Summary
Philips Electronics NV (PHG), one of three major global lighting companies, announced that it intends to acquire Color Kinetics (CLRK), one of few pure plays in the nascent solid-state lighting market. Having previously bought out Lumileds Lighting, a JV that it launched originally with HP, and most recently getting the green light to purchase TIR Systems (TIR.TO), Philips shifts into high gear its ongoing competition with Siemen's Osram (SI) and with General Electric (GE). Included in the deal is Color Kinetics' well-known and expanding IP portfolio of digitially-controlled lighting software and hardware systems.
Analysis
As politicians and consumers alike ponder whether the century-old incandescent general service lamp is ready to retire (or not) to make way for more energy-efficient and longer-lasting lamps, light emitting diodes (LEDs) are today's distant runner-up to the more mature compact fluorescent lamp (CFL). Philips has a powerful brand backed by a deep marketing budget and numerous products; they are gazing strategically beyond the near-term demand for CFLs (which they also manufacture) and envisioning a global conversion to LEDs and organic LEDs.
Armed with a full array of technology options, Philips may take the upper hand in timing the introduction of LEDs and the phase-out of incandescents. Other players are readying their market plays, too. GE's recently renamed its LED product group as Lumination, perhaps as a linguistic play on lumen+nation. This business was formerly known as GELcore and had its origins as a JV birthed by GE Lighting and Emcore. Lumination just rolled out an ultraviolet-based warm-white LED product line; they also have an agreement to cooperate with blue-chip leader Nichia of Japan. Cree (CREE) in North Carolina and Siemens (via its Osram Optosemiconductors and Osram Sylvania) continue to compete with Nichia to set records for lighting performance with their high-brightness white LEDs.
The competition is still wide open for the future of solid-state lighting, but in New York City at least one winner has been chosen de facto. This acquisition will apparently end the high-profile jousting between Philips Lumileds and Color Kinetics to win the contract to install colorful lighting for the exterior view of the Empire State Building. New Yorkers may be disappointed to see the abrupt end of what the New York Times dubbed a "smackdown," but now the the whole world is a stage set for a solid-state lighting wrestling match.
