CLEVELAND, April 18, 2017 /PRNewswire/ -- Recent headlines in the Wall Street Journal and other outlets have suggested that General Electric is seeking a buyer for its Lighting unit. This rumored plan reflects the company's ongoing movement away from consumer-facing goods and commodity products. The Lighting unit, one of GE's aging, but iconic businesses, has been producing incandescent bulbs and other light sources since the days of Thomas Edison.
GE is said to be retaining its Current, powered by GE unit, which supplies LEDs and smart lighting solutions. This unit concentrates on the less competitive and higher margin side of the business in commercial markets. Furthermore, this unit uses licensing and other partnerships to engage more deeply in integrated digital projects. For instance, in February Current announced an exclusive agreement with AT&T to connect cities in the US and Mexico to the Internet of Things (IoT) as part of their Smart Cities solutions.
A similar shift has been ongoing as other historically dominant lighting companies have also divested or spun off once-core lighting brands. For instance, on March 3, 2017, OSRAM completed the sale of its Ledvance light bulb and LED business to MLS, a Chinese lighting firm, and two investors for around €500 million. OSRAM seeks to concentrate on its Specialty Lighting, Lighting Solutions & Systems, and Opto Semiconductors operations. Similarly, on May 26, 2016, Royal Philips spun off its Philips Lighting business in an IPO as part of the company's efforts to concentrate on their healthcare operations.
Jennifer Christ, Freedonia's Consumer & Commercial Group Manager, called GE's purported divestiture plans inevitable. "Although, historically, it's interesting that a company that originated these products will no longer sell them, that divestiture is just a matter of time." With lighting experiencing heavy downward pricing pressure from incandescent and fluorescent bulbs to newer LED light sources, lighting manufacturing is a low margin business. Consumer lighting, in particular, is a tough business to be in, with increasing efficiency regulations in play throughout much of the world. Former lighting giants are increasingly ceding those segments to lower cost manufacturers in China and elsewhere, and seeking higher margin operations relating to high value lighting technology design and smart interconnection services.
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SOURCE The Freedonia Group