Backlighting and general illumination are two major application fields of LEDs, with the former already adopted by the global leading providers of relevant products, while the latter holds significant business potential, though its development has not reached maturity. LEDinside recently interviewed James Liang, CEO of the lighting specialist, Aeon Lighting Tech (ALT), and invited him to analyze the possible development of the LED lighting market in 2010, based on his expertise in High Power LEDs.

ALT is a new player in the LED industry, noted Liang, since its inception in 2007, ALT has been committed to the development of high power LEDs, and has won a number of relevant safety certifications. ALT has expanded from a smaller-scale high power LED company that was reinvested by server provider SuperMicro Group. One of the company’s competitive advantages is that it has the capacity to implement the heat sink and driver technologies used for servers into its LED products. Furthermore, ALT leverages its relevant experience in product design, model development and system integration to improve the stability, lifespan of its high power LED products while lowering the cost.

James Liang, CEO of Aeon Lighting Tech

The leading global LED makers consider 2012 to be the right time to launch high power LEDs

Liang indicated that during the development of high power LEDs for general lighting applications, ALT has conquered many challenges and solved issues in reliability, heat dissipation and lifespan of high power LEDs. As technology advances, the brightness of LEDs has been gradually improved. However, the ultimate goal of making LEDs the main luminaire for general lighting has not been achieved. He further pointed out that leading global LED manufacturers predict that high power LEDs will only become the main luminaire for general lighting in 2012. As for the profitability of the LED industry, he noted that as LED is a unique field, there is a high chance of failure for companies interested in investing in the industry, but have no R&D capabilities. He added, even with leading global LED makers such as Cree and Lumileds, only a few companies manage to achieve high profitability in the LED lighting field.

Liang said that, upon closer investigation, high power LED to become main lighting source, there are many drawbacks, such as heat dissipation, luminous decay, lifespan, which may take some time to overcome. Judging from current lighting market demand, LED lighting products are still not ready to be sold as commodity; this is mainly because there are substantial cost differences among the LED manufacturers, which naturally leads to vast differences in quality. The LED products for main lighting applications are in the introductory phase of the development cycle, and still have a long way to go before reaching the growth phase. However, it is evident from the growing LED application in supplementary lighting that its has gained significant market presence.

ALT has successfully developed a series of LED indoor lighting products, including BR30, BR40, recessed light, AR111, T8LED tube. Its BR30 15W and BR40 20W offer luminous flux of 800lm and 1100 lm respectively; they can replace the compact fluorescent bulbs and incandescent bulbs used in general households and office spaces, as well as lighting fixtures such as ceiling lamps, wall lamps, down lights and projection lamps. ALT has recently introduced its new T8 LED tube for replacement of T8 fluorescent tubes to meet general lighting demand in offices, marketplaces and other indoor spaces. Compared to other major global players, ALT has been making rapid advancements in the LED lighting field, said Liang said.

The dimmable lighting products will be the focus of ALT's product strategy for 2010

ALT's product strategy for 2010 will focus primarily on main lighting products for both indoor and outdoor applications, as well as dimmable indoor lighting products. Liang explained that there are many levels of energy saving, for example, for illumination in parking lots, the luminance should be turned down in places where it is not needed, in order to reduce the power consumption. Similarly, dimmable lighting is also preferable for illumination in the basement, and that a smart power control system will reinforce its energy-saving capabilities.

Taking the MR16 LED bulb for example, Liang said that those available on the market are mostly AC dimmable models, with problems like flickering, instability and short lifespan. To solve these problems, ALT has introduced the DC dimming technology, with its patent pending in Europe, the US, Japan and Taiwan. This is because most customers who purchase MR16 bulbs, especially ones in European and U.S., required dimmable products, Liang explained. In addition, other specifications of main lighting products, such as E27, also offer dimming functions. ALT's products are based on its linear dimmable technology, and its power control mechanism. In mid-2010, the company plans to implement the PWM system in its products, and release outdoor lighting products that combine solar power system and outdoor dimming system; relevant products will gradually launch as well.

Liang stated that ALT had already developed the DC dimmable technology two years ago, but the product was not accepted at the time as the market was not mature enough. Furthermore, a technology without patent protection could easily be copied after its introduction in the market, he added. On the other hand, ALT's exclusive heat sink technology, which features high efficiency and large heat dissipation area, has patent in Taiwan, Germany, the US, Japan and China, thus is impossible for other manufacturers to reproduce.

In addition, ALT also pays much attention in safety certifications, with 1,188 of its products UL and ETL certificated. ALT's products have also received other certifications, including CUL, FCC, TÜV, CE, LVD, CNS, KC MARK, Leaser Testing, and RoHS.

Currently, ALT has just released about 50% of its developed products, and more products currently under development will be released soon. Since its establishment 2 years ago, ALT has been focused on product development and technology patents; and in the future, the company will place more emphasis on marketing, and will positively seek strategic marketing partners to jointly expand the market and create a win-win situation.

ALT’s dimmable Par30 LED bulb

Sharing the module could save cost, but the price competition during the introductory phase of its development is risky

Liang noted that during the initial product development period, ALT has already taken into consideration that sharing modules could substantially cut production cost, and would be one of the advantages of the company.

However, currently LEDs lighting is still in its introductory phase, most of Taiwan and China's LED manufacturers are paying too much attention in price competition and neglected the more important matters such as technology, quality, stability, lifespan of the products, and strategy. For example, the MR16 bulbs from leading global manufacturers such as Philips and CK are sold at around $30, while the products of the same model from other companies are priced at only $7 to $14. Upon investigation, the costs of the global manufacturers exceed $15, more than twice that of Taiwan's manufacturers. Leading brand vendors are sticking to the high price strategy as they believe that ensuring stable product quality is the key to success during the introductory phase. When the market reaches the growth phase, the differences in the products will be more remarkable. That is the reason that the leading manufacturers are reluctant to sacrifice quality at a lower cost.

Typically, when price competition occurs in the market, it indicates that the product has reached maturity, and that there are little differences among products. However, this is not the case in the LED lighting market, because in their introductory phase, price competition among LED lighting products had already been fierce, which is an anomaly in the market. Faced with such market conditions, ALT's strategy is to focus on product quality rather than price, as lowering prices will result in lower quality and reliability of the product, which will hinder the development of the industry and damage the customers' confidence in LED lighting products, Liang said.

For most of Taiwan's LED lighting manufacturers, price advantage is still a priority; however, high power LED customers are extremely concerned about the quality and safety of the product. If customers find that the products they bought are poor in quality, they will likely lose confidence in LED lighting products, and damages the image of the brand vendors. ALT's strategy, on the other hand, is to focus on quality and after-sale service to differentiate its products from other products on the market. By learning from the top 5 global lighting manufacturers, ALT aimed at improving its product quality and establishing its brand loyalty, and eventually capturing more market share in the LED lighting market. Without high product quality and good after-sale service, the outcome will be terrible, Liang said.

Where there is culture, there is demand for lighting

Where there is culture, there is demand for lighting, Liang said. ALT's products are shipped to over 80 countries including US, Canada, Germany, France, UK, Romania, Eastern Europe, South America, S. Korea, Japan, Taiwan, South Africa, and other regions. Even though its major demand comes from mature markets like Europe and the US, its products also reach other third-world countries and Oceania areas. By adopting an open partnership strategy – wherever there is demand for lighting, ALT will make every effort to explore the LED lighting application markets there, and promote the energy-saving concepts.

ALT hopes that technological development will provide long-term benefit to all mankind and earth, and LED lighting has been one of the best examples, Liang said. In recent years, LED lighting technology has been advancing in a fast pace, with the luminous efficacy of LED products increasing exponentially every year, and gradually surpassing that of conventional lighting sources. It is expected that in the near future, LED lighting will replace all the lighting products currently used in the world, which would save an estimated 20% of the power worldwide, as well as reduce the carbon emissions and mitigate the greenhouse effect, bringing positive influence to the environmental protection on this planet.

Insights from LEDinside

In the LED lighting industry, ALT is one of a few companies of its scale that have received patents and safety certificates. As the number of ALT's target markets is more than that of other companies, it proves the feasibility of expanding its sales to areas that are rarely covered by other manufacturers. Furthermore, its comprehensive safety measures will be helpful for expanding its market. In addition to OEM, a new LED lighting manufacturer is also capable of finding its own strength and establishing its brand in a market of leading global companies and the small-sized manufactures that rely on cost advantages.

On the other hand, ALT's market positioning, as well as the technological support from its parent company regarding heat dissipation, has enhanced competitiveness of its products in the market, which has also brought remarkable revenues.

The acceptance of both AC and DC dimmable products is far higher in European and US markets than in Asian markets. And improvements in these dimmable products would be an ideal way for many LED lighting companies to tap into the mature LED commercial lighting market and main lighting applications market.