Business Report

The Light Bulb Gets a Digital Makeover

Electric lights are 135 years old. The Internet is 45. They’re finally getting connected.

As they become connected, lighting fixtures could offer new services.

To demonstrate how the Internet is changing one of the oldest and least exciting technology businesses around, Shane De Lima, an engineer at Philips Lighting, took out his smartphone. A flick across the screen sent a message to a nearby Wi-Fi router and then to a wireless hub, which shot a radio command to a chip in the base of an LED lamp in front of us.

A moment later, the conference room where we were sitting darkened.

It may seem like Rube Goldberg’s idea of how to turn off a light. Or it could be the beginning of how lighting companies such as Philips find their way from selling lighting hardware into networks, software, apps, and new kinds of services.

This story is part of our July/August 2014 Issue
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The introduction of networked lights is happening because of another trend. Manufacturers have been replacing incandescent and fluorescent lights with ultra-efficient LEDs, or light-emitting diodes. The U.S. Department of Energy says that LEDs had 4 percent of the U.S. lighting market in 2013, but it predicts this figure will rise to 74 percent of all lights by 2030.

Because LEDs are solid-state devices that emit light from a semiconductor chip, they already sit on a circuit board. That means they can readily share space with sensors, wireless chips, and a small computer, allowing light fixtures to become networked sensor hubs.

For example, last year Philips gave outside developers access to the software that runs its Hue line of residential LED lights. Now it’s possible to download Goldee, a smartphone app that turns your house the color of a Paris sunset, or Ambify, a $2.99 app created by a German programmer that makes the lights flash to music as in a jukebox.

That’s a very different kind of business from selling light bulbs, as Philips has done since 1891. “With the new digitization of light, we have only begun to scratch the surface on how we can control it, integrate it with other systems, and collect rich data,” says Brian Bernstein, Philips’s global head of indoor lighting systems.

Another look at how lighting systems are changing will emerge this November, when a 14-story regional headquarters for Deloitte, nearing completion in Amsterdam, will be festooned with networked LEDs in each fixture—the first such installation for Philips.

Each of 6,500 light fixtures will have an IP address and five sensors—all of them wired only to Ethernet cables. (They’ll use “power over Ethernet” technology to deliver the juice to each fixture as well as data.) The fixtures include a light sensor to dim the LEDs during the day, and a motion detector that covers the area directly beneath each light and turns the light off when no one is there. “We expect to spend 70 percent less on light, because systems [give] us much more control,” says Erik Ubels, chief information officer at Deloitte in the Netherlands. Additional sensors in the LED fixtures can monitor temperature, humidity, carbon dioxide, and heat, turning the lights into a kind of building-management system.

Prices for LEDs are high but falling quickly. A “dumb” LED that puts out as much light as a $1.25 incandescent bulb now sells for $9 (but uses one-sixth the energy and lasts much longer). That’s down from $40 each a couple of years ago. A connected LED bulb from Philips’s Hue line retails in the U.S. for $59. But these will get cheaper, too. Philips says a third of its lighting revenue now comes from LEDs, and about 1.7 percent from the newer LEDs that can connect to the Internet.

Many other uses are being explored. A department store in Dusseldorf, Germany, is using LEDs to send out light frequencies that communicate with shoppers’ smartphones. Philips has placed street lights in Barcelona that react to how many people are strolling by.

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The Internet of Things

Billions of computers that can sense and communicate from anywhere are coming online. What will it mean for business?

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