Cree makes the bulk of its revenue from of selling LED chips and components to other LED bulb and lighting makers. The company is profitable and doing well.

On Tuesday Cree also announced a better-than-expected earnings, raising its guidance for its fiscal third quarter, and reported better than expected profit and revenue for the current quarter. Cree earned $20.4 million on revenue of $346.3 million for the most recent quarter. Along with those strong earnings Cree saw its shares jump 12.5 percent in morning trading (as much as 19 percent earlier this morning).

Cree is selling three new LED bulbs: 1). a 40-watt, warm white replacement for $9.97, 2). a 60-watt, warm white replacement for $12.97, and 3). a 60-watt day light for $13.97. Cree says the bulbs save 84 percent of the energy that would be used by comparable incandescent bulbs, last 25 times longer, and come with a 10-year warranty.

As we explained in our research report for GigaOM Pro (subscription required), the LED market has hit a turning point, particularly for commercial and industrial building owners who are installing LEDs because it makes financial sense. Check out our report on LEDs (digest here), written by Ucilia Wang, and here’s our podcast discussion about the report.

It’s been a harder sell to get consumers to buy LEDs, but with new cheap products like this line from Cree that will slowly change. Still, consumers expect super cheap bulbs — compact fluorescents can sell for a buck or two, and incandescents for well under a $1.

Other companies that sell low cost consumer LEDs include GE (which bought LED startup Albeo last year), Philips and Lemnis Lighting, which introduced a bulb last year for under $5. Worldwide sales of LEDs rose 2.1 percent to $13.7 billion in 2012 from $11.3 billion in 2011, and will grow to $16.4 billion by 2017, according to Strategies Unlimited.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Opportunities in LED Solid-State Lighting
• Big data meets the smart grid
• Green IT Q4: solar, subsidies and the outlook for EVs

(download)

iTunes

Stitcher Radio

SHOW NOTES
Host: Adam Lesser
Speakers: Ucilia Wang and Katie Fehrenbacher

Instgram’s Twit-storm, Netflix nabs Disney, GMail’s Pretty iPad App

RoadMap re-run, our talk with Instagram’s Kevin Systrom

iTunes 11, When Things Connect, Sun Volt

What Aspiring New Media Stars Should Know About Agents and Managers

Holiday Gadget Gift Guide

War Tweets, Google TV and Nexus 4

Director Jay Duplass on low-fi movies through high-tech

Election Dissection, Ditching DSL and Dumping the iPad

Sandy’s Social, Infrastructure Impact and Forstall

Windows 8 Surfaces, and disruption eruption

iPad Mini, iMac gets skinny

Boxee Cloud DVR, Apple Rumors and Chromebook

Commutist interview: Joy of X author Steven Strogatz

Commutist podcast: Patent trolls, Costco ban and Passbook’s home run

Commutist, meet Nerdist, and interview with Chris Hardwick

T-Metro, Broadband Caps, Remembering Steve Jobs

Apple’s iO-Mess, Dirty Data Centers and Tesla

News from the Mobilize Conference

Paul Tough: How Children Succeed and what you can learn from them

The iPhone 5 Event

Come on, Kindle, Light My 4G Fire

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Opportunities in LED Solid-State Lighting
• The fourth quarter of 2012 in cleantech
• Cleantech and investment in 2013

This imbalance of supply and demand is also happening at a time when market researchers are expecting growth for the LED market to slow in the next several years. Our new report on the LED lighting sector on GigaOm Pro (subscription required) focuses on the latest LED technology, new applications, and the role that LEDs are playing in the increasingly digitized home.

While LED lighting isn’t widely used in homes yet, the technology isn’t new. LEDs are commonly used for indicator and traffic lights. But improving the technology so that it can radiate the same intensity, warmth and even distribution as incumbent incandescent and fluorescent lighting continue to be a challenge.

Already, the making of the diodes themselves is cornered by rivals with large factories. Eleven companies control over 70 percent of the market for LEDs packaged to be turned into bulbs and fixtures. That makes it more difficult for startups to fight for market shares against the likes of Philips, Samsung, Cree and Osram Opto Semiconductors. Many of the large LED manufacturers also design and make their own LED bulbs and lighting systems.

Meanwhile, venture capitalists in recent years have shied away from investing in manufacturing technologies. Manufacturing technologies often take a lot longer to scale and more money than expected to reach the market. Even when they do, many forces — from strong competition to changes in public incentives that have driven clean tech’s growth — have gutted the ambitions of new entrants who thought their technology breakthroughs would naturally lead to high customer demand and profits.

What will be interesting to watch are new business models that go beyond just the sales of LEDs and their bulbs and fixtures. LEDs share a similar DNA as other semiconductor-based technologies, from sensors to wireless networking. Marrying lighting with these technologies can deliver uses in sectors from farming to location-based services. LED lighting, in effect, will serve multiple functions and occupy a spot in the widening web of Internet-dependent goods and services.

Photos courtesy of  Soraa and Ucilia Wang. 

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Opportunities in LED Solid-State Lighting
• Tablet market to hit over 377 million units by 2016
• The future of mobile: a segment analysis by GigaOM Pro

Algae fuel

Thin, flexible batteries

Wireless mesh smart grid

Crowdfunding solar

Next-gen geothermal power

Biomimicry LEDs

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Cleantech and investment in 2013
• Flash analysis: lessons from Solyndra’s fall
• Locating data centers in an energy-constrained world

Fireflies have a pattern of jagged scales surrounding the light-emitting lantern part of their bodies, (see photo below) which boosts the glow of the lantern. The researchers studying the design also compared the structure to a factory roof.

The scientists, including students at the University of Namur in Belgium, decided to create an outer layer for an LED that mimicked those jagged scales and ultimately enhanced the light extraction of the LED by up to 55 percent, making it more than one and a half times as efficient as standard LEDs.

This image shows the misfit scales found on the lantern of the Photuris firefly. Researchers found that the sharp edges of the scales let out the most light.

Such an outer layer could be used on current LED technologies (which means LED makers wouldn’t have to reinvent the wheel) and the researchers implemented their firefly outerlayer on a standard gallium nitride based LED. The cost of this layer will have a big impact on how widely uses such an innovation would be, and given that this innovation is just a design in a lab right now, there’s little information on the economics.

The LED market is starting to mature, first in the industrial and commercial buildings sectors, and soon for residential buildings. Prices are coming down as the industry starts to become commoditized, but LEDs are still not mainstream tech for homes.

Biomimicry — or using nature as inspiration for efficient design — is also a growing field, particularly for clean energy technology. Pax Scientific is a startup developed just to commercialize designs found in nature.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: lessons from Solyndra’s fall
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Report: An Open Source Smart Grid Primer

Good bye to Philips yellow, groove-laden LED bulb.

Lighting giant Philips says it’ll start selling a newly designed LED bulb in the new year that actually looks like a normal light bulb. Philips’ current LED bulb that can replace a standard 60 watt incandescent bulb is bright yellow and has silver grooves lining it (see left). Philips will start selling its new white LED home bulb (that doesn’t have those grooves) starting in 2013 at Home Depot stores (see right).

Philips says due to a new air cooling technology that it’s developed called AirFlux, the company was able to eliminate the silver grooves (called heat sink fins) on the former bulb. The company also ditched the bright yellow color, which I always found a little off putting.

Philips’ newly designed normal-looking LED bulb

The new “normal” bulb will cost $25 — which isn’t bad in the LED world — and at launch time interested customers can get $5 off that sticker price. The new bulb is also more energy efficient than the old one.

LEDs are continuing to drop in price and become more mainstream for both industrial and commercial sectors, as well as residential homes. According to GigaOM Pro and Pike Research, by 2020 LEDs will make up nearly half (46 percent) of the $4.4 billion U.S. commercial lamp market.

Startups are also making some headway in the LED market. GE recently bought a startup called Albeo, which makes LED fixtures and platforms. I’ve been testing out the liquid-cooled LED bulb by Switch.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Connected world: the consumer technology revolution
• Smart Grid Apps: Six Trends That Will Shape Grid Evolution
• Opportunities in LED Solid-State Lighting

The Cambridge, Mass.-based startup was founded in May 2011, and is just now coming out of stealth about how its technology could help create a whole new world of social networking services and money-making ideas. ByteLight has raised $1.25 million from investors such as VantagePoint Capital Partners, and is already doing some field trials of its technology, with undisclosed companies.

You’re probably wondering what LED lights has to do with this? Basic GPS — found in all phones these days — works well outdoors but works less well when people move indoors. At the same time common indoor wireless technologies, like WiFi and Bluetooth, aren’t very suitable for mapping the exaction location of each person, though there are companies out there working on indoor mapping using wireless networks.

ByteLight’s idea is to home in on a shopper’s whereabouts by blasting a specially designed light signal from an LED bulb in the store to the camera of the smart phone. To accomplish this feat, the smart phone will have to have ByteLight’s software on it, the phone will have to be out of the person’s bag or pocket, and each LED light bulb will have to come with a chip for sending the light signal.

The light signal is made up of a unique blinking pattern that flickers too fast for humans to see, said Dan Ryan, co-founder and chief technology officer of ByteLight. A good location-based technology has to be speedy and accurate, and ByteLight’s technology can pinpoint someone’s location to within a meter of accuracy and to do so under a second, Ryan said.

The chip inside the LED bulb and the software for detecting the light signal also create the path for delivering targeted ads or helping shoppers find what they want. Ryan says the chip will be cheap to add, and any existing smart phone camera would work.

Ryan and his CEO and co-founder, Aaron Ganick, still have to work out the business model. ByteLight won’t be supplying chips or selling LED bulbs with those chips inside, but they could collect licensing fees from giving LED bulb makers the chip design. The company also doesn’t plan to develop the mobile phone apps themselves. ByteLight wants to provide the developer tools for making those apps, so it could be collecting fees there as well.

What ByteLight has done is they’ve created a content management system that can help retailers track and deliver their ads and other messages to smart phones, which could be loaded with different ByteLight-based apps. Those retailers who don’t have the expertise at creating and delivering content — or at analyzing the results of their ads – could rely on ByteLight to do that as well.

To create a world in which ByteLight’s technology will work seamlessly will require a lot of coordination among LED lighting companies, retailers and app developers. The location-based technology might appeal to LED bulb makers because it gives them a selling point beyond the usual pitch about energy savings and replacement costs, Ganick said. That also means the adoption rate of ByteLight’s technology will depend on the growth of the LED market.

Then there are potentially privacy issues with tracking people’s movements and bombarding them with ads. This is a sensitive subject for Ryan and Ganick. They are quick to point out that consumers will not reveal their locations if they put their phones in their pockets or purses.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Podcast: Mobile winners and losers in 2012 and what to expect in 2013
• Analyzing the wearable computing market
• Why tomorrow’s iPad will need a battery breakthrough

But still as IKEA points out LED lighting consumes 85 percent less energy than incandescent lighting, and lasts 20 times longer.So-called light emitting diodes are semiconductors that emit light, so LED lighting can basically turn lighting digital.

IKEA has long been aggressive when it comes to sustainability. IKEA has phased out plastic bags, and has also been putting solar on the roofs of its stores, and now is the company with the 4th most solar capacity in the U.S.

In IKEA’s announcement, they included a survey on LEDs, and it’s clear that people aren’t necessarily all that educated on the benefits of LEDs — well, at least Americans:

• Less than one-half of Americans (43 percent) have at least one LED bulb in their house compared to China (80 percent), Russia (65 percent) and Sweden (61 percent).
• Only 27 percent of people know that these bulbs last 20 years.
• Only one-third (34 percent) of Americans say LED lights provide similar lighting quality to incandescent bulbs, compared to China (77 percent) and Russia (61 percent).

Startups that are innovating around interesting LED technology includeDigital Lumens, Switch, and BridgeLux.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: lessons from Solyndra’s fall
• Green IT Q1: Cleantech Breaking Out — and Bracing for Hard Times
• Report: Cleantech’s Third-Quarter Growing Pains

That’s the idea behind Digital Lumens’ plan to offer LED lighting and energy management as a service rather than an equipment sale. The Boston startup intends to launch its service early next year, Tom Pincince, Digital Lumens’ CEO told us in an interview. The service plan will guarantee that adequate lighting will be around to enable employees to do their work.

“For the most part customers today buy lighting as a capital purchase. In the future we will get to a point where we will manage an intelligent system remotely. You will buy a service around lighting,” Pincince said.

What will allow Digital Lumens to sell its technology as a service is the package of sensors and processors that are built into the wirelessly networked LED fixtures, creating a lighting system that can adjust lighting needs of different locations within, say, a building or factory throughout the day (or night). Lights are dimmed when no one is around or brighten up when shades are drawn around the window, for example.

The company uses LED components from Cree, designs its own lighting system and develops the lighting management software. Its customers are mostly industrial space operators such as warehouses and factories.

The service model is similar to what has become popular in the solar market in which businesses pay monthly fees for using electricity from solar panels on their rooftops that are actually owned by somebody else, be it the company that erected the equipment or an investor who financed the installation. The power purchase agreement, which usually lasts 15-20 years, not only eliminates the need to pay for the big upfront cost, it often comes with performance guarantees and promises of lowered utility bills overall over time.

Where will Digital Lumens turn to for capital to finance installation? Pincince wouldn’t say. Digital Lumens also is looking at partnership opportunities to package LED lighting with solar energy equipment for commercial and industrial customers, Pincince said.

Investors have pumped a lot of money into the LED lighting market, from the development of LED chip technology to the integration of LED fixtures and the software that controls them. A system of conventional lighting fixtures for commercial and industrial space may cost two or three times less, but LED fixtures use energy more efficiently and promise to last longer. That means lower energy bills and the cost of replacing bulbs over the years.

The payback period for an LED lighting system could be under two years, and after that the business should expect energy savings to reach as high as 90 percent, Pincince said. Digital Lumens is able to deliver the 90 percent savings because LED is inherently more energy efficient and because the company’s lighting management software, he added.

Using computers to control lighting and reduce energy use isn’t common. The Electrical Power Research Institute reported that only 7 percent of the U.S. commercial and industrial market have installed lighting control systems of any kind.

The company, founded in 2008, last raised a $10 million round last year from investors such as Black Coral Capital, Flybridge Capital Partners and Stata Venture Partners. Digital Lumens has raised $25 million since its inception.

Digital Lumens customers include Americold, United States Cold Storage and, more recently, Mutual Logistics in France. Digital Lumens is now eying Asia as its next new market. Japan could be a good-size market, particularly given a rise in LED lighting installations in residential and commercial spaces since the nuclear power plant disaster last year, Pincince said.

Digital Lumens’ competitors include Cavet Technologies, Easylite LLC, Fifth Light Technologies and Redwood Lighting.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Home Energy Management: Consumer Attitudes and Preferences
• Key technologies for the smart city
• Flash analysis: lessons from Solyndra’s fall

So how exactly did Barnes & Noble solve the problem of uneven light across the display? It’s not just technology magic, but science that makes it work.

Thanks to an iFixit teardown of the device, you can see how Barnes & Noble accomplished this, as well as view all of the many parts packed into the e-reader device. Along the top edge of the e-ink display are eight LED lights, evenly spaced apart.

These are the only lights used make the screen glow evenly and they’re only on the one edge. But the lights don’t shine directly down the display. Instead, the glass display has diffraction grating built-in, causing the light to be spread out across the entire screen surface, says the iFixit blog:

This diffraction grating bends and disperses the light throughout the screen. Barnes & Noble really did their homework on this one, because instead of a simple linear diffraction grating (think of a bunch of parallel slits), it appears that the diffraction grating varies throughout the glass to evenly disperse the light.

To illustrate how the glass display diffracts light across many angles, the iFixit team shined a laser through the screen’s edge. Normally, a laser appears as a single point as all of the light waves are tightly focused. Shining it through the diffraction grating however, shows how the screen spreads a beam of light out.

The solution is ingenious and I’d love to see it come to mobile devices because it would mean using fewer lights and therefore save power. Unfortunately, most smartphones and tablets are backlit, meaning the light comes from under the display, so this is an unlikely prospect for the future. Then again, I’m not a science expert, so maybe there’s an opportunity here!

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Forecast: the evolution of the e-book market
• Connected world: the consumer technology revolution
• Disruptapalooza 2011: how Amazon’s Kindle is changing the portable media game