foretelling a massive industry shakeout?

I’ve heard rumors that my former employer, Micron Technologies, is finally killing its floundering LED lighting ambitions, at least at the fixture level.  Micron has a long, sad history of starting “hobby businesses” in an attempt to diversify outside of its core memory-chip business; Micron already killed its foray into PV Solar, which actually had far more traction then the LED group.   Micron is clearly at fault for its own failure to achieve any meaningful traction in the hot LED market over the course of four years.  But I think it is a great example of what you will see over the next couple years in the lighting business:  A whole bunch of the external “new entrants”, especially the large semiconductor companies, are going to loose patience with the lighting business.

Here is what happened in the industry, with Micron just one example:  Clever management types looked at research reports from a couple analysts that exclaimed how big the global lighting business is: $100b+!  And the technology is in transition, apparently favoring tech companies over existing industry incumbents.  But all these managers, with zero experience in the actual lighting industry missed two painful facts:  1. The industry is highly fragmented on a global level, with literally tens of thousands of competitive companies, and 2. The extremely long lead times common to the business, because at its heart, the lighting industry is part of the construction industry.

So these new entrants expected to dip into a big old pot’o’revenue, but instead realized the painfully long times to revenue common to the lighting business.    The managers in these big corporations just don’t have the vision, temperament or endurance to build anything other than Powerpoints.  Now that they don’t see the fast revenue typically seen in the semiconductor business, the first LED industry “shakeout” is at hand:  Only the most passionate and patient companies will remain.

The second round will happen soon after, when the really strong and passionate companies find that there are still far too many major players vying for business.  That is when the real “bloodbath” will begin.

My sympathies go out to all the good people that were recruited to these divisions and poured their heart and soul into these endeavors.  Lacking visionary leadership, nothing will ever succeed, no matter how good the team.