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The Technology That’s Changing the World and Igniting This Industry

In my last column, I discussed the long, slow death of Thomas Edison’s traditional incandescent light bulb – and the equally slow transition to new lighting technologies.

Thanks to legislative measures like the L Prize, there are some incentives that are helping to move us toward ultra-energy efficient methods. For example, this bill spawned Philips’ (PHG) Endura LED light bulb.

But there’s a considerable way to go yet. As I mentioned last time, “After being in use for 130 years, [conventional light bulbs] are deeply engrained in everyday life. So asking consumers to switch to something new won’t be easy.”

But if you look closely, you can see some winners and losers emerging. Let’s take a look – and pinpoint which companies are positioned to profit from the shift…

CFL is DOA

As for a loser… step up, compact fluorescent lighting (CFL).

For a much-heralded consumer product, the CFL leaves a lot to be desired.

Among the complaints: The quality of the light isn’t good. Plus, when you flip the switch, it takes several minutes for the bulb to achieve its fullest brightness.

When the light is on, flickering can be a problem. And the bulb can’t be dimmed, either.

One of the biggest assertions – that CFLs last longer than traditional incandescent bulbs – hasn’t lived up to manufacturers’ claims.

And as for disposal, or breakage… better mark off some time on your calendar.

CFLs contain trace amounts of mercury, so you can’t just discard them in the trash. If you break one, the Environmental Protection Agency (EPA) recommends an eight-step clean up procedure. Eight!

From a manufacturing standpoint, the CFL process is labor-intensive. The signature spiral tubing (which looked cool when it first came out) is often still hand-blown. Because of this, CFLs are made entirely overseas, almost exclusively in China.

So it’s anything but a job-creating technology.

The light’s efficiencies have maxed out, and at just over $1 for one bulb, the price is as low now as it will ever be.

Suffice to say, the CFL is at the end of its technology curve. Even the Federal government is giving up. The Department of Energy’s L Prize competition, which I detailed last time, stipulated a “solid state” technology in its specifications.

What do I mean by solid state technology?

In a word… LEDs.

LED: Leading the Way

LED technology has everything going for it that CFL does not.

When you turn on an LED, you have full light instantly. They don’t flicker. They’re very bright and dimmable. They’re even programmable. And there’s no harmful mercury!

They also boast lower energy consumption and a longer lifespan than incandescents and CFLs – typically between 25,000 to 50,000 hours, compared to 10,000 to 15,000 for CFLs and just 1,000 to 2,000 hours for incandescents.

LED lights are already used in many places. For example, video displays like stadium scoreboards, plus traffic lights and road signals. They’re also heavily used in the automotive and aviation industries, plus many household items like DVD players and other appliances.

However, LED is still in its infancy. The technology has room to grow in terms of both efficiency and price.

Just as computer chips have become smaller and cheaper, LEDs will, too. Prices have already dropped from $50 to $20 and now to $10 just in the last two years.

Simply put, LED is reaching a tipping point.

And because LEDs derive their light source from semiconductor materials, companies in the semiconductor industry are quickly pivoting into the market. This includes Toshiba (TOSBF), LG (LPL), Samsung and Cree (CREE). In fact, Cree recently announced that it had created a 200-lumens-per-watt LED.

The influx of these semiconductor players is disrupting the big three bulb manufacturers – Philips, General Electric (GE) and Osram, which is owned by Siemens (SI).

Where these companies previously enjoyed a combined market share of more than 60%, their vice-like grip on the market has loosened considerably. According to global management consulting firm McKinsey, LEDs will account for 41% of the overall value of the lighting market in 2016 and 63% by 2020, compared to 12% in 2011.

As Alan Salzman, of VantagePoint Capital Partners, states, “When an industry transforms, some of the incumbents adapt, but a lot don’t. That’s what’s happening in lighting.”

His firm is backing a newcomer to the LED bulb industry – a company called Switch.

The Switch bulb solves a problem that no other LED manufacturer has yet been able to overcome. You see, LED bulbs are sensitive to heat and become ineffective when oriented upside-down.

To solve the problem, Switch bathes the LEDs inside the bulb casing in a non-toxic cooling gel. The elegant design has impressed experts. Popular Mechanics called it “muscular and industrial.” The issue for Switch now is to make the price competitive and get it into consumers’ hands.

There are other new lighting technologies on the horizon, too…

Turning Plastic and Waste into Light

From a physics lab in North Carolina to the world’s biggest light bulb manufacturer, new lighting innovations are underway. For example…

~ FIPEL: Wake Forest Physics professor David Carroll recently unveiled his newest invention – a lighting technology called field-induced polymer electroluminescent (FIPEL) technology.

The new light source consists of several layers of very thin plastic. Each sheet is about 100,000 times thinner than the width of a human hair. The plastic is inserted between an aluminum electrode and a transparent conducting electrode. When a current is passed through the device, it stimulates the plastic to light up. The result is a light source comparable to LED. And because it’s made from plastic, it’s moldable and far less breakable.

~ Bio-Light: The design team at Philips is working on an innovation called Bio-Light. The nature-based concept takes organic waste and turns it into light. No electricity required. Glass containers of bioluminescent bacteria suspended in liquid would be connected with tubes that process household waste. As the organisms consume the waste, they softly glow. The bacteria could be genetically engineered to shine in various hues and to produce light when they sense darkness.

I wonder what Thomas Edison would make of such bold innovations that are slowly but surely rendering his once-groundbreaking incandescent light bulb obsolete.

Ahead of the tape,

Elizabeth Carney