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Philips didn’t just sell lamps. They sold light. Facing commoditised markets and fierce global competition, the company transformed its business model from one-off product sales to a service-based approach. With Light as a Service, customers pay for the light they need, not the physical product, while Philips turns circular innovation into a business advantage.
In 2011, Philips faced a critical challenge: their markets had matured, its products had become commodities, and global competitors, particularly from China, were rapidly eroding market share. Selling a product had become a one-off transaction: once a lamp, toothbrush, or medical scanner left Philips’ hands, the company had no control over it, no opportunity to update it, and no way to build ongoing value. Philips needed a radical rethink—one that would turn products into services and customers into long-term partners.
The first proof of that rethink became Light as a Service (LaaS). The idea was deceptively simple: customers don’t want to buy lamps—they want light. By shifting from selling physical products to providing lighting as a service, Philips could retain control, extend product lifespans, and deliver measurable value to both itself and its customers. Customers no longer had to worry about maintenance or replacements—they paid only for the light they needed—and energy savings were realised through longer-lasting LED technology. Philips, in turn, gained loyalty, reduced material waste, and created a resilient business model that was difficult to replicate.
The concept for Lighting as a Service at Philips was conceived in the midst of nature, during a jungle trail in Botswana, where Circle Economy's founder Robert-Jan van Ogtrop and Philips CEO Frans van Houten brainstormed about the possibilities of circularity in business models. Circle Economy played a critical role in shaping Philips’ LaaS by analysing business cases—such as street lighting for Eindhoven City Council and airport lighting at Schiphol—helping Philips understand both the economic and environmental impact of the new model.
The first implementations demonstrated clear benefits: extended LED lifespans, reduced energy consumption, and simplified maintenance. Customers experienced cost savings, while Philips generated recurring revenue streams from long-term service contracts. The success of these pilots paved the way for global adoption in municipalities, airports and industrial clients.
Philips’ innovation didn’t stop with lighting. They became a driving force in shaping circular business practices across the capital equipment industry. LaaS inspired the Capital Equipment Coalition, uniting ASML, Cisco, Dell, KPN, Damen, Lely, Enel and Vanderlande in their commitment to accelerate circular practices. Philips also became one of the founding partners of PACE, a public-private collaboration platform dedicated to scaling circular economy initiatives worldwide.
The success of the lighting-as-a-service model motivated Philips to invest in other circular innovations, such as Hospital Patient Monitoring as a service for its medical division. In addition, the company later launched a buyback scheme for its large medical equipment, such as CT and MRI scanners. The devices bought back from the clinics are refurbished and sold at a discount to hospitals that couldn’t afford them otherwise.
Today, Signify (formerly Philips Lighting) is a global leader in LED and connected lighting, with a significant portion of its €6.1 billion revenue generated through LaaS. Light as a Service is not only central to Signify’s commercial strategy but also a pillar of its ‘Brighter Lives, Better World 2025’ programme, which aims to double circular revenues while continuing to embed circular innovation in the company’s core operations.
Philips’ journey illustrates how circular thinking can transform markets. By focusing on services rather than products, the company built stronger customer relationships, unlocked new revenue streams, and reduced environmental impact—all while creating a model that competitors could not easily replicate. LaaS shows that circular economy innovation is not just about sustainability; it’s about resilient business, customer-centric design, and systemic change.
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