Strategically Blogging

China Pricing War II

Martin Shih 11/17/2014

We recently took a trip to China to interview top manufacturers of LED components for our upcoming China Quarterly Updates Report. According to these major LED players, we are convinced that several LED trends we predicted in my blog at the beginning of this year did and are continuing to happen.

The Dental Laser Market Needs A Filling

Allen Nogee 10/31/2014

It was just 14 years ago when a group of dental professionals came together to form the World Clinical Laser Institute. This group was formed to promote and share their ideas and experiences and to advance dental care through the use of lasers. Today, the WCLI is the largest group of dental professionals supporting the use of lasers in dentistry; with 19,000 members, the use of lasers by the dental profession has not grown as fast as many had expected. Today, in the US, roughly 7% of all dentists use lasers, which means that 93% of dentists don’t. Of the four medical laser segments we track (cosmetic, ophthalmic, surgical, and dental), the dental area is growing the slowest.

Integrated vs. Non-Integrated Luminaires

Shonika Vijay 10/30/2014

As time goes on, it is becoming more and more apparent that LED lighting will soon take over. With the current ban of 40W through 100W incandescent light bulbs and the dropping prices of LED lighting, it is no surprise that LED lighting is the lighting of the present and will be lighting of the future. However, LED lighting was first, or in some cases still is, introduced into the market to replicate the incumbent technology so that consumers don’t get scared away by a lighting system that they can’t associate with their old one. What I mean here is that having a fixture where the consumer can physically take out the lamp and replace it if it burns out. Today, there seems to be plenty of interest in fixtures/luminaires where the lamp could be replaced.

When Will OLEDs be the Next Big Thing in Lighting?

Stephanie Pruitt 10/08/2014

OLEDs have been gaining in popularity lately, mainly in displays, but also more recently in general lighting. They offer many benefits over traditional and LED lighting, including being a surface emitting light source (as opposed to point emitting), being extremely thin, and having the capability to be flexible and even transparent. OLEDs open the doors to really innovative and creative light forms that were previously not possible with traditional lighting. However, they still have a ways to go in efficacy, lumen output, and price compared to their less expensive inorganic counterparts that are still struggling to really penetrate into the market.

Shonika Vijay

High-End Lighting Markets for Solid State Lighting

Shonika Vijay 09/30/2014

Lighting has always been seen as a commodity market. In fact, most people buy their light bulbs from the same place they buy their milk. It is a price war out there with slim profit margins on lighting products; meanwhile, the market keeps demanding higher quality. The general indoor lighting market mostly consists of the following form factors: downlights, troffers, suspended pendants, track lights, and high bay lights (a detailed market report of general lighting luminaires with these form factors along with all technologies will be released this November). Downlights and troffers make up the majority of the installed luminaire base for all regions. In order to compete for penetration in these installed luminaire bases, LED lighting has had to slash its prices while making sure it can sustain the light output levels of halogens, incandescent, and fluorescent technologies.

Archive for 'March 2012'

    Big money for photonics in data centers

    March 16, 2012 1:44 PM by Tom Hausken
    The best news that photonics people could hear came last week at OFC when Cisco announced that it was buying Lightwire for $271million in cash. Lightwire is a start-up making integrated photonics , and Cisco is interested in it for making interconnects in data centers, among other things. I try not to get intoxicated with financial ups and downs that ultimately benefit only a few investors (if that),and I'm not fond of buzzwords like "integrated photonics," but this is good news for anyone with a similar technology.


    It makes sense that Cisco needs the expertise developed in Lightwire. Companies have spent millions on this; for Cisco to do it itself would take millions more and years of delays. Meanwhile, its competitors--Huawei for one--are encroaching on Cisco's market with technology of its own. Cisco can't rely on the merchant market for everything.


    The data center bottleneck is particularly important. I attended four discussions on the topic, including the OIDA workshop to develop a roadmap (where I was a moderator and am writing the report). The challenge is for the industry to develop new architectures and inexpensive components that can address the many-to-many interconnects necessary in modern data centers, such as those of Google and Facebook. Traditional data centers are not a challenge: a conventional switching hierarchy can store and retrieve data, and that scales predictably. The new data centers don't scale as well.


    Both Google and Facebook made the rounds at OFC, and both claim that the technology is available today, it just has to be commercialized. They say there needs to be a whole new sector of components that don't need to meet Telcordia and NEBS standards. It just has to be good enough for the controlled data center environment. Oh, and make it really really cheap, thank you.


    The one problem I have will all of this is that the net margins for Google and Facebook are about 25% or so. That's net profit, not gross. The optical components suppliers' net margins are a few percent to negative. So how about giving some of that nice margin back to the components suppliers? Especially as many suppliers don't see the return on this new segment justifying the risk.


    That's why Cisco's acquisition is such good news. It's a return for the start-up's investors, but it also means that Cisco is willing to fork over some real money for components.


    The OIDA roadmap report on data center interconnects will be coming out sometime in the coming weeks. Look for it at the OIDA web site or here .

    Good news and not-so-good news in LEDs

    March 2, 2012 7:13 PM by Tom Hausken
    There was good news and some not-so-good news at our 13th SIL event in February. First the good news: it was another record year for LEDs, and for that matter, for the Strategies in Light event. As my colleague, Ella Shum, reported: sales totaled $12.5 billion in 2011, thanks to growth in all major segments except backlights.

    The not-so-good news is that growth will continue through 2012 but the market will be tepid for a few years beyond that, ending in 2016 in about the same place, the way things are going. This is because LED suppliers are so successful in reducing the selling price while improving the performance. Growth in sales is countered by reduction in the LED count (per product) and falling prices, making a double whammy. This is good for increasing penetration of LEDs into lighting and other applications, but it’s hard on suppliers’ profits. In fact, it was a bloodbath, in Ella's words, due to overcapacity.

    Looking at this another way, the LED business is maturing. It still has a long way to go with lighting, of course, and even backlights. But the business is now of such a size that it is starting to behave like DRAMs, to use a cliché. Penetration into new applications is not enough to guarantee LED industry growth through the coming lull. From now on, LED sales will be highly dependent on the fortunes of the end-product markets for backlights, just as DRAM sales are highly dependent on personal computer sales.

    To improve margins and market share, LED suppliers will have to stay ahead in scale and performance. LED lighting, in particular, will require larger volumes and high performance devices. Suppliers that can manufacture well in volume (improving yield and tightening binning, for example) will fare well. The suppliers that cannot may be relegated to older segments that don’t require the performance that lighting does. Or they may simply get squeezed out of the market.

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