Philips and Osram Compete for Lighting Solution-based Multi-Year City Contracts

LEDs are tooted as having long lifespans, but as more traditional light sources are being switched out for SSL, manufacturers are realizing that long lifespans are not good for a sustainable business model. Therefore, companies such as Philips and Osram are looking into long-term installation contracts. Philips has secured such a contract with Washington’s transit authority to upgrade around 13,000 fixtures in parking lots, according to a recent Bloomberg Businessweek report

By 2020, SSL will make up around two-thirds of global lighting, according to Osram. This is a massive increase from 18 percent in 2011. Market growth has been spurred by the move to energy efficient lighting by urban areas over the past few years. “The budget of cities and local communities are getting smaller and smaller and the pressure to be more efficient with budget is increasing,” said Florian Wunderlich, Director at consultancy McKinsey & Co. in an interview with Bloomberg Businessweek.

As more cities move to replace traditional lighting sources with more efficient SSL, and less need to replace said SSL owing to its long lifespan, companies such as Philips and Osram are looking to secure a steady flow of revenue through long-term contracts. “Key to the new business model is to provide installation and management services over many years,” said Eric Rondalat, CEO of Philips’ lighting sector. LED lighting manufacturers have begun to place more importance on systems and services instead of solely on products.  

Osram and Philips are now looking into emerging markets such as in Asia and Africa. “We focus on Africa as we regard this as a big untapped market,” the report quoted Nick Kelso, spokesperson for Philips lighting in Africa. 

Growth of the LED industry has also led to a rise in Asian competitors. Japanese manufacturer Toshiba and Korean manufacturer Samsung have both seen strong performance in their lighting sector recently. The addition of service margins will be able to protect manufacturers against decline in profit margins as LEDs popularize, said Wunderlich. 

(Edits: Leah Allen, Editor/Translator, LEDinside)

Disclaimers of Warranties
1. The website does not warrant the following:
1.1 The services from the website meets your requirement;
1.2 The accuracy, completeness, or timeliness of the service;
1.3 The accuracy, reliability of conclusions drawn from using the service;
1.4 The accuracy, completeness, or timeliness, or security of any information that you download from the website
2. The services provided by the website is intended for your reference only. The website shall be not be responsible for investment decisions, damages, or other losses resulting from use of the website or the information contained therein<
Proprietary Rights
You may not reproduce, modify, create derivative works from, display, perform, publish, distribute, disseminate, broadcast or circulate to any third party, any materials contained on the services without the express prior written consent of the website or its legal owner.

The recent outbreak of COVID-19 has prompted the large-scale search for practical solutions that can prevent the spread of the deadly virus — from researchers and scientists committed to finding a solution, to the manufacturers and consu... READ MORE

Nichia’s Tunable 757 receives rave reviews from industry leaders, including the coveted LpS Best Sustainability Technology Award. Nichia, the leader in and inventor of the high-brightness LED, announced its game-changing single LES, tuna... READ MORE