On a monthly basis, IMS Research analysts around the world collect retail price data on the LED lamp market. The data currently covers more than 650 lamp models, 43 brands and 26 retail stores in 12 countries. By doing this, IMS Research is able to compare how price, lumens/watt and lumens/$ trends develop on a regional basis each month.
From this research, it has been seen that the average price of general illumination LED lamps has been relatively stationary since data was first collected in September of 2011. China and Mexico have been the exceptions, with the average lamp price in China experiencing an approximate 41% drop in price from $24 to $14 (after accounting for lamp outliers) and Mexico experiencing an approximate 29% drop in price from $47 to $33. It should be noted that an increase in the number of lower cost LED lamps covered in these countries after September 2011 is a contributory factor in this average price decrease, and it is not only due to month on month decreases in lamp model prices.
Initial lamp price continues to be the largest purchasing influencer for most retail lamp consumers. With residential sockets making up approximately 63% of the world’s total, it is imperative for LED lamp manufacturers to appeal to these consumers by finding ways to decrease the price of their products. The speed at which the lamp price decreases is also very important, since the longer life of LED lamps means that as more are installed in existing sockets, the smaller the market will become as replacement lamps will not be required for several years.
The figures below clearly show this. By 2013, the LED lamp market will be the largest in the lighting market with 40% of the total (approximately $11.5 Billion).
However, the market growth rate will begin declining in 2014 as lamp ASPs continue to decrease, so much so, that by 2018 the LED lamp market is actually expected to begin contracting.
IMS Research has forecast that the ASP of LED lamps will fall under $10 in 2014, leading to an increased surge of lamp sales. This surge will also be assisted by the “banning” of incandescent lamps in countries like the United States (40W and 60W incandescent lamps phased beginning in 2014) and China (banning incandescent lamps that use more than 60W in 2014) and regions like the European Union (40W and 60W incandescent lamps phased out by 2013).
This leads to a conundrum of sorts in the industry. In order to succeed in the LED lamp market, manufacturers are required to decrease their prices quickly, all the while ensuring that product quality is maintained. This is extremely important as consumers will still be paying a premium price over incandescent and CFL lamps which are still available for purchase. This is also especially important in markets such as the Unites States, where it is widely recognized that an influx of low quality CFLs in the early 1990s led to a slow uptake of the technology into the general market. This experience with CFLs has also led to purchasers being wary of new lighting technologies, including LEDs. LED lamp manufacturers will therefore be required to play a difficult game of balancing low prices and high quality standards in order to ensure increased profitability in the quickly evolving LED lamp market.
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