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06 Mar 2006
HB-LED makers should concentrate on building relationships with their customers in order to break down the incumbent culture based around the light bulb, say analysts.
The penetration of high-brightness (HB) LEDs into the general lighting market seems closer to becoming a reality as manufacturers look to extend their applications base beyond cash cows like the mobile phone.
Improvements in LED chip structures and packaging will of course be fundamental to this switch, but technology alone will not be enough to create a solid-state lighting (SSL) market. According to some commentators, the HB-LED industry needs to change some of its ways to make this happen.
One of those commentators is the analyst firm NanoMarkets, which has just released its second market report on the HB-LED business. As well as providing the usual estimate of the size of the sector and its potential for growth, Rob Nolan and Lawrence Gasman from NanoMarkets have identified several problem areas that they believe the industry needs to address to keep growing strongly.
They value the HB-LED market (defined as packaged sources emitting 50-250 lm) at $4.1 bn (€3.4 bn) in 2005, and Gasman predicts steady if unspectacular growth over the next eight years as existing application areas increase in size. During that time, there should be much faster growth in the "ultra-high-brightness" area, as HB-LEDs gain a foothold in more demanding applications such as automobile headlamps and general lighting.
Relationships
But the message from Gasman and others is that just relying on the technological superiority of HB-LEDs over conventional sources will not be enough to effect the latter's replacement.
"Compact fluorescent lamps had [technological] advantages over incandescent lamps, but the industry did a poor job of selling that technology and it didn't take off," said Gasman of one recent attempt to take on the light bulb. While he believes that the HB-LED industry can do a better job, there remain plenty of issues that need to be addressed along the way.
One of these relates to the sometimes thorny relationship between HB-LED suppliers and the lighting equipment makers that use the chips in their products. "There is a level of mistrust," Gasman said, although this is not surprising in what is still a relatively young industry where technology is a key differentiator. "The lack of a consolidated effort by HB-LED manufacturers with OEMs has been a hallmark and a drawback for the HB-LED industry," states the NanoMarkets report. It adds that chip manufacturers are too concerned about their patented chip designs being copied and made into cheaper products.
More important in the years to come, however, will be the relationships between chip manufacturers and their customers. In time these relationships will become just as valuable in terms of competitive advantage as technology patents are today.
With Philips now in complete control of Lumileds Lighting, things may start to change more quickly. This is a step that Gasman believes will be replicated by more big players in the lighting industry, although with General Electric's stake in GELcore and Osram's Opto Semiconductor LED subsidiary, it could be argued that the biggest players have already made this move.
Another analyst firm, Strategies Unlimited, has also been looking at the degree of vertical integration within the HB-LED business. It has just published the results of its latest industry survey, finding that over 100 companies are now involved in the supply of either HB-LED epiwafers, dice or packaged devices. Of those, 12 are described as vertically integrated.
Not everybody believes that a large degree of vertical integration is the best way forward for the industry, however. For example, at the recent LEDs 2005 conference in San Diego, Makarand Chipalkatti - the head of corporate innovation management at Osram's Sylvania lighting business - argued against the idea. But he agrees that to challenge the light bulb culture HB-LED makers must become less obsessed by technology and increase collaboration to address issues of industry infrastructure, which he now sees as a priority. "It's time to move to the next step," he told delegates, urging them to work within industry groups to mount an effective challenge that he regards as the biggest change in lighting for nearly a century.
But while the incumbent lighting industry, with the Edison bulb at its heart, is well defined in terms of its supply chain, the divisions in SSL are less clear. "In the SSL value chain, boundaries are more blurred and the innovation cycle is more rapid," said Chipalkatti.
Chipalkatti is also the chairman of the SSL section of the lighting systems division within the National Electrical Manufacturers Association in the US. Another industry association that he is closely involved with, and which is tied to one of the leading academic institutes involved in LED development, is the Alliance for Solid-State Illumination Systems and Technologies (ASSIST). Established in 2002 by the Lighting Research Center at Rensselaer Polytechnic Institute in Troy, NY, ASSIST was set up to advance and promote LED technology, and Chipalkatti sees it as having a critical role in establishing the required SSL industry infrastructure.
Whether these efforts and the rapid innovation in HB-LEDs mean that the light bulb's days are numbered seems very unlikely, however. For the average consumer in the developed world, lighting is an inexpensive necessity that does not deserve or get much attention. Changing that mindset will mean that the SSL industry has to create a market that is different to the current one. The way to do this, believes Gasman, is by starting up an awareness campaign with consumers now, so that HB-LED lighting becomes an "awaited" and desirable technology, rather than one that takes the consumer by surprise.
The emphasis will need to be put on the features that are unique to the technology, in particular the precise control over wavelength and brightness, as well as the ability to switch between different white-light "tones" at different times of the day.
Standards
Gasman also identified characterization standards as a priority for the industry to address. "The industry stands in dire need of uniform standards to measure the characteristics of HB-LEDs," thunders the NanoMarkets analysis. The old, existing standards, such as the colour-rendering index (CRI), are simply not appropriate, it claims.
"Some experiments have indicated that human perception and liking for shades of white does not conform to the CRI," says the report. "In fact, [they] suggest that our liking for warm or cold white light varies according to the time of day and the ambient conditions."
A definition of the lifetime of HB-LEDs must also be agreed, says Gasman, who adds that packaging and drive electronics should be standardized. This fits in with Chipalkatti's vision of HB-LED light sources with a USB-type functionality.
For the HB-LED to ultimately prevail over the Edison bulb, it appears that the industry will need to address all of these issues while simultaneously solving the remaining technological problems to increase chip brightness. Only then will we find out just how accurate those optimistic long-range market forecasts are.
Details of NanoMarkets' report on HB-LEDs can be found at www.nanomarkets.net.
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