The incandecsent bulb's days are numbered.

We are going to witness the entire multi-billion dollar lighting industry flip to a new technology -- spurred on by technology innovations, improved pricing and in no small part, legislation.

LEDs and CFLs are going to succeed the Edison bulb with a resulting set of new market victors -- and a set of market losers. Some new entrepreneurial firms will emerge and a few incumbent firms might perish in the industry transformation. 

We've covered the new firms in the LED lighting field extensively at Greentech Media. Here's a recent survey of the players.

Switch Lighting

One of the LED bulb aspirants is Switch Lighting -- we visited them for an update last week. The early-stage startup (formerly Superbulbs) just started shipping its LED bulbs this quarter, as promised in an earlier interview. Switch Lighting's product is meant to be an exact replacement for the century-old Edison bulb.

That means the exact same radial flux, the same warm light quality, the same "instant on" as incandescents, the same performance with existing dimmers, and three-way switchability. The "dirty secret" of LED lamps, according to Switch CEO Tracy Bilbrough, is their vulnerability to drivers, which heat up because of bulb orientation and placement. Switch claims to have solved that problem.  "We are the only people with a complete replacement," according to Bilbrough, who added, "We think we can win against these incumbent giants because of our unique approach."

The firm is LED "vendor-agnostic" and has received funding from VantagePoint Venture Capital. In fact, the firm seems VPVC-centric with a board comprised of two VPVC partners as well as Bill Watkins, the CEO of LED light engine vendor and VPVC portfolio company Bridgelux.

Currently, the bulb is manufactured by U.S.-based contract manufacturers and uses a unique liquid cooling method: the bulb dome is filled with a nontoxic liquid that draws heat away from the LEDs housed inside. The cooling technique allows Switch to use fewer LEDs but to drive them at higher power. Fewer LEDs also means less cost, since LEDs account for around 65 percent to 80 percent of the cost of a bulb.

Switch has also adopted a "cradle-to-cradle" approach whereby most of the bulb's components are designed to be "reused or recycled in a zero-impact" fashion.

The company will initially come out with a series of bulbs: a 40-watt equivalent (actual power consumption 9 to 10 watts), a 60-watt equivalent that will put out 800 lumens (12 watts actual), and the 75-watt equivalent (17.5 watt actual). According to Brett Sharenow, Chief Strategy Officer, the 75-watt equivalent  “will have a less than one year payback in commercial applications. It will save you about $150 in energy costs over its lifetime.”

Consumer Markets, Commercial Markets, Sales Channels

What goes through your mind when you pick up light bulbs from the store? Return on investment? Quality of light? Reliability issues?

If you're like most people, probably none of those things. Instead, you reach out for a certain wattage, barely checking price or brand and proceed to the checkout counter.

LED Edison bulb replacements run in the $25 to $60 range. That seemingly high price is one of the challenges that LED bulbs face as they move toward the consumer market: light bulbs show tremendous price elasticity. Bilbrough said, "We think that with a retail price in the mid-teens, you'll have a massive consumer market worldwide."

There are four major retailers for light bulbs, according to the Switch CEO: Walmart, Target, Home Depot, and Loews. These vendors sell millions of conventional bulbs per month.

In the meantime, commercial markets will open up first -- and with a much different sell.

According to Switch's Chief Strategy Officer Brett Sharenow, there is a sub-six-month payback for commercial applications. Think about conference rooms with recessed lighting, or, more interestingly, hospitality markets like hotels and high-end retail where lights can be on for 12 to 16 hours per day. In fact, Switch's first sales have been to hotels. And with higher kilowatt-hour electricity prices, such as in the EU or Japan, payback could be in the three-month range. Payback compresses as electricity prices rise.

Interestingly, some of Switch's sales to hotels have been based on the novel look of their bulb and how that changes the customer's experience.

Fred Maxik, the founder and CTO of the 900-employee Lighting Science Group, doesn't feel that cost is holding the industry back. He told me recently that in commercial and retail applications, LEDs can today be justified on an energy-efficiency basis. What's needed, according to Maxik, is consumer education. 

Switch agrees, and views its bulb as a way of altering the consumer experience, with an appreciation of a better industrial design and a "fun factor." Switch would like to think that the bulb "looks as good off as it does on."

Despite the crowd of innovative startups in the LED chip, lamp, and fixture market, incumbent lighting vendors such as Philips, GE, Osram, and Sylvania are not going to let this mammoth market slide from their hands without a considerable fight.


Legislation Sounding the Death Knell For Incandescents

China announced that it will phase out incandescent light bulbs in a few years, following the lead of the U.S. Certain wings of the U.S. political spectrum see this as a threat to our freedom of choice.

Both the U.S. and China are phasing out high-wattage incandescents to start and eventually will be applying the ban to lower wattages.

China produced 3.85 billion incandescent light bulbs in 2010 and 1.07 billion were sold domestically, according to the State-run Xinhua News Agency. Lighting is estimated to account for about 12 percent of China's total electricity use and the potential for energy savings and reduction of greenhouse gas emissions is enormous, according to the agency.

Other global regions including the European Union, India, and Australia are also legislating a phase-out of the Edison bulb for replacement by fluorescent and LED technology.

New Innovative Sales Channels?

So, is there a better way to sell a light bulb that in the words of Switch's CEO "will outlive your dog, your couch, your car" and potentially "your marriage"?

Lemnis Lighting has suggested that online sales are the way to sell this now durable, rather than consumable product. Alan Salzman of VantagePoint has suggested that once the bulbs become cheap enough, utilities should provide them to consumers for free to meet their energy-efficiency goals. Since they last so long, what about a leasing model where the consumer rents the bulb for $5 per year? What about an Apple Store for LED light bulbs?

Despite these novel ideas, Switch's CEO says, "If we want to be selling massive numbers of light bulbs in 18 months, we will need the support of those four big names in the U.S."

Other vendors in the incandescent bulb replacement race include Lemnis Lighting, Philips, Lighting Science Group, LEDnovation, and Cree. 

Challenges ahead for LED bulb manufacturers include maintaining a sustainable margin in a commodity market despite a complex design.