How Philips Lighting mastered smart lights - and turned a $60 light bulb into a winner

Jon Reed Profile picture for user jreed March 18, 2015
When is a light bulb not a light bulb? When it opens up a different way of thinking about lights - not to mention data. My talk in Barcelona with inventor George Yianni of Philips Lighting showed how savvy companies are reshaping business by rethinking the familiar.

Before heading to Barcelona, I didn't expect a conversation about lighting would stand out. But when I learned Philips Lighting had managed to turn a sixty dollar light bulb into a winner, I had to find out more.

George Yianni in Barcelona

The end result: a sit-down with George Yianni, Head of Technology, Connecting Lighting at Philips, and prior winner of an "Unsung Heroes of Tech" award for his role inventing Philips Hue (the aforementioned bulb).

Yianni and I taped a podcast on Philips Lighting's IoT play, starting with his assertion that companies moving into the Internet of Things should begin with lights. The podcast served as a bit of a keynote preview for his talk the following day - here's the takeaways.

Why the Internet of Things starts with lights

Here's why Yianni argues that companies should start with lighting:

If you have a look around you, look up at the ceiling now and count how many light points are on there. There's bound to be at least two, three or four, if not more. Lighting is the product which is the most distributed than any other thing across the world. It's everywhere - where we shop, where we live, where we sleep and where we work, and so it is the perfect network that we can use to roll out value in Internet of Things.

Historically, lighting has always been about one thing, helping people to see what they're doing. What I'm going to be talking about tomorrow is how we should actually change our thinking about light into something very different. Every light point can be personalized, every light point can sense what's around it, and every light point can be managed as a service with additional things on top.

How Philips turned a $60 light bulb into a winner

I'm always looking for the price of light bulbs to go down. Meanwhile, Philips is raising the price to $60 and finding an enthusiastic market. What gives? Well, it's about Yianni's invention, Philips Hue, a consumer lighting product that merges lighting with technology (and has even found some celebrity status due to its use in the TV series 12 Monkeys).

I asked Yianni for the Hue backstory:

Philips Hue is an Internet-connected light bulb that people use in their homes. It really changes the nature of the way you use light in your home. Suddenly, you want light to help you decorate your home. It's an alternative to wallpaper or display cushions. It's an alternative to a security system - it can simulate your presence when you're away from home, and always welcome you with bright, welcoming light when you come back. You can even think of it as an alternative to having a coffee in the morning, because light has a biological impact on your body and can help you wake up, concentrate or even relax in the evening.

Charging $60 for a light bulb means reframing the core meaning of the product. How did Philips pull that off? Yianni:

Light has always been viewed as a cost, a necessity. It's something you have to have around you all the time, but you just want it to be as cheap as possible. Now, we're not talking about only light to help you see, we're talking about value beyond that. The thing you are buying is completely different, and you have a totally different perception of what it's worth. That's how we are able to sell the product which used to be a $2 cost - a product which we only thought about when it broke - and charge $60 for totally different reasons.

To get Hue to the market, it wasn't just consumer perceptions that had to change. There was some skepticism inside of Philips as well:

There's certainly some people that thought we were crazy to try and sell a light bulb for $60 when we were struggling in some markets to sell the $2 variety. But we sold our launch quantities in two days, and it's been going great since then, so I think we won the argument.

Enterprise smart lighting - a connected network

Philips lighting video screenshot

Yianni's next keynote point? GPS-enabled "smart" lights can function as a connected network, with a range of industry use cases:

Since lighting is all around us, every one of these artificial light points can sense what's around it. One of the things that we're doing in retail places, and in shops and supermarkets, is we're having the light there give you a kind of indoor GPS. Every one of our light points can send out a code hidden in the light which a human eye can't see, but your smartphone camera can. We can use that to exactly position where you are in this retail space.

Shops can then use that to either to track your motion and behavior through the shop, or offer you contextual personalized advertisements and promotions for products that could go well with what you've already bought. These things are really proven to have a profound impact on shopper behavior, so people are really excited about what this can do for the retail experience.

I asked Yianni for some numbers - he reports that Philips has found that these types of in-store, contextual promotions are up to ten times as effective as traditional promotional tactics.

Serving municipalities - outdoor lighting as a service

Yianni's third use case involves helping cash-strapped municipalities by turning their  street poles into lighting-as-a-service:

We're managing every light point as a service for cities around the world. The outdoor street poles are connected to the cloud. They each have cellular data connection inside, so that they can be remotely monitored and controlled from a central location. Municipalities can see at any point in time where they have lights that need maintenance, where lights are on, which parts of the city are consuming more than others.

But improved lighting management is just the beginning:

Where it gets really exciting:  these light points are now able to sense what's around them. We have this network of perfectly distributed lights all over the city, which can do things like track the air pollution, see if there's been a traffic jam - all kinds of things that can be rolled out on top of this infrastructure which you have to have in your city anyway. What used to be an expensive dedicated sensor network is now just another service on top of your lighting.

Building a next-gen office with Deloitte

Last talking point: Philips has collaborated with Deloitte to build a next-gen office, from the ground up. The project is an example of how these lighting innovation themes can be pulled into one initiative:

All  three things have come together in a project to design the office space of the future that we've done with Deloitte. Deloitte's built an entirely new headquarters in Amsterdam and they've installed, together with us, the most state-of-the-art lighting system in the world.  Every one of the light points in this building are connected directly via the power of Ethernet cables towards the IT infrastructure of the building.

Furthermore, they have this indoor GPS and sensors built into every one of these nodes. An office worker in this space can just pull out their smartphone and control the lights above where they are, to set personal brightness levels or temperature controls. The facility managers can see exactly how the building is being used, so they can plan their cleaning and expansion of office space more efficiently.

Final thoughts - "We're not selling lighting anymore"

In his Mobile World Congress wrap, The Internet-of-Things isn’t ‘up for grabs’, it is a diverse new phase of the web, my colleague Derek du Preez argued that the true impact of the Internet of Things is not cost savings, but the realization of entirely new business models emerging from the data - creating opportunities for the bold and danger for the laggards.

That's certainly true in this case, where the shift is felt by both Philips and its customers. For Yianni, it's the understanding that Philips is now selling something different:

We don't go to them anymore and just sell the lighting. We sell them a whole bunch of other things which they also want and desire, but now they can get it bundled together. In a lot of cases, the reasons we're winning the projects is not because of the light we're selling. It's because of what we do with the lighting infrastructure. It's totally transformed the way we conduct our business.

That same shift is felt on the customer side. It's an entirely new customer interaction, and a good note to end this series on:

We always used to talk to the facility managers, and the only thing they ask us every year was, "How can we get the cost of this light down even further?" Now we're talking to the CTOs and CIOs, and they're excited about the data we're generating, the new promotions they'll be able to run, and the insights the products we're selling them will give them.

Here's the embedded version of my on-site podcast with Yianni:

(You can download the podcast also, on my Busting the Omnichannel page)

Bonus: I recommend Charlie Bess' Will all businesses shift to product platforms, enabled by IoT?, which includes mention of Philips Hue in a broader context.

This is the final installment in a series I authored on the standout apps I’ve seen at the Mobile World Congress, Barcelona. First piece: Can data-driven video fix the content relevance problem? Second piece: Augmented reality for business – present and future use cases from Metaio. Third: IoT simulation – SAP fixes the Barcelona fountain with predictive maintenance. Fourth: Thinfilm unveils a smart bottle label – and the technology behind it.

Honorable mention: I wasn't able to write up every cool app I demoed in Barcelona. My other nods go to: Teamchat, a nifty player in the enterprise messaging space, and InstaVoice, the best consumer app I saw at the show, and a superior offering for integrated voice and text than anything Google Voice has to offer.

Image credits: Photo of George Yianni by Jon Reed. Philips Lighting graphic is a screen shot from a Philips Lighting video.

Disclosure: diginomica has no financial relationship with Philips Lighting. I was able to attend Mobile World Congress based on SAP funding my air travel and hotel expense, however, I set my own editorial agenda for most of the conference.

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