When a smart lightbulb can tell you about adoption rates
You know when an idea has reached its adoption phase when market signals tell you. For more than four years, since October 2012, we have been talking about a product introduced en masse by Philips: intelligent and controllable lighting from a smartphone or other device through a communications bridge, a family of products known as Philips Hue. A quick look at the product website provides an idea in terms of features and price.
Hue is spreading in popularity and that was named in 2012 Product of the Year by Forbes, and has been successively updated by the company in 2015 and 2016. The company does not report individual sales for Hue, which is included in Philips Lighting, making it hard to know exactly how popular it is, but we can take a guess based on the €18 per light bulb that can be remotely controlled. Until relatively recently, these prices were appreciably higher. As a reference, an Amazon Basics LED bulb of similar power, standard and non-adjustable, costs in Spain around €4 euros.
Last March, IKEA launched a similar product line, Trådfri (for those fascinated with the Swedish names of the company’s products, Trådfri means wireless :-) compatible with systems such as Apple HomeKit , Google Home or Amazon Alexa. On its Spanish website, we can see a similar approach as the Philips’ one in terms of accessories and options, as well as price: the most basic light bulb is around €20. And when IKEA puts bulbs of this type on sale, we can expect greater adoption at all levels. At the same time, if Ikea had not launched this product line, it would risk losing its position within the so-called smart home or home automation market segment. And obviously, they are not the only competitors in the market, but certainly the best-known brand.
What does it mean when a consumer-oriented brand with a pricing strategy as carefully planned as IKEA’s puts a smart light bulb on the market at a price so similar to that of its main competitor and category leader that virtually invented the thing? Simply that although the price may evolve over time, adoption is already starting to approach a tipping point, the market is maturing and that from here, the next phase is mass roll out.
The convergence in prices and the — relative — drop in margins are simply an indicator of coming high sales, which means that very soon, many people will turn their lights on and off with their smartphone or devices through an app, changing shades of color or grouping certain parts of the house according to their needs, rather than simply pressing a switch. These indicators are telling us the moment for this idea has arrived.
Looking at the strategies of the different competitors in a category depending on the moment they enter a market or at their pricing policies is a very interesting exercise in evaluating a technology adoption curve. Until now, smart light bulbs were the preserves of geeks. Soon, we will see them everywhere.
(En español, aquí)
