Cree: LEDs aren't just more efficient, they're better

Cree today introduced an LED lighting component that will bring prices down significantly, but the company has come to realize that only cutting prices won't make LED lighting mainstream.

The company said its latest XT-E White LED delivers an industry-best 162 lumens per watt at room temperature. Boosting the price performance of LEDs results in a cost reduction of about 25 percent at the retail level in a year or two, said product marketing manager Paul Scheidt.

That's significant given that LED lighting has a higher upfront cost than more established products, but Scheidt said the industry's focus on purchase price alone is misguided. Instead, lighting companies should focus on the set of features LEDs offer over other technologies. That includes longer lifetime, lower energy consumption, more flexible designs, and better controls for dimming or network-aware LEDs, Scheidt said.

"Everyone is trying in the short term to bleed out as much cost as they can and they are sacrificing all kinds of things because they think they need to get to this magical price point," he said. "We're saying that's not the right path."

The discounting is happening as lighting companies try to get a foothold with these new products. For example, GE's "omnidirectional" LED bulb which debuted last year at $50, is now available for $30 online. GE's bulb is one of a new crop of LEDs designed with enough brightness and light dispersal for all sorts of uses, rather than only spotlights or downlights from recessed cans.

Even with cost cutting and energy savings over time, though, compact florescent lights (CFLs) and incandescent bulbs still have a substantially lower price. Industry analysts expect that LEDs will be a high-volume business, but margins for manufacturers will be low.

Reviews of these new general-purpose LED bulbs are generally very positive on Amazon, Lowes.com, and Home Depot.com. Most consumers talk about features in addition to good efficiency, including the ability to dim LEDs, the light quality, and the lack of mercury in LEDs.

But for all the focus on consumer products, Cree's Scheidt said commercial customers will be the leading adopters of LED lighting because they tend to look at the total cost of ownership rather than just upfront cost.

Digital Lumens, for example, is a lighting startup that's developed a lighting fixture specifically for industrial warehouses. The company is using Cree's LED light sources within its product because it helps their product deliver "compelling performance and end-user payback," Digital Lumens Chief Product Officer Fritz Morgan said in a statement.