In the pre-LED days, when the mantra was ‘to focus on the core business’, lamps and luminaires just didn’t go together.
Egged on by management consultants, the great post- war lighting companies began separating into their component parts. Even the mighty Thorn Lighting was broken up when GE bought the lamps business in 1991.
How things have changed. With the advent of LEDs, lamps and luminaires have become inseparable. Literally. After their introduction, components such as control gear and lamps rapidly become commoditised, and margins are slashed as Far Eastern manufacturers pile in.
Instead, by selling – horrible word alert – ‘solutions’ for projects in the form of integrated light sources, luminaires and controls, margins are much better and competition is thwarted.
Hence the rush to put lamp and luminaire brands back together. Earlier this month, Osram bought Siteco, the former luminaire- manufacturing arm of its parent Siemens.
It’s a smart – some would say overdue – move that helps fill in the gaps in Osram’s offering. Its only other recent purchase of substance has been that of LED and controls specialist Traxon Technologies in 2008.
Siteco has not insubstantial annual sales of £188 million, but crucially it is strong in all the correct markets for growth with white LEDs: office, technical, and exterior and amenity lighting. The fit with Osram in terms of brand values and profile is excellent.
The purchase can only help make Osram more attractive to potential investors should Siemens’ rumoured flotation of the company proceed this spring. Bankers reckon Siemens is ready to divest itself of its lamps subsidiary to focus on its own core markets. Osram is of course, a cash cow for Siemens, but a one-off IPO could raise as much as £5 billion.
Investors will also be starry- eyed about the growth rates with LED technology, and the promise of a second wave when OLED technology is ready to roll.
For customers, there will be increasing polarisation between the big brands and the commodity players. Who you choose will depend on your budget – and your attitude to risk.