From WSJ:
Long Road Ahead
Today, LEDs make up only a tiny fraction of the estimated $12 billion lighting market, according to Mr. Steele. He expects the proportion of LEDs used in lighting to rise, however. Out of a predicted $4.7 billion in high-brightness LEDs in 2007, some $500 million will be used in lighting applications, up from $100 million in 2002. Still, that will be only a few percentage points of the lighting market. "It will be a 10-year problem to really get LEDs into the general lighting market," he says.
Until recently LEDs couldn't compete with the type of light produced by halogen or incandescent lamps. But experts say Lumileds -- a 50-50 joint venture between Philips Lighting, a division of Philips Electronics NV, and Agilent Technologies Inc. -- is out front in the area of high-power LEDs. In conjunction with Philips Research Labs in Aachen, Lumileds found a way to increase the brightness of white light by depositing a semiconductor chip that produces blue light with a layer of luminescent material, or phosphors. That converts the blue light to red or yellow, and by then mixing blue and yellow further, it appears white.
"It is a very elegant method," says Hans Nikol, head of the nanomaterials and devices group at Philips Research Labs in Aachen. Lumileds launched its Luxeon line of LEDs based on this research in 2001. Mr. Nikol says researchers have been able to continually increase the color quality of the white light, but that until Lumileds released its "soft white" in October, many still considered the light too cold for general lighting purposes. "There is poor and there is good white light," he notes.
"Lumileds is way ahead of the others," contends Andreas Zimmermann, LED specialist on the research team of the Bartenbach LichtLabor, an Austrian lighting-research and consulting company. Mr. Zimmermann maintains that Lumileds' products are more energy-efficient and brighter than those of competitors such as Regensburg, Germany-based Osram Opto Semiconductors GmbH and Nichia Corp. in Tokushima, Japan.
Nichia launched a warm-white product in July for the U.S. and European markets, according to James Crevelin, sales manager at Nichia in the U.S. And Osram spokesman Markus Rademacher says his company's equivalent product, Golden Dragon White, is currently available as a sample and will be launched into production soon. He notes that Osram concentrates its color LEDs on the automotive market.
Opportunity Knocks
Some smaller lighting vendors already see an opportunity in the fledgling market. Two-year-old LumiDrives Ltd., based in Knaresborough, England, has built its business on planning and installing indoor and outdoor lighting systems based on Lumileds' high-power LEDs in museums, nightclubs, on runways and for street lights. "We just saw an opportunity to create a business around" Lumileds' technology, says Gordon Routledge, managing director and founder of LumiDrives.
Users of LED products also enthuse about the aesthetic effects they can produce, due to their intense colors and small size. "With LEDs you get a broad wash of pure color," says Roger Sexton, new-business development manager, OEM division, at Philips Lighting. "That gives options for designers of city centers and shops that are visually intriguing." Fluorescent lights are also available in colors, but they tend to visually ruin the effect with their bulk. "Your creativity is unfettered" with LEDs, says Mr. Sexton.
The Anna Hotel in central Munich last year unveiled an elegant LED-equipped restaurant and bar that allows its owners to adjust the colors throughout the day, from warm to cool, while also saving on energy costs. "We wanted a light that would change the room," says architect Joachim Dahms.
To be sure, LEDs have major drawbacks to overcome before they make a mass-market breakthrough. They are still too expensive, for one. According to Mark van den Berg, marketing manager for Europe at Lumileds, a 40-watt, incandescent light with 400 lumens of light output costs about $1. To get the same amount of light from LEDs requires about 15 LEDs, which, at $2 apiece, costs between $30 and $40. He says, however, that the lower maintenance requirements of high-power LEDs justify the initial investment.
Mr. Zimmermann of Bartenbach LichtLabor calculates that even factoring in such savings, LEDs are still 20 to 50 times more expensive than comparable light sources. Although halogen lamps have to be replaced more frequently, he estimates it costs 10 times less to replace them than an LED, at a cost of about €5 a lamp. Even so, he is encouraged by rapidly falling prices for LEDs, which have nearly halved over the last year.
Increasing the light output of LEDs will also pull down the cost of using them. "LEDs as a single source give little light. But in the future, one LED could replace a halogen lamp," says Mr. Nikol of Philips Research Labs. In 1993, it took 200 to 300 LEDs to replace one traffic light, but today there are only 12 LEDs in one such light. "That is dramatic progress," he says. "We want to move toward having one LED replace that light."
Another market barrier is that lighting original equipment manufacturers must be specially trained to install and mount the high-tech lights properly. Says Mr. Routledge of LumiDrives: "LEDs are hard to work with because they are so high power. You need special techniques to build applications around them." OEMs must be trained to mount the LED properly so that it doesn't overheat, adds Mr. van den Berg. If installed incorrectly, he notes, "the chip will generate too high a temperature and the degradation process is accelerated."
Moreover, LEDs still have to overcome an image problem. "People are used to thinking of LEDs as nothing more than an indicator on their washing machine," says Mr. van den Berg. "They can't believe there are LEDs that light up a room."
-- Ms. D'Amico writes about technology from Munich. Kristi Essick in Paris contributed to this story.
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