2010: LED’s Watershed Year

In a few years, we’ll look back at 2010 and remember it as the year that LEDs turned a corner and went from a pricey niche lighting technology to a mainstream contender.  According to a recent report from Pike Research, that transformation is already underway.  The research firm predicts that by 2020 LEDs will make up nearly half (46 percent) of the $4.4 billion U.S. commercial lamp market. However, one company isn’t waiting around for a decade to make it happen.

Last month, Cree announced that its Q1 2010 revenue, driven primarily by LED products, shot up 78 precent compared to the same quarter a year ago and 17 percent above the previous one (fourth quarter 2009). And at $44.6 million, profits experienced a tenfold increase compared to a year ago.

Of course, a rosy forecast and one company’s stellar financials do not a vibrant LED market make.  Here are a couple more reasons why 2010 is a watershed year for this solid-state lighting technology.

Lighting Management Gets Smarter

While the simple act of replacing traditional lighting systems with LEDs is a good way to cut energy consumption, the biggest opportunity for energy savings comes from lighting management systems that give commercial facilities managers fine-grained control over their lights, and by extension, the energy they consume.  At Lightfair, a tradeshow for lighting specialists, designers and decorators, two companies are currently showing off new smart LED lighting systems.

Taking a cue from co-founder and ex-Cisco staffer Dave Leonard’s IT background, Redwood City, Calif.-startup Redwood Systems — one of Earth2Tech’s 10 LED companies to watch at Lightfair — uses sensors to fine-tune lighting for energy savings. And there’s a networking angle, too. The company’s Redwood Engine, a centralized power system, takes a PoE-like approach to lighting up to 64 LED fixtures over networking cables. Also at Lightfair, California Eastern Laboratories, Teridian and Synapse Wireless are showing off their “plug-and-play” collaboration that forms the basis of a wireless lighting control and energy management and monitoring platform. Draw some parallels to data center and smart grid management technologies, don’t they?

LEDs Attract More Big Guns

Panasonic was among the first consumer electronics giants to bet its future on green technology, going as far as snapping up cleantech powerhouse Sanyo last year for $4.59 billion. Now Samsung and Toshiba are jumping on the bandwagon. This week, Samsung announced that it’s devoting a massive $21 billion to pursue green technologies including (you guessed it) LEDs. Toshiba, also in the midst of spending billions to explore eco-opportunities, debuted its E-Core LED bulbs at this year’s Lightfair. Considering that competition in the consumer electronics space is nothing if not cutthroat, you can expect the rivalry between these firms to spill over into the LED market with aggressive price cuts to follow soon after. Speaking of price cuts…

Home Depot Breaks the $20 Barrier

We have Home Depot to thank for the final (and my personal favorite) reason. After months of being teased by GE and Philips with LED bulbs that carried price tags in the $40-50 range, Home Depot started selling Lighting Science Group’s dimmable, 40-watt equivalent EcoSmart bulb for $19.97. Even better, its 3032°K color temperature falls closer in line with the warm tones of incandescent bulbs than the cool, harsh light that’s typically associated with LEDs and that many find so off-putting. (It’s 50,000 hour rating doesn’t hurt either.) Mind you, $20 is still a lot of money to pay for a light bulb, but judging by initial demand (backordered as of this writing), it looks like the product is off to a good start. And even if prices don’t fall much further, what Home Depot did this week is establish a pricing floor that will be hard for competitors to ignore.

Where does this leave startups and other LED lighting hopefuls?  OK, so duking it out with Samsung or fending off Home Depot’s retail muscle are daunting propositions, however there are plenty of opportunities left.  The advent of smart lighting management systems is an opening for firms like Digital Lumens that specialize in integrating networking, management and energy optimization. And as Katherine Austin noted in her solid-state lighting report last year, LED drivers still represent an opportunity for semiconductor firms whose designs improve efficiency and lower costs, particularly now that production — and competition — is heating up.

Bottom line: this is one train that hasn’t completely left the station. Sure, the LED space is got a little more crowded this year, but by the same token, it never looked brighter.

Question of the week

Are you ready to make the switch to LED? If not, what’s holding you back.
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