This post was written by Keith Dawson for UBM Tech’s community Web site All LED Lighting, sponsored by Philips Lumileds. It is archived here for informational purposes only because the All LED Lighting site may go dark at any time. This material is Copyright 2013-2015 by UBM Americas.

2013-08-19

The Economics of LED Lighting

Niels Bohr said, "Prediction is very difficult, especially about the future." But we want you to take a stab at it: Where will LED lighting prices be going, and why?

We have aired a lot of opinion in this community about the future of LED pricing, much of it centering on prognosticating about the price of the canonical LED consumer product: the 60-watt-equivalent LED light bulb sold in big-box stores.

Our own Ron Lenk believes the industry is engaged in a self-destructive price war, a race to the bottom, and that it will prove possible ultimately to introduce an LED bulb that retails for $1.50 and has enough margin for all the players in the supply chain.

Beyond the simple replacement A19 light bulb, LED products are being introduced that take full advantage of the unique lighting characteristics that only LEDs can provide. A prime example is the Philips Hue, which is not only dimmable, but can also take on a range of color temperatures along the black-body spectrum, and can in fact be set to emit light in any of 16 million colors, all controlled by a smartphone app. This capability does not come cheap today. Will a mass market pay for such features? Will prices come down? By how much and when?

The pricing of LED lighting products depends on a large number of factors, mapping to points along the supply chain. Can moving to a silicon substrate save significant cost over the sapphire that is most commonly used today? Can new phosphors help lower prices? What about quantum dots? Remote-phosphor designs? Will "driverless" AC LEDs ever be a significant market force? Will solving the mystery of LED "droop" result in lower operating temperatures and thus simpler heat-sink designs? Will advances in optics lower costs?

Will competition from OLEDs in some segments of the lighting market put pressure on the inorganic LED side of the house?

How about intellectual property concerns? Will further patent cross-licensing deals among the major LED makers lower prices because fewer royalties are being paid? Or will such deals serve to maintain elevated prices by keeping new and innovative players out of the market?

How will the ramp-up of production capacity in Asia affect the current price-damping oversupply of LED components in the years to come?

These are a few of the considerations this community has aired. Now we would like your opinions on where pricing in LED lighting is going to go. Predict the retail price of a 60-W A19 bulb in 2020 and tell us why; or weigh in on any of the factors you think will be important in determining the price of LED lighting products in the future.

Share your views on the message board below and if you're among the first 50 people to post a message (before August 26) you get a $5 Starbucks card and the chance to win a Philips Hue connected bulb starter pack. (Please take a moment to read the contest rules.)

Note: The customary Monday Roundup will appear on Tuesday this week.

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