Will Lutron Become a Player in Luminaires?

Lutron positions itself as the leader in smart lighting controls and automated shading solutions–and it is!  When your humble editor joined the industry in the 1980’s,  Lutron was a premier company.  Their brand is even more valuable today and no other lighting name has experienced their longevity in brand goodwill.    Although Lutron is privately held, over the years we have heard rumors of a few of their numbers, and they have been wildly profitable.  Lutron does what they do very well and they print money.

Channels are changing and we find their acquisition of Ketra curious.   With LeGrand’s acquisition of Finelite and Leviton’s acquisitions of Con-Tech and Birchwood, we knew it was only a matter of time before Lutron followed. Lutron is not known for acquiring companies, so why start with Ketra?  The first reason that comes to mind is financial but that is quickly discarded.   If Ketra is profitable, and we are not sure if that is true, the added gross margin would be a rounding point to Lutron’s bottom line.  However, given Lutron’s reputation and strong network, if Ketra is not profitable, it soon will be.   Could the acquisition be technology driven?  Maybe. Perhaps Ketra has some color tuning IP regarding human centric factors that Lutron does not already have.

We think there is another reason.  Mike Pessina, co-CEO and president at Lutron Electronics says,  “… we’re excited to deliver this expanded light control solution to the industry.”  We think he is also excited to deliver luminaires to the industry.   The controls environment is still unsteady and the success of Bluetooth Mesh could eat into their C&I business as Alexa has done to their residential side.  Almost every lamp in my home can now be dimmed, and many can be color tuned, and I don’t have one manual dimmer. It’s all done through Amazon Echo and Google home.

Channels continue to evolve.  EdisonReport recently reported on Current, today powered by GE, and their large Morgan Stanley order, which was sold direct.  After we published the article, a long-time GE/Current employee confirmed that it was sold direct, but was packaged by FSG.  So GE/Current, who has long sold through electrical distributors, sees some value in a different model.

With the ballast business fading, Universal Lighting Technologies, a legacy manufacturer, changed their model and now offers a complete line of LED modules and drivers. In addition, they are adding features to those drivers such as Bluetooth mesh and adding optional wireless components. Further, Universal has eased into the retrofit and replacement market by offering a retrofit continuum of products; from Tubes to full fixtures, to their strong network of electrical distributors. They buy components from their OEM customers and package those components into a variety of retrofit options. So Universal does not compete against their customers, they actually become a customer of their customers, as their model has evolved.

EdisonReport believes that the Ketra acquisition is Lutron’s attempt at dipping their toe in the luminaire water.  Ketra offers downlights, linear pendants, recessed linear, and beautiful track luminaires–all of the things that lighting designers like to specify and rep firms bundle into packages.  Will luminaire manufacturers and their big rep firms now view Lutron as a competitor?  Will they work with architects and engineers and continue to specify their linear pendants and track luminaires with Lutron?  It will be interesting to see if there is any fallout from the Ketra acquisition.

When you compete against your partners, sometimes unintended consequences happen.   Just ask Cree.