The LED lighting industry is still under immense profit pressures in 2013, despite a huge surge in demands for LED lighting products. Revenue is no longer the most important issue; profit is the key, said Edward Po, President, Taiwan, Philips. Manufacturers in the LED lighting industry including Philips are facing profit challenges. Philips is trying to increase LED lighting integration services, and secure gross profit and profit performance with lighting integration.
LED lighting demands are growing fast, but the industry is still deeply stuck in the stereotype of difficult profits. Philips is also facing the same LED lighting product profit challenges, Po said frankly. As lighting enters the LED era, manufacturers will be focused on providing lighting system solutions. The battlefield will be transiting from a model of increasing economies of scale by lowering costs with shipment volumes to a competition of organizational capabilitiesabilities.
Po noted the market for lighting system solutions is very big and includes commercial lighting, home lighting, outdoor lighting, public lighting and others that require system integration skills. For aesthetic presentation, LED light source requires illumination designs, in which Philips LED lighting main strategy is differentiation. LED light source, control, and detection systems all play crucial roles in Philips' lighting system solution, and tests integration capacity. At the same time, the lighting system solution is crucial for profit breakthroughs.
Philips lighting system's profit performance and revenue areis also much better than those of single light source products, such as LED bulbs and tubes, said Po. The revenue ratio for lighting system solutions compared to single light source products is about 3:1, and accounts for 35% of Philips total revenue. Out of which, LED products revenue contributed 25%. In addition, with increases in LED lighting demands, Philips estimates the proportion of LED revenue will surpass 50% during 2015-2016.
