MAURY WRIGHT discusses the entry by Tridonic into the North American market and the transition to smart lighting and the Internet of Things with CEO GUIDO VAN TARTWIJK.
In early January, Tridonic announced that it would enter the North American market, with that entry coming about three months after Guido van Tartwijk took the helm as CEO. Tridonic is an Austria-based manufacturer of LED drivers, light engines, and other enabling technologies for lighting, and part of The Zumtobel Group of companies. The company has been what van Tartwijk described as a very European-focused manufacturer of high-end electronics for lighting. Arriving at Tridonic, van Tartwijk counseled management that US entry was critically important as a complement to the company's business in Europe, Asia, and Australia. Of course, the move comes at a time when Tridonic is also embarking on a smart-lighting-centric future. At Light+Building last year, Tridonic introduced its net4more Internet of Things (IoT) platform and products will come to market this year. Moreover, the company had previously established an IoT-centric engineering organization in Rancho Santa Margarita, CA (in Orange County south of Los Angeles), and more recently opened a North American headquarters in Highland, NY near New York City.
LEDs Magazine: Welcome to the North American market. Tell us a little about the motivation to come to a new market.
Guido van Tartwijk: When I met with the previous management, I said, "Listen, guys...Look, you need to be in the US because there is a fantastic leverage to be gained by being both active in Europe and in the US and in Asia." So that global game is really going to be essential to be a winner. Tridonic has a strong history in bringing electronics for lighting manufacturers in a professional domain in Europe, especially in the indoor arena. We have strong customer relations.
The group market share and everything is hunky dory, but everybody has been talking about the whole IoT wave that's coming. Everybody sees the press announcements. They see the Nest thermostat. They see all the stuff happening. But let's also be very clear. In Europe thin gs are not moving at the same speed. We also understand why. And the US is the market where this is happening at fantastic speed. So in order for Tridonic to retain a strong position as a leading electronics player for lighting, we need to be at the forefront of this market development and the best way to do this is to join - to be in the market and to build success. It works both ways. We've been approached already by a few American companies that have interest to enter the European market in the IoT domain. And they are asking for our help because they're also seeing that Europe is very different.
I think the best way to describe the difference is that the European market, in the professional domain, has been for years already used to very sophisticated controlled lighting. It's all DALI [digital addressable lighting interface] based and that's almost, I want to say, a commodity, but it's a bread and butter offering of the majority of all lighting installations in Europe. Where in the US, DALI never made it. So in the US, the lighting has been for a very long time still fluorescent based. Dimming is a big need in the US market and the jump from fluorescent to LED is now done. But still, having controlled lighting that actually brings you extra benefits from lighting, that is starting from scratch and then to step from not-smart or dumb lighting to smart lighting is a very easy one to make.
And I think the number of technologies being explored by big companies in the US, and startup companies - everybody has a flavor; there are different protocols, different control systems. There is no winning standard or winning technology yet. We believe that with net4more we have a very significant and meaningful offering to the main US market. If we're successful, which we are very confident about, this is also going to help our European market activities because there we already have a very strong base in DALI. So I think it's our attempt to achieve the best of both worlds. Long story! I hope you can follow it.
LEDs: We assume you were aware of Tridonic as a company and of its technology direction. But in terms of chronology and how you approached the decision to join the company, what was most important and how did factors like the US entry and IoT come into play?
van Tartwijk: Yeah, I think that the lighting industry, especially the LED lighting industry, is not a big group of people so you tend to meet each other at the various light fairs in the US and at Light+Building. You do meet customers, suppliers, and sometimes even competitors. So I have known Tridonic as a brand for quite a while and always with quite some respect, because they have done a fantastic job in the European market. And then you talk about the general trends in the industry and it's also quite available in magazines like the ones you publish. There has been a debate [about] whether you need to be truly global to be successful in LED lighting. And that I think that stems from the old world of conventional compact florescent bulbs where you need to have volume on a global level to be competitive. That's a cost question.
I think what we are now seeing in LED lighting is that you don't need to be global in a volume perspective, because you can be competitive at volumes from a sub-region, if you are really good from a single country. But exploring different technologies that are popping up around the world, every market has its own needs. I think it's a generic truth that the best way to find out is to do it and the proof of the pudding is in the eating and not in the PowerPoint analysis mode. I think that's where everybody agrees. You need to be smart in choosing what options you want to explore in the various markets. Being globally active in this respect means just that it will be really strange to sit in Europe and wait for the US market to make up its mind on the winning technologies in connected lighting, and then say, "Okay, now we know what to do and let's do it in Europe." No one will think that's a smart approach.
LEDs: If I just think about Tridonic as a driver company, why now in terms of the move to North America? You could have moved into the US two years ago. You could have moved before controls had to be a part of your product portfolio. Is it controls that made now the critical junction?
van Tartwijk: I think that is a good question. I cannot give too much comment on what happened in the past. Choosing the right moment to enter a new territory is not an easy one. I do think that it does not make a lot of sense, being Tridonic, to enter the US market to say, "Yes, we are an LED driver company." For a majority of the customers, it would be just another driver supplier and I think that is not a very attractive way. So we have been waiting for the right trigger to enter the market. You could indeed have argued a little bit sooner would have been better. But it also needs to be based on how ready Tridonic is with our offer. So we have worked on the net4more technology now for one and a half years and it was announced to selective customers at the Frankfurt Light+Building last year, and I think that's when all the realization started all this and we need to at least do the same thing and better in the US. I think that LightFair is the right moment to do this, and I think the last LightFair was a bit too early.
LEDs: I have what is almost a logistics question about you entering the market. The press release said you will offer US-specific versions of products such as drivers. But there are clearly global- or universally-compatible power-supply products in the consumer market, so universal drivers would seem plausible. Will you sell the same products globally, or will you sell products that are unique to geographic markets?
van Tartwijk: I think the answer is both. If you think about Power over Ethernet [PoE], for instance, there will be something like a power box which you can compare to a laptop power control, so it's universal. When volumes start to become interesting, there is always a very logical moment where you decide to make it US specific. Mind you that the US driver needs detailed specifications that are, in a number of aspects, quite different from the European specs. It goes down to something as mundane as the wiring.
So there is a clear need for US-specific, UL-approved products and that's what Tridonic is of course going to make available. There will be a stepped approach. So we start with universal and go to indoor and outdoor. The scale of diversity is huge. Today, I had a discussion with product management that was indeed about wiring and cables. There is not that universality yet in lighting products as, let's say, that Nokia chargers have. I think that's just the history of the industry.
LEDs: You said earlier that the net4more development effort was well over a year in the making already. How important was Tridonic having undertaken that effort to your decision to join the company? Were you looking for an opportunity where you had a commitment to a controls strategy?
van Tartwijk: Well, I think for me the menu of opportunities that Tridonic is offering, it's by nature very interesting. And one of them is indeed having an embryonic control IoT plan already in the making. That was very attractive. Is it as perfect as I would like it to be? No. So I am now here to give it some shape and some drive.
I like the fact that Tridonic has some very clear strengths recognized by our existing customer base. I always use the [term] we are world champion in dimming, world champion in color rendering and in tunable white. It's really high-end lighting-specific stuff that has created a lot of customer intimacy and very high [satisfaction] scores with our customers. And using that as a base to get to the next stage of lighting is a fantastic starting point.
It doesn't guarantee anything about the future, as LEDs have shown in the past. You know how lighting works and how we can get very high-reliability drivers and light engines. Getting to what I think is this technical competency level is also very quickly recognized by the new kids or the new companies on the block. So we have been engaged with a few players in the court at the IoT level. Companies that are working already with lighting are trying to do smart lighting in offices and schools in the US and elsewhere. When their architects in the end talk to Tridonic architects, they say, "You really get it."
So our team has a certain competence in that area that we need to put to market. I think the other attractive part of Tridonic is that it's relatively standalone as a business within The Zumtobel Group. So we have great independence in the group. We have our own brand. So for myself personally it's a great way to run a business without having, "Yeah, it's a big company," and interferences from every possible angle. That makes it also very attractive. So it's small but not [too] small, has strong assets in the technical arena, has a strong customer base, and a great technology in the making for the future. So I would be stupid not to take that opportunity. I have no regrets, although I'm still in my first 100 days.
LEDs: When I was first exposed to the net4more technology platform, I was surprised by the ground-up approach. You could easily have sourced a third-party wireless module for integration into your drivers. You could have used a more-established software base such as ZigBee rather than relying on an IP [Internet Protocol] base. We still don't know if IP platforms will overtake ZigBee. Tridonic has really put itself out there a bit in saying, "This is what we think is the way forward." How do you view the decisions given that it's not what the bulk of the lighting industry is doing today?
van Tartwijk: I think it's gutsy, looking back at my predecessors, to basically start communicating about net4more - having a fully IP-based Thread network lighting opportunity as a vision of the future. When I started here a few months ago, I said, "Okay, that's great. Now it's time to show." Now you need to live up to all your stories, so I want to see us actually demonstrating this stuff in actual projects. And if you don't do that, no matter now fantastic your technology is, you will be caught up by technology that you may find inferior but they are there.
I think ZigBee is one but there are many others like Bluetooth. We know all the companies that are working at it and everybody's racing towards getting a first viable product offer to market as a success. So it's gutsy. The beauty of net4more, however, is that I am getting more and more convinced that we are getting to the right speed. We have a team in Orange County that is important but it is also a small part of our full team. Having them there is extremely helpful and it also teaches our team around the globe what it means to be in the startup mode. I think that's all about speed. We are on the right track to have the right things available for the market, and the beauty of it is that when I talk to the guys that do Bluetooth, they all agree that in the end things will gravitate towards a fully IP-based network.
So my challenge is to not help gravitate towards Bluetooth but to let Bluetooth move - how can it be moved into our system? We need to be agnostic on the type of protocols being used and that I think is within grasp. If you don't choose a direction, we don't have infinite funds to explore many different technology options at the same time. This being said, listen, we said, "If you want to differentiate, we go for the real thing and it won't be easy." And it isn't easy, but we are getting there and we are on track to have a fantastic show at LightFair. We are going to create some LightFair meetings with a few potential customers in the US to make it work. It's not the usual thing in business. It's a calculated risk.
LEDs: LightFair will offer you the ability to do demonstrations, but that's still quite a bit different from doing actual projects and networking a building. When will you expect to show the world a pilot installation?
van Tartwijk: It will be shortly before LightFair, [that] is the target. We have a few projects lined up. There are actual buildings. They need to be up and ready, targeted to do that just before LightFair, which is May 8th and 9th. We are on the day-to-day project planning here. You're right; demonstrating is nice but the real installation is what matters, and it needs to be live and customers need to be able to see that the big data is coming full steam, etc.
LEDs: What about the fact that all wireless and even wired networks face security issues these days? That's not a phenomenon just for net4more, but for everyone. We know the software community is working to embed security in network stacks. What is Tridonic doing in the area of security? At Strategies in Light Europe, an Osram executive said one bad thing about standards in this area is that the bad guys know what you are doing. That exec said you almost have to add a proprietary layer to secure a network.
van Tartwijk: I'm a big fan of not trying to do things that other people can do better - same like building a cloud. I mean, there are hundreds of companies that offer cloud services around the world. So I'm not going to build my own cloud, and I think the same thing goes for security. So we will team up with the right security provider giving us proper security. This is not just a Tridonic issue; it's our customers' issue. Everybody's asking for it as is to be expected after the recent months of black hat activity around the world. I'm a little bit "allergic" to put proprietary things on something like a network because the whole concept of net4more is a lot of open architecture. The security needs to be handled by an outsourced partner. We have a few candidates there and it may be different per region.
LEDs: You mentioned PoE earlier and that's been a popular topic for us of late, especially with companies like Cisco pushing lighting-centric initiatives. How does PoE fit in your overall net4more platform as a companion alongside wireless networks?
van Tartwijk: I think PoE will be one of the first executions of net4more. Net4more will also be offered in wireless. PoE to me is a beautiful concept. I think designers in stores, architects love it. But there are not that many new buildings being built around the world, especially in Europe and the US. So most of the buildings are being refurbished. If there's already wires in the building, then the business case that will follow for PoE is not always that fantastic. So it depends on the application and can be super clean with lean tracklights with no shoebox electronics that retract; that's fantastic. Although Ethernet has a certain virility in the market, but in my view it won't conquer the insider market because of the enormous potential of refurbishment in both Europe and US. I think also in China the number of new buildings is not exploding as it was in the past. Our net4more offer, to summarize, will be agnostic of the driving mechanism - can be PoE, can be something else. Our PoE itself is something we will offer that will be, I think, in tracklights. It's for shops, very interesting designer stuff like that with those big nasty driver boxes sitting above their heads.
LEDs: There a lot of different aspects of PoE that are very elegant, including DC power distribution and improved conversion efficiency. We have written favorably about other DC-grid technologies such as the EMerge Alliance platform. Do you think, outside of connectivity, just about the fact that we can be more energy efficient with a single power conversion?
van Tartwijk: There are various options when it comes to low-voltage grid. The one I think is a logical one and quite fitting also in our portfolio is the 48V grid. But it's also true that if the industry doesn't gravitate towards some consensus there in the end, you still need the 48V power supply and that needs to be discerned. We have something on the DC string and it's a low-voltage offer. From my perspective, I don't have a clear view of whether it should be 48V or 36V or anything else. I know that people love 60V [or lower] because that helps a lot in miniaturizing electronics. It's a beautiful concept.
LEDs:We had an article recently from another SSL industry exec who said that people running businesses in the sector need to move rapidly to the IoT and smart lighting technology or basically face extinction. Do you agree with that message?
van Tartwijk: For Tridonic, I think there is no escape from the fact that price erosion is around us. But if you think you can escape price erosion by moving into connectivity, then it's wrong thinking. You need to be competitive at cost levels that allow you to compete even in the space that is under serious price erosion, because it's not stopping at the driver and the modules. It is going up again towards the higher value anyway... Yeah, no matter how you say it, you need to move on. You need to keep innovating. The next innovation wave is in the connected lighting domain. But it doesn't mean that you are excused from working hard on your competitiveness. Only then you will survive. You need to innovate both in value and your features, and all of a sudden you go to market in your crawl space. There is no excuse not to innovate anywhere in the company. That's my mantra. So innovation is not something that I will restrict to the R&D department.
LEDs: Back to Tridonic's position in The Zumtobel Group, you said you get to operate with a high level of autonomy. There has to be something when you are sitting with a luminaire maker, a potential customer, outside of Zumtobel, where that manufacturer must wonder why they should buy a driver or light engine from you when you are also driving innovation up though Zumtobel's lighting products, including the coming net4more technology. How do you address that?
van Tartwijk: Actually, it's different per customer. In the end, it's the way that you work with customers is always based on building a relationship and getting into a trust. If you don't have the trust, it will never work. Tridonic is a company that has an extensive list of [customers] and yes, all of them compete with the luminaire companies in The Zumtobel Group. So all my customers expect me to maintain a very strict firewall between myself and the luminaire companies in The Zumtobel Group. And if they smell that something is wrong, they will call me immediately. This is how it works.
That has worked exceptionally well and, in fact, it goes almost the other way around where sometimes I get some critical remarks from my colleagues from within The Zumtobel Group, whether I'm not giving their competitors too much of a discount on certain products. I'm not kidding, and that happens in a good spirit, but it also shows that the firewall is working and the only way to demonstrate the firewall is working is to show it and is to do it. That was not different from, let's say, a company I used to work for in Philips. We had exactly the same challenge and also there you can make it work.
In fact, with Tridonic we are really a standalone company in The Zumtobel Group. We have our own brand, we have our own email addresses, we have a different site. It's all quite perfect. The firewall is real, it's tangible, and I think that customers that visit us also see that and that's how you build the trust. Trust is one thing you deliver on. Customers have more than one option, so they will kick you out as soon as they smell something is wrong. It's a beautiful self-regulating process.
LEDs: About the office in Highland, NY - is that the headquarters for sales and marketing in North America?
van Tartwijk: Correct, we have a number of sales and marketing people around the country, and you will not be surprised at some strategic places - San Francisco, Atlanta, New York, and Boston. We start with a small team and we are supported by the R&D team in Los Angeles and the R&D teams in Europe. New York is our go-to address.