Many of the smart windows technologies are not especially new. What has suddenly given them some glamor is that the rising real price of energy is increasing the ROI of smart windows deployment, while at the same time smart windows fit perfectly with the growing interest in LEED and zero-energy buildings. For smart windows to replace dumb ones, they are going to have to achieve improved price points. And the business models adopted by smart windows suppliers are going to have to recognize where the opportunities are and where they are not.

1. Smart Windows and Mirror Technologies: An Opportunity Analysis
The construction, automotive and aerospace industries combined will spend around $2.0 billion in 2013
for glass and film that prevents too much light being transmitted or reflected. The reasons why someone
would need materials of this kind are easy to understand. Avoidance of glare is critical to this market, but
so is energy efficiency, and temperature control.
We think this aggregate market number is accurate, but acknowledge that it might be somewhat
confusing. It includes both what we might call “dumb glass,” as well as the smart kind. By dumb glass we
simply mean films and coatings that filter out light. Smart windows by contrast adapts to the sunlight
level either by virtue of a smart coating that changes with the level of light (passive smart windows) or
through direct electrical control (active smart windows). In the case of active smart windows, the control
might come directly from a building automation system.
Many of the smart windows technologies are not especially new. What has suddenly given them some
glamor is that the rising real price of energy is increasing the ROI of smart windows deployment, while at
the same time smart windows fit perfectly with the growing interest in LEED and zero-energy buildings.
For smart windows to replace dumb ones, they are going to have to achieve improved price points. And
the business models adopted by smart windows suppliers are going to have to recognize where the
opportunities are and where they are not.
The Smart Windows Opportunity: Not as Big as it Seems?
Most of the revenue included in NanoMarkets’ $2.0 billion estimate given above could not really be called
an opportunity in the usual sense of that word. Around $550 million comes from conventional window
film. We expect that market to grow slowly – 5 to 6 percent each year through this decade. It is already
a low-margin business, dominated by established suppliers. Not a land of opportunity for newcomers
this.
Nor is window film “smart” in the sense that the smart windows sector uses this term, it does not respond
dynamically to changes in light conditions either as the result of the chemical nature of the coating or film
used, or because an on/off switch can be flipped. Glass that is “smart” in this sense currently uses one (or
more) of the following technologies: thermochromic, photochromic, electrochromic, SPD or PDLC.
While all these technologies are included in our global $2.0 billion number and they are genuinely “smart,”
NanoMarkets cautions that not all of them are areas worthy of commercial pursuit.
•
In particular, included in these numbers are self-dimming automotive mirrors, most of which
come from Gentex. Gentex claims an 88 percent share of the self-diming mirror market and this
firm has dominated this part of the smart glass market for many years. For this reason alone, selfdimming auto mirrors do not seem a good place to invest for a new entrant. Nonetheless, we
think these mirrors represent 30 to 35 percent of the smart windows market.
•
Then there is PDLC. This is also a genuine smart glass technology and perhaps one that presents
a good future for existing and future suppliers, but it is limited in applicability mainly to privacy
glass, because it is does not offer enough transmissivity to serve as a substitute for regular
NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-938-0030 | FAX: 804-360-7259

2. windows. There is definitely a market for smart privacy glass, and not just in James Bond movies,
but it is a market separate and different from which most smart glass makers are targeting
Where the Opportunities Are
Kicking out the technologies listed above, one is left with a general “opportunity space” worth around
$350 million consisting of electrochromic glass, and several different kinds of films (electrochromic,
thermochromic, photochromic and SDP). Some of these technologies have excellent growth prospects –
we have estimated a CAGR of around 30 percent for electrochromic film, for example.
However, all of these technologies are chasing after the same markets to a large extent, so it makes
considerable sense to benchmark them against each other, which we do in the exhibit below. While a
discussion with any of the fine purveyors of smart windows will leave one convinced that their particular
flavor of smart windows technology is the way to go, there doesn’t seem to be that much difference
between the smart windows technologies. That is to say, there is nothing that jumps out that we can see
that says one smart windows technology is going to be a winner or a losers.
Price, of course, does make a difference; especially when one considers the potential for residential
market sales over time (which is considerable) and there does seem to be a view in the market that
electrochromic technology may do especially well, because of its ability to lower prices over time.
However, NanoMarkets expect that – in the final analysis -- what really may stand between success and
failure in the smart windows market may be supply chain strength; or what is today sometimes referred
to as a strong business ecosystem.
The Vital Ecosystem
Glass firms are taking a considerable and understandable interest in the smart windows business and
some of the biggest – AGC and Corning, for example – have been doing R&D in this field. However, at
present most of the innovative work in smart windows seems to be coming out of smaller firms.
The obvious strategy in such circumstances is for these small technology providers to form alliances with
the big glass firms. But the nature of these alliances – what works best – has yet to be determined. Some
possible business models are evolving, however, and more will evolve and develop.
There is already some of this going on; PPG and Pleotint are technical partners, for example. And SaintGobain now owns Sage, the strongest possible alliance. This could give these smaller smart windows firms
a presence in supply chains that are long established and well-funded; supply chains that they could never
have created for themselves.
There will be more technical alliances, mergers and acquisitions. That’s for sure. But we also note that a
licensing model can be very effective. The case in point here is Research Frontiers which licenses its SPD
technology to a huge range of firms. The downside, of course, is that its revenues consist entirely of
licensing fees. It’s hard to build a big business that way, but then again, in another industry, ARM did
exactly that.
RFI’s SPD technology is currently manufactured exclusively by Hitachi Chemical which has at least 400,000
square meters of production capacity in place. This would be the equivalent of perhaps $200 million in
NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-938-0030 | FAX: 804-360-7259

3. SPD glass shipped if the plant was working at full capacity and firms other than Hitachi Chemical are
beginning to manufacture SPD glass too.
While only some of the value created by RFI’s technology will be returned to Hitachi, this means that
Hitachi has enough confidence to believe that SPD – currently regarded as something of a niche -- will
emerge someday as one of the most successful smart windows technologies.
Suppliers
Electrochromic Electrochromic Thermochromic Photochromic SDP
Glass
Film
Film
Film
Sage
Electrochromics
View, Inc.
US e-Chromics
Chromogenics
Markets
Rapidly growing market. Seems
well positioned to become the
dominant technology in the long
run and can leverage off
technology developed for mirrors
Comment
Electrochromic has faster response
times than other technologies
Pleotint
Ravenbrick
GlasNovations
Switch
Materials
Many licensees
from Research
Frontiers (RFI)
Market is still
modest sized –
perhaps $30
million. Used in
commercial
buildings and
auto
Technology still
maturing. But a
lot of interest
from large firms
such as Corning
and DuPont.
Supply chains
beginning to
form
Niche.
Primarily auto
Market
is
already large
based on RFI’s
financials
Originally used
for sunglasses.
Said to be in
need of cost
reductions
Can achieve
highly dark
state, but not
as effective at
blocking IR.
High cost
The information for this article was taken from the NanoMarkets reports “Worldwide Smart Windows
Markets 2013-2020” and “Smart Windows Materials Markets 2014-2021”
NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-938-0030 | FAX: 804-360-7259