LED lamps poised for steep growth

Maury Wright, Editor, LEDs Magazine and Illumination in Focus
mauryw@pennwell.com

LED lamps will see sharp growth but socket saturation lurks

At the Strategies in Light (SIL) 2014 conference held in Santa Clara, CA over February 25–27,the Strategies Unlimited analyst team delivered research updates on both LED components and segments of the lighting market. Director of research Philip Smallwood focused on the LED lighting market in general and the replacement lamps market in particular. LED lamps are in the news constantly these days, and articles on that topic score highly with you the readers. Still, the lamps market is in the earliest of stages with sharp growth coming but socket saturation lurking.

LED lamp sales in 2013 totaled $4.8B (billion). That figure includes A-lamps, reflector lamps such as PAR and BR bulbs, MR-16 lamps, and decorative products. It also includes LED-based replacements for linear fluorescent tubes. Smallwood projects the total to grow to $12.2B by 2018, a 21% compound annual growth rate (CAGR).

Ironically, it’s the LED-based tubes that accounted for the second largest revenue total in 2013 despite the fact that the product category in general gets poor marks for replicating the light distribution of fluorescent tubes. But the tube sector is largely a business sector, and businesses have moved to LED-based lighting more quickly than consumers. LED tube revenue was $1.2B in 2013 but Smallwood projects only 9% growth through 2018. I believe LED-based troffers sold as fixture replacements or integral upgrade kits will prove more popular, although there are plenty of manufacturers pursuing the tube strategy. Indeed, at SIL, startup Luxul Technology launched with plans to manufacture tubes in the US that can work with existing electronic ballasts.

In the more conventional lamp space, it was surprising to learn that MR16 lamps led the A-lamp segment in 2013 with the sectors generating $1.7B and $1B, respectively. The MR16 revenue was up sharply from well under $500 million the prior year. Smallwood said that in part the growth was due to a very large sales volume in Russia, although he also said those lamps were very low-cost products that also deliver low-quality light and relatively short lifetimes. The growth forecast is 13% through 2018, although the market will peak prior to that year as socket saturation hits.

The A-lamp sector is set for the largest growth curve at 39% CAGR with revenue projected at $5.2B in 2019. The market won’t surge this year but will hit a steep slope beginning in 2015 and will still grow by almost $1B from 2017 to 2018.

Much of the A-lamp growth will come from the residential market. Smallwood pegs A-lamp adoption as not even having reached the early adopter stage at this point. The potential market is enormous; however, LED lamps will change the market dynamics dramatically. Using a computational model based on homes and sockets per home, Smallwood said that the world has been consuming 1.1B A-lamps per year for residential usage. Yet there were only 14 million A-lamps sold in North America last year.

Lamps manufacturers need to stake out their turf quickly. Smallwood warned that the available sockets will disappear quickly. And with LED product lifetimes, there won’t be a replacement required for years.