22 July 2011
Sales of CFL light bulbs are down more than 16% compared to last year, according to a report released last week by NEMA. Meanwhile, incandescent bulb sales increased 6.4% over the previous quarter. Are we going backwards? CFL's have been proven to consume 4-7x less energy than incandescent bulbs to produce the same lumens (total light emitted). CFL's are available at every major retailer with numerous choices. The return on investment (ROI) for CFL's is often just a few months based on the energy savings. Yet incandescent light bulbs are growing at a very healthy rate, while CFL market share goes into a rapid decline.
What does this mean for adoption of LED light bulbs? We at Mr. Beams expected to see mass market LED light bulbs available this year. We see larger selection at stores such as Lowes (see earlier blog), but at $15 - $65 price points, it is only the early adopters and those financially comfortable enough to accept an ROI of 5-8 years who are buying. If CFL's - with their 2-6 month ROI - are declining in market share, then LED light bulbs at a 5-8 year ROI are not going to experience any traction for many years. We see reports that the expansion in capacity will lead to dramatic reductions in the prices of LEDs over the next few years, but even a 50% retail price reduction will not make a large improvement in sales - if you use CFL's as the example. The challenge will be for LED bulb manufacturers to survive to see the cost reductions and for them to fight the temptation to cut the quality in order to meet the consumer demanded price points.