Philips Lighting Transformation "Internet of Things", focusing on two major directions in 2017

On Philips Lighting's 2017 Innovation Day, Philips Lighting CEO Eric Rondolat, Chief Innovation Officer Qiu Yihong, and Greater China President Wang Wei lined up to declare that this 125-year-old veteran is going to the Internet of Things. "lighting company for the IoT" is moving forward.

Hong Anli said that LED energy saving and smart communication, let light transmit information, is the two major directions of Philips lighting in 2017.

Philips Lighting CEO Hong Anli, let light transmit messages, rewrite the definition of "lighting"

From selling lamps to selling "light" means that Philips Lighting has to sell products to sell systems and sell services. Creating an interconnected smart road, public space, home life, and sustainable urban agriculture through LED lights is the next four goals.

The question is, can selling "light" really make money?

The price war is heating up, and the profit pressure is high.

"We are also thinking, we must know what our goals are, not what we should do, but we know clearly why we are doing this," Hong said.

For Philips Lighting, 2016 is an important watershed for transformation. The first is Philips' plan to suspend the sale of its Lumileds and automotive lighting divisions. In May last year, the lighting business was split into an independent company and listed in Amsterdam, the Netherlands. At present, the parent company Philips holds about 55% of the shares.

Spreading the financial report of Philips Lighting last year, the transformation pressure is also on the paper.

In 2016, the comparable sales growth of Philips Lighting's overall revenue shrank 2.4% from the previous year. Net profit fell from €240 million in 2015 to €185 million. Adjusted EBITDA increased from 547 million euros in the previous year to 645 million euros.

Among them, the comparable sales of LED and home sector increased by 16% and 11% respectively compared with the previous year. The two business groups with large revenues, including commercial buildings, hospitals, industrial and outdoor environments, were down 0.5%, while non-LED products were down 15.8%.

As more and more LED manufacturers invest, the price war is heating up, professional and home departments have become the two major points in the transformation of Philips lighting.

In the Yangpu District of Shanghai, between the walls and the construction site under construction, there is an old piano factory abandoned for ten years. Two years ago, the piano factory was converted into the “E Penghui Green Creative Industrial Park”, and the Philips lighting system was also integrated into it as one of the green low-carbon applications.

In the office, as soon as the person leaves the seating area and the system detects that there is no movement within five minutes, the light will automatically turn off. Zhou Jing, who is in charge of the investment business, said that on average, this floor can save about 70 kWh a day.

But power saving is only part of it, and the future lighting system needs to be smarter and more customized.

Not just selling light bulbs, but also changing your home.

The China Academy of Building Research in Beijing is further adopting the intelligent networked lighting technology of PoE (Power over Ethernet). This new building, with nearly zero energy consumption, allows employees to set the light and shade preferences through the mobile app.

“The ubiquitous lighting is at the heart of the Internet of Things. Smart connected lighting systems with rich sensors have been integrated into the messaging network of the entire building,” said Wang Wei, president of Philips Lighting Greater China.

More information is needed to integrate, as well as cross-brand resources.

Hue, the home smart lighting system, is one of the bridges for Philips Lighting to sell “light”. Users can change the settings of home lighting through the mobile app and through the background of the Philips lighting system.

George Yianni, Hue's inventor and head of Philips Lighting's home interconnect lighting division, said, "We sell not just light bulbs, but the way lighting uses to change your home and life."

In September last year, Huawei and Philips Lighting signed a cooperation agreement to become the Friends of Hue of the home smart lighting system, linking the OceanConnect IoT platform. For example, once the surveillance camera detects suspicious intrusion, it will light up the red and blue warning lights along with the Hue bulb in the home.

In November, Philips Lighting and Xiaomi formed a joint venture, focusing on smart home and IoT LED lighting products. Now, Qiu Yihong announced that Philips will cooperate with China Mobile Research Institute to conduct research on Cellular IOT standards. Philips Lighting also set up a smart connected road lighting application show at China Mobile's 5G Joint Innovation Center.

From selling lights to selling "light", Philips Lighting can create a stable new profit model, and it will take time to prove. But what is certain is that the definition of "lighting" is changing and will only become more and more unimaginable.

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