Michael Kanellos 10 08 09, 10:23 AM

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Why Have LED Bulbs Dropped in Price by 50%?

CHIBA, Japan -- Last year at Ceatec, the giant Japanese electronics fair, Toshiba showed off LED light bulbs. The 60-watt equivalent cost about $90 and the 100-watt equivalent that could also be dimmed ran around $360. Granted, the bulbs consumed one-tenth of the power of regular bulbs, but the price looked difficult to swallow.

This year at the show, Panasonic showed off a 60-watt equivalent with dimming that will cost 4,000 to 5,000 yen (about $44 to $55) when it comes out soon. It consumes 6.2 watts and lasts 40,000 hours. Sharp has a similar bulb. The light quality is good.

So why the price whack? Electronics regularly drop in price at a rapid rate, but a drop like that is somewhat rare. Volume manufacturing can explain some of it, but there are also other reasons afoot.

One, governments are phasing out incandescents. Australia bans them in 2010 and Europe will phase them out from 2010 to 2012. The U.S. has adopted efficiency regulations that will lead to the demise of incandescents. The Edison bulb celebrates its 130th anniversary on Dec. 31, making it one of the longest-running and last vestiges of vacuum tube technology.

Second, competition. Small startups like Lemnis Lighting and Green Ray have started to market cheap LED bulbs for around $40 to $50. I asked Lemnis CEO Warner Philips (the great-grandson of the guy who founded Philips Lighting) how a tiny manufacturer could undercut industrial giants last week. Along with having some techincal nuances, maybe Lemnis is willing to accept lower margins, he said.

Lemnis and others are also looking at leases and layaway plans to make the price even more palatable. Ideally, the lease price will be less than the energy saved. The lease would also only run three or so years, but consumers would keep the bulb.

So there you have it. Get that light socket ready.