There's Still Room at the Top in the LED Lighting Industry

For decades, the lamp industry has been dominated by three players, Philips, Osram and GE. In an industry where people are using the same technologies they were in the 1900’s, it’s no wonder these three have been dominant for so long.

With governments starting to ban incandescent lamps in favour of more energy efficient technologies, this has left everything up in the air. Incandescent lamps have dominated household sockets for years (by far the largest installed base of lamps is in the market). So the big question has always been: when incandescent lamps go, what will take their place? CFL, halogen and more recently LED lamps have been taking market share but what will be the impact on the competitive environment?

IHS forecast 2014 will be a big year for LED lamps, accounting for 32% of the entire global lamp revenue. Companies are likely to expand their LED lamp portfolios to ensure their products end up on the retailer shelves and then installed in people’s homes. It’s quite obvious to see this trend as some lighting companies who hold share (Havells, TCP, Panasonic, etc.) are broadening their LED lamp portfolio to ensure they don’t get left behind.

In 2012/2013, LED lamps were still too expensive for your average consumer to make the switch, but as more companies compete for a space in your living room, these prices are coming down fast. Some of the incumbent manufacturers have reacted slowly to the price changes and have started to lose share.

With fierce competition in the market, manufacturers have to take smaller margins if they want to be competitive in the residential sector. Companies like Samsung, Toshiba, and LG who have a substantial business outside of lighting (and benefit from manufacturing LEDs) will be able to hang on longer, while pure lighting players have to either accept lower margins or move out of the residential sector altogether.

The main factor will be down to price, but brand recognition and brand reliability will also play an important role. So when will the oligopoly end and we see the likes of Panasonic, Havells, Samsung, Toshiba, TCP and LG being a real threat to the Big Three?