The Restructuring of Signify and its Implications for the Smart Lighting Industry

The smart lighting industry is experiencing significant changes as Signify, the company that owns smart lighting brands Philips Hue and WiZ, undergoes a restructuring process. This move comes in response to ongoing market volatility and uncertainty. In an effort to prioritize consumer and business products, Signify aims to streamline its operations and reduce costs. This article explores the implications of Signify’s restructuring and its potential impact on the smart lighting industry.

A Customer-Centric Approach

One of the key aspects of Signify’s restructuring is the adoption of a new customer-centric organization. By organizing the company around four vertically integrated businesses, Signify aims to strengthen its focus on customers: Professional, OEM, and Consumer. This shift in strategy indicates a clear shift away from manufacturing products for other manufacturers and specialty lighting applications.

Signify expects the restructuring to result in significant cost reductions. The company anticipates saving over €200 million annually, demonstrating its commitment to improving efficiency and financial performance. While job losses are expected as part of this process, Signify has not disclosed specific details regarding the number of people affected. However, the company aims to bring its non-manufacturing costs within the range of 25-29% of sales, further prioritizing profitability and sustainability.

Interestingly, Signify’s restructuring also involves undoing some changes implemented as recently as 2020. In response to declining sales, which can be partly attributed to the longevity of LED lights, Signify had previously shifted from three business groups to four. However, the recent decision indicates a reassessment of the effectiveness of these changes and a renewed focus on core customer products.

Diversification of Revenue Streams

As part of its efforts to expand revenue streams, Signify’s Philips Hue and WiZ brands have expanded into the smart security market. This expansion includes the introduction of security cameras and cloud service subscriptions. By venturing beyond traditional smart lighting, Signify aims to tap into the growing demand for integrated security solutions in the smart home industry.

Enhancing Security and Privacy

Another significant development is the requirement for customers to create an account to use Philips Hue products, which was previously not mandatory for all features. Signify states that this change is primarily driven by security reasons and assures customers that their data will not be shared without additional consent. This shift in policy demonstrates Signify’s commitment to enhancing the security and privacy of its smart lighting ecosystem.

Adoption of the Matter Smart Home Standard

Both Philips Hue and WiZ have embraced the new Matter smart home standard, which aims to enhance interoperability among smart home devices. While the adoption of this standard demonstrates Signify’s commitment to staying at the forefront of industry trends, the rollout process has been slower than anticipated. This delay in implementation has raised concerns among consumers and industry experts regarding Signify’s ability to meet market expectations and remain competitive.

The restructuring of Signify marks a significant shift in the company’s strategic direction. By adopting a customer-centric approach, focusing on core customer products, and diversifying revenue streams, Signify aims to strengthen its position in the smart lighting industry. While cost reductions and efficiency improvements are expected, the company must navigate challenges such as job losses and the slow rollout of new technologies. The ultimate success of Signify’s restructuring efforts will depend on its ability to adapt to market dynamics and continue innovating in the fast-paced world of smart home technology.

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