Bulbs are broken. Services will win in lighting.

One of the big promises of what people like to call digital transformation that’s occurring with connected everything is a change in business models. Companies can go from selling things and having a one-time relationship with a client to selling a service and having an ongoing relationship. In the lighting world, this has been happening for years.

Indeed, if you want to see how connectivity can reshape a business, the lighting industry offers a great case study. As soon as digitization hit in the form of LEDs, the industry found itself more concerned with semiconductors – the source of LED light – than it was with old-school chemicals and filaments that lighting up the warehouse racking. But it also found itself with a problem. LEDs last a lot longer than light bulbs, so instead of selling a product that’s replaced every year or two, the industry suddenly starting selling one that lasts some 20 years.

That’s a big shift. Meanwhile, startups saw the transition to energy-saving LEDs as an opportunity to create an entirely new form of network inside buildings by anchoring them with these new LED systems. Digital Lumens, Enlighted, and others were subsequently formed to replace old lighting with LEDs that also measure elements like temperature and motion. From there, these startups were able to lower energy costs, but they were also able to start offering consulting services aimed at helping businesses make better use of their space or even track inventory.

Ultimately, it is undeniable that more people than ever before are looking for new ways to reduce their energy costs. For example, in the home, lowering your utility bills can sometimes be as simple as switching energy providers. Comparing different energy providers such as Startex power, for instance, can make it easier to determine whether you could be entitled to a more affordable electricity package.

That’s paying off now for OSRAM, a German lighting maker that purchased Digital Lumens last year and has now integrated its technology as well as other OSRAM tech into a new lighting platform called Lightelligence.

OSRAM has long made bulbs; with Lightelligence, it is now starting to sell lighting as a service. A warehouse customer could contract with OSRAM to provide 300 lux (a measure of brightness) in its buildings when needed. Thorsten Mueller, head of innovations for OSRAM, explained that this is possible because the fixtures containing the lights have computers that can measure and process 40 different parameters about the light itself and the environment it’s in.

OSRAM also has enabled other technologies that work with its lighting software to understand the room and what’s going on inside of it. For example, in retail environments, the platform brings in data from cameras or Bluetooth beacons that can indicate where people congregate in a store or where there are choke points. It’s worth noting that in the camera example, Mueller says the images aren’t used, only the data. So the platform recognizes that four people might be clustered near a clothing rack, but it won’t know who they are. In Europe, where the government regulates privacy, this is a necessary precaution.

In industrial environments, LiFi can be used to help guide robots or equipment around a plant or warehouse. LiFi is a way of transmitting data using light over short distances. It does require a transmitter and receiver, so it’s only practical for environments where the owner controls both the physical lighting infrastructure and the equipment they want to track.

The ultimate goal is to use different technologies and the sensors embedded in the lighting system to offer a variety of services. Light is an obvious one, as is location tracking. But there are also cool applications, such as those mentioned above, or even using the lights to convey relevant information.

For example, Mueller says that in a warehouse environment a customer could use the system to track forklifts and help them plot the best route to get inventory. But it also can blink the lights if it sees two forklift operators on a collision course. These sorts of services provide more value than selling a light bulb every few years.

However, in the quest to turn everything into a service, there are concerns. One is lock-in. Because the best services will be those that are easiest to use, OSRAM lets people write applications for its platforms. It shares APIs and offers cloud-to-cloud integration so your lighting platform can talk to your building security platform or the elevator platform. IT however, does not let bulbs from other vendors into its fixtures.

Additionally, in revamping its business toward more services, OSRAM’s customer changes from the facilities folks to the C-level executives and/or plant managers, who are thinking holistically about the success of the business.

Finally, in the services world, companies like OSRAM will face a host of new competitors that are also trying to sell elements of their business as a service. Lighting can provide interesting sources of data, such as where people are in a building, but other sensors or platforms could offer the same data. Or perhaps a far-thinking utility might offer a package of comfort that includes lighting, HVAC and warm water. A buyer might decide to go for something like that instead.

GE’s Current unit basically sells energy management, which includes lighting among some other elements such as power for operations. So even as the lighting industry undergoes its digital transformation, there are still a lot of questions left to answer and a really unsettled playing field.

Updated: This story was updated on 3-27-2018 to reflect that OSRAM doesn’t currently have a warehouse customer purchasing light as a service, or a customer using the platform to guide forklift drivers. It also doesn’t allow other companies’ bulbs in its fixtures.