We're finally moving to the main event in the lighting fight.  

"In the next 12 to 25 months, you will see $25 to $50 LED products that will blow away anything in the house," booms Keith Ward, the lighting industry veteran who took over Luminus Devices in June. "In the commercial market, they will pay for themselves a couple of times over in labor."

Light emitting diodes (LEDs) have been touted for years as ideal replacements for incandescent bulbs – a hoary piece of technology that turns 130 years old on December 31 – and even compact fluorescents. Unfortunately, quality and price have held them back. Consumers can buy screw-in LED bulbs now, but the good ones cost around $90 and the cheaper ones give off about as much light at E.T.'s finger.

Although still more costly than standard bulbs, the coming wave of LED bulbs will be cheaper in the long run because they use far less energy and last far longer. The commercial market will likely adopt them first, he added. LED bulbs might use 7 to 10 watts and last for 50,000 hours.

Policy will also prod the market. Several jurisdictions have already placed restrictions aimed at phasing out the inefficient, old and ubiquitous incandescent.  

Luminus follows a similar strategy as Bridgelux, which also predicts $25 bulbs in a few years, but gets there by different means. Bridgelux has come up with a way to package several of its LEDs under a single lens and into a single package, thereby cutting components and costs. In traditional LED arrays, each LED has its own lens and package. (Check out this video on Bridgelux's LEDs.)

By contrast, Luminus has designed a supersize LED called PhlatLight. While standard LEDs might measure 1 millimeter a side and take up a little more than a square millimeter in area, Luminus makes devices like its PT120 that can sport 12 square millimeters of light emitting surface (that's 4.6 x 2.6 millimeters). A larger LED means that fewer LEDs are needed to produce a lamp or a streetlight, which in turns leads to higher efficiencies. It's component reduction, but a different component is being reduced.

Some kind of early success in the commercial lighting market is also crucial for Luminus at this juncture. The company has raised a $139 million in VC funds, or tens of millions more than other lighting startups. Philips and General Electric, the two large facts of life in lighting, are pushing hard on LEDs and acquiring smaller companies.

Additionally, Luminus can't participate in one of the strongest markets for LEDs: LCD screens. TV and computer makers build their arrays out of smaller LEDs, not honkers like PhlatLight. "It is not conducive to TVs and notebooks," he said. So far, most of its design wins have been for projectors.

Ward came to the company in May as part of reorganization. He's there because he has a deep rolodex after working in lighting for the last few decades.

Besides general lighting, Luminus has begun to study new markets. As part of the reorg, it created a division to see if LEDs could replace UV lights for curing paints and chemicals in industrial shops.

"It is a done deal. It is going to happen because you can dial in a wavelength. You can optimize drying," he said. LEDs also can't burst, like UV lights.

The chemical lighting market, however, likely only accounts for tens of millions in sales a year. Approximately $5 billion worth of light bulbs get sold in the U.S. a year.

Another potential market: aviation. The landing lights on planes are quartz halogen devices that can cost hundreds of dollars and break.

"If I can take a filament product out and put in a chip, that changes the whole world because nothing can break."