Are LED lightbulbs priced too high?

Summary:Amid lackluster results, Philips CEO admits LED pricing is still beyond the reach of many consumers. Do the vendors need to make cuts or let market economics take their course?

So, we're one month into 2012, the year that the U.S. government mandated the start of energy-efficiency improvements for the common lightbulb -- a move that infuriated certain lawmakers who believed that the changes were too costly for consumers.

Well apparently consumers can take care of themselves, by choosing not to buy the more expensive bulbs.

The most obvious expression of this is the lackluster results of light emitting diode (LED) chip technology pioneers such as Philips. This week, the company reported a loss for the fourth quarter; that follows some rather lackluster results for another LED technology manufacturer, Cree.

Mind you, Philips is a big company and it doesn't stake its entire busines on LEDs. However, as reported by Mark Halper at ZDNet sister site SmartPlanet, the company publicly admitted that the pricing for LEDs focused on consumer applications is still problematic. "The price point for LEDs in the consumer space is still a little bit out of reach," Philips CEO Frans van Houten told analysts on the Philips earnings conference call on Monday.

Later, a Philips spokesperson told SmartPlanet's Halper that the company believes pricing will go down for LED bulbs over the next couple of years because of "product/cost innovation and innovation."

SO, the company isn't exactly predicting a price cut, but it does acknowledge that the price point for LEDs is still too high -- especially if you consider that prices for the most popular "other" incandescent replacement alternative sits somewhere in between the prices for "regular" bulbs.

As I've reported previously, prices for consumer LED lightbulbs are all over the map.

Some of the Philips 17-watt bulbs cost up to $40 each, depending on where you buy them. The most popular Philip 60-watt equivalent bulb (the AmbientLED 12.5W) runs about $25.

That's pretty expensive, except when you consider that (in theory) you really only have to place these bulbs once every 15 to 25 years. (Although we don't really know that, do we, because they haven't been around that long yet.) How many times do you replace incandescents during the course of a year? If you do the math, LEDs wind up being about the same cost as the traditional alternative if you consider that you don't have to replace them as often and that they can save at least 25 percent of the energy you would use with an incandescent bulb, but most people see the upfront pricetag and balk.

Philips isn't the only game in town, so I did a little poking around to see where prices currently stand with several companies you have heard of and one company that might not be on your radar. Here is a snapshot:

  • Samsung's A19 bulb, which is considered the replacement for the 40-watt incandescent, is priced at about $20 through Lowe's. Some of its models to replace 75-watt halogen bulbs, however, cost upwards of $60 each. Here's some more information on the Samsung series.
  • Lighting Science Group is another company that is making strides in LEDs; it is working on a 60-watt bulb replacement that could come in around $15. The bulb isn't available yet in the United States, but it is being sold in emerging markets.
  • The GE Energy Smart series encompasses a number of different incandescent replacement formats, including compact fluorescent bulbs and LEDs. Its current A19 40-watt LED offering is around $46 if you buy it online.

I have to admit, even though I probably think about energy efficiency more than my average neighbor, even I haven't splurged on an LED replacement yet. That's mainly because I usually buy my lightbulbs at the grocery store and haven't really had an opportunity, yet. Most of the LEDs currently seem to be offered by the hardware and home improvement retailers, such as Lowe's or Home Depot. But anything about $25 would definitely make me balk, too. Even though, intuitively, I know that that math points in LED's favor.

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Topics: Samsung

About

Heather Clancy is an award-winning business journalist specializing in transformative technology and innovation. Her articles have appeared in Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. In a past corporate life, Heather was editor of Computer Reseller News. She started her journalism lif... Full Bio

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