Consumers turn toward LED lightbulbs

January 4, 2008
From ScrippsNews.com

Every technology trend requires early adopters, the trendsetters who embrace new gadgets before they are ready for prime time.

In the race to find a better light bulb, there's Alan Falk.

He recently began installing lighting built from tiny chips, light-emitting diodes or LEDs. They use less power than traditional bulbs, don't have the harmful mercury found in fluorescent lights and can last for 20 years.

They are still too expensive to use in every light fixture in his house, but Falk has put two reading lamps in the bedroom, flood lamps over the deck and directional lamps on his Prius and cargo trailer, all LEDs.

Recent advances in LEDs' brightness, ambience and durability got Falk interested in buying and promoting the technology.

"I was a proselytizer for hybrid cars, and now I'm doing it for LEDs," said Falk, a retired engineer in Raleigh.

LED lights have been used in cell phones and car dashboards and for industrial settings for years. As costs decline and the technology improves, LEDs are catching on in a broader market.

The city of Raleigh, N.C. began installing them in parking garages this year. N.C. State University is testing them for campus housing. And retailers are selling flashlights and strings of Christmas LEDs.

The obvious next step is home and office lighting.

Part of that push will be driven by General Electric, Philips and other traditional light bulb makers, which are placing huge bets that LEDs' appeal will widen. Philips announced last month that it will buy LED lighting-fixture company Genlyte for $2.7 billion.

Based on technology advances, industry analysts think prices will fall enough to attract a much wider range of consumers next year. That should coincide with the appearance of general-purpose LED lights on store shelves. Right now, distributors are selling the products mostly to electricians and contractors.

Falk bought his on eBay.

But until prices fall, few consumers will pay a premium to switch their homes and offices to LEDs. Even Falk, a trendsetter since he bought Mazda's first rotary-engine model in 1973, stopped short of a full-home conversion. He said LEDs have to drop in price before savings from their low-power consumption justify the expense of replacing dozens of bulbs.

"It's still a big hurdle," said Harsh Kumar, an analyst with Morgan Keegan in Memphis who tracks the LED lighting market.

He estimated that LEDs cost four to six times more than alternatives, including compact fluorescent bulbs, whose sales have climbed amid positive publicity about their environmental benefits.

On the bright side, there are significant savings "when you do the math," Kumar said. And as LED manufacturing costs and prices continue to fall, "that math becomes easier and easier for consumers to swallow."

Replacing an entire house's light bulbs would cost thousands of dollars, depending on the number and type of LED fixtures. The latest products are manufactured as bulbs and can screw directly into common lighting sockets.

LED makers see an uptick in interest among environmentally-conscious consumers, and that's rippling out to the home builders and electricians who serve them.

LED Lighting Fixtures, which manufactures and assembles ready-to-plug-in lights, last month reported more than $1 million in sales 90 days after releasing its first product. The company sells through more than 300 distributors in the U.S. and Canada and recently raised $16.5 million in private equity funding to expand its line of energy-efficient lights and to accelerate research.

"Consumers are seeing they can win because they're recognized as leaders in energy conservation and the whole green movement," said Mike Fallon, vice president of sales and marketing at LED Lighting Fixtures. The perception that they're doing something good for the environment helps offset initial price woes, he said.