average households to switch to smart LED bulbs has been relatively low, due to the products higher price tag. MiPow’s low pricing definitely solves this problem, but the question is this strategy reasonable?

Some would argue, the smart lighting industry seems far from reaching maturity. There are still many technical issues that need to be overcome including making operating control apps interface designs more user-friendly, incompatibility, and wireless control problems. In addition, there are still no consensus on the smart lighting device’s communication protocols.

However, the entry level for smart lighting is probably lower than projected. This can be seen from the growing number of manufacturers entering the market. For example, at LED Expo Thailand 2015, LEDinside observed local manufacturers, such as L&E develop smart Bluetooth-based LED bulbs. The critical component that sets apart smart lighting from ordinary bulbs is the IC driver, indicating it can be relatively easy to upgrade normal LED lights to smart lighting. A trend in smart lighting has been how smart bulbs are becoming multi-functional, but it’s not just traditional consumer electronic manufacturers, such as Sony that have the capacity to develop speaker embedded LED bulbs. MiPow and other startups have shown the same capacities much earlier on. The design challenge is user design interface, and how to integrate it smoothly into smart home applications to provide a seamless user experience.

Entry of traditional consumer electronic manufacturers Sony, Samsung, LG and Panasonic, Apple Homekit and others will also propel the adoption of smart lighting products in the average household. Nevertheless, with LED bulb prices dropping at an alarming rate, it probably is just a matter of time before it impacts smart LED bulb prices. Average 40W equiv. LED bulb prices in June 2015 reached US $11.8, and 60W equiv. LED bulb prices US $15.8, according to LEDinside statistics. Lowest 40W equiv. LED bulbs and 60W equiv. LED bulbs prices have even reached, US $1.84 and US $3.3 respectively.

It might be a matter of time before the price wars spread to the global smart LED bulb market, and MiPow will probably be the first to ignite one in the Chinese market. The industry can only hope the lower pricing strategy can attract more consumers to upgrade from traditional luminaires to smart ones.

(Author: Judy Lin, Chief Editor, LEDinside)

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