LED makers get smart to rise above price war

2014-04-03 17:55

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Frankfurt - Lighting companies like Philips and Osram are scrambling to develop more advanced technology as a price war for LED bulbs threatens to eat into profits and bring on a period of low growth as the long-life bulbs become more common.

The market for light-emitting diodes (LEDs) is growing rapidly as companies, hotels and shops switch from incandescent light bulbs, which are being banned in countries around the world, to these more efficient and durable lights.

But the initial cost of buying LED bulbs for home use, while falling rapidly, is still higher than alternatives such as compact fluorescent lighting (CFL) or halogen, leaving consumers hesitant to adopt the new technology.

That is driving manufacturers to cut prices, and also to seek new product features to replace lost business when a blown bulb becomes a much rarer event.

"We are working on two different fronts," Philips Lighting CEO Eric Rondolat told Reuters at the Light + Building trade fair, which is being held in Frankfurt this week.

Analysts see the overall lighting market starting to shrink from around 2017, when LED will account for more than half of the lighting market.

Three manufacturers - Osram, Samsung and LG - announced plans at Light + Building to launch or expand smart lighting systems for light-emitting diodes (LEDs), pioneered by Philips's Hue line.

Manufacturers hope they can lure more customers with systems that allow them to customise light intensity, colour and composition.

Smart lighting allows users to remotely control lamps from a smartphone or tablet computer. They can, for instance, add orange hues to their lights when they want to relax in the evening, have colourful lighting schemes for kids or have their lights blink whenever they receive an e-mail on their smartphone.

When used in office buildings, such smart, connected systems offer ways to save energy by having the lights on only when and where they are needed and to increase productivity by adjusting lighting schemes to match human biorhythms.

Price drop

Manufacturers like Philips, US-based Cree and Germany's Osram have been cutting retail prices of LED light bulbs as they compete for the residential market.

Philips said its retail price for 60 watt replacements in Germany had dropped to just under €12 by 2013 from close to €40 in 2011, and Cree has been selling a comparable bulb for about $13 in the United States.

"Our objective is to drive LED lighting to the same price level as traditional lighting," Greg Merritt, Cree Vice President Marketing Lighting, told Reuters at the trade fair.

Globally, the retail price of LED lamps fell 9.4% in the 12 months through March, according to data from IHS Technology, putting the average cost of an LED lamp that can replace a 60 watt incandescent bulb at around $25.

General Electric, one of the biggest traditional players in the lighting market, has estimated that LED will account for about 70% of a $100 billion lighting market by 2020, compared with 18% in 2012.

Some estimate the residential sector alone will account for almost a third of LED lighting.

But in 2012, LED accounted for less than 1% of light bulbs in the United States, compared with 43% for CFLs, according to a May 2013 report by the US Department of Energy.

In Germany, only 3% of lamps sold in 2012 were LED, up from 1% in 2009, according to energy think-tank Dena.

"In the residential area, costs are still seen as relatively high," Osram Chief Technology Officer Peter Laier told Reuters ahead of the trade fair.

"But you're also getting a product that lasts at least 10 times longer," he added.

Manufacturers realise that prices have to fall further to win over more customers, so they are also trying to lower production costs to safeguard margins.

Osram, for instance, is introducing an LED lamp based on a modular product platform so it can combine parts in different configurations and introduce new components when technology advances.

Manufacturers are also trying to develop technology that uses silicon instead of sapphire in the manufacturing process, although so far silicon-made LEDs do not perform as well.

"We currently still see an efficiency disadvantage," Aldo Kamper, CEO of Osram's chip-making business Osram Opto Semiconductors, told Reuters.

"That doesn't mean that we have given up on the matter. Production with silicon substrate is still being developed."

Read more on:    samsung  |  philips  |  lg  |  europe  |  technology
NEXT ON NEWS24X
SHARE:

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Inside News24

 
/News
 

New GIF keyboard on iOS for added fun!

Soon sending an LOL! or facepalm will be so much more fun!

 
 

For chic geeks...

Puppy goes crazy over iPad game
Printable solar panels will bring exciting new opportunities!
Now there’s a special lane for texting while walking
LOL! 7 brutally honest texts from parents

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Pre-order your iPhone 6 at kalahari.com

Hurry and pre-order your own iPhone 6 now at SA’s favourite online store!

Bargain box – 60% off

Reduced prices, very limited stock. While stocks last. Hurry and shop now!

Mind blow low prices on electronics

Get either the Prestigio multiphone or Proline tablet 7” tablet for only R699. Offers valid while stocks last. Shop now!

30% off Barbie toys

Save 30% on all Barbie toys and accessories. Offer valid while stocks last. Shop now!

Baby extravanganza month at kalahari.com

Celebrate baby month with a wide range of awesome baby products. Offers valid while stocks last. Shop now.

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Horoscopes
Aquarius
Aquarius

There is a tendency to fight against the current today but this will just use up a lot of energy and not get you very far. You...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.