Light emitting diodes, chips that emanate light, are ideal in almost every way. They use about one-eight of the power of regular light bulbs. They can emit light in a wide variety of colors and tones. They don't contain mercury or harmful gases. And you only need to replace them every decade or so – too bad that a single bulb costs nearly as much as a new pair of $100 running shoes.

Bridgelux hopes to erode that problem with a new way to package LEDS that substantially reduces the cost and number of components. The company's LED Arrays consist of several LEDs under a single phosphor-coated lens. The Arrays are about the size of a button or nickel, depending on the number of LEDs. If you look closely at the photos on the right, you can make out the rows of chips underneath the yellow lens. (Note: the LEDs emit blue light; the lens filters it to white.)

By contrast, conventional LEDs come in individual glass bulbs that get wired separately to a larger circuit board.

With this sort of condominium-style packaging, Bridgelux can sell an 800-lumen part, which will emit about the same amount of light as a 60-watt bulb, for $8 to $16 in volume quantities, depending on the color tone and quality of the light. A complete bulb built around one of these parts in the not distant future could sell for as low as $26 if everything goes Bridgelux's way.

Even if that price can't be hit right away, bulbs based on the Arrays could reduce the return on investment for LED bulbs from the current four to five years to one to two, he said.

"There is a lot of extra stuff and a lot of extra steps" in traditional LED light fixtures, he said. "We think that can delay time to market."

You might not know it, but you're living through a revolution in how your home or office will be illuminated. Rising electricity prices, environmental regulations and rapid innovation is expected to cause a massive shift in the industry. Today's bulbs -- one of the last vestiges of the vacuum tube era – will give way to LEDs, plasma lights, OLEDs and even new types of energy-efficient fluorescents, say proponents.

The turnover in some vertical segments could be quick. For several years, cities tested traffic lights powered by LEDs. Then, in the earlier part of the decade, the ROI dropped to around nine months.

"When the payback hit nine months, it went crazy," Scott said. "It flipped in a matter of six to eight months. Boom. That was it."

Bridgelux will initially target the commercial market and mostly attempt to displace halogen and incandescent bulbs.  A single Array might only use five to 20 watts, versus the 35 to 150 watts an incandescent or halogen bulb light might use. 

How does the math work? LED lights cost more – a 60 watt equivalent LED right now might cost $82 versus $1 to $3 for a an incandescent or a halogen. After two years, the electricity, maintenance and bulb costs for an LED might come to $96 compared to $80 or $90 for conventional bulbs. A tough choice. But if Bridgelux can drop the price of LED bulbs to $30 or $40, their bulb will only have total cost of $44 or $54 after two years, or half the conventional bulbs. Call the sales guy.

Getting into the consumer market will take longer. Compact florescent lights are actually somewhat cheap already and only use about twice the amount of power as LEDs. Thus, the cost argument doesn't work. But CFLS contain mercury, they don't last as long and the Web is filled with comments about people wondering what to do with their old CFLs. Bridgelux CEO Mark Swoboda told us last year that the price ceiling for consumers is around $25, which will still take some work (see Green Light post).

Policy will also help. The E.U. has passed regulations for phasing out incandescent bulbs starting in 2010. In the U.S. the phase-out starts in 2012. By 2012, the LED lamp and bulb market could climb to $10 billion.

The company plans to manufacture a wide variety of LED arrays. The basic versions will emit 400 lumens of light (about the same as a 40-watt bulb), 800 lumens (close to a 60-watt bulb), 1,200 (100 watts) or 2,000 lumens (the kind of thing you see in illuminating purses and shoes in stores).

These different bulbs will also be available in different tones as well: warm (the tone most people like in their homes in North America), medium (similar to the florescent bulb in your office) and cool (that bluish light often associated with LEDs). Cool light is actually somewhat popular in China, Scott noted. The country doesn't have a long history with incandescent bulbs, which give off a warm light. In North America, cool light is gaining acceptance for outdoor applications light streetlights but still somewhat unpopular for interior lighting.

"Your skin looks sickly and your meat looks overdone" under the cool light emitted from inexpensive LEDs, he said.

Bridgelux will also do custom versions of its arrays. It might cost more, but if a high-end retailer wants 900-lumen bulbs with a cool light tinted with red, it will be able to get it. Several studies show that lighting can impact retail sales.

While many believe LEDs will eventually become a standard, competition between technologies continues. LED makers are also going to have to craft strategies that aren't self-defeating. If your bulb lasts 10 years, you can't count on a replacement market. Philips, the world's largest bulb maker, for instance, says it plans on expanding into making lamps and complete light fixtures so it can capture more revenue at the time of sale. To date, Bridgelux has only concentrated on the LED chip itself, so these new products really represent a shift into the higher-revenue market.