In fact, computer scientist Gordon E. Moore proved more than simply prescient — the cycle he described back when we were still launching Gemini capsules into low Earth orbit has accelerated to more like every nine months (eerily coincidental with the human gestation period). And the costs for those same components are declining at a similar pace, which has put more than one industry sector — including pro audio — into a race to the economic bottom.
An LED Parallel
As it turns out, I wasn’t the only one thinking about applying Moore’s paradigm to the LED economic effect on the lighting industry, now that that technology has been incorporated into enough new products for an effect to be adequately measured. Someone else beat me to it, at least theoretically. Dr. Roland Haitz, a scientist at Agilent Technologies, and for whom Haitz’s Law is named, stated at the turn of the last century that, every decade, the cost per lumen falls by a factor of 10, and the amount of light generated per LED package increases by a factor of 20, for a given wavelength of light. Unlike Moore’s Law, Haitz’s postulation has not proved too conservative. At the time, Haitz predicted that the efficiency of LED-based lighting could reach 200 lumens-per-watt in 2020, crossing 100 lumens-per-watt in 2010. In fact, we’re on track for LEDs to become the single most efficient light source within the next 10 years, with a combination of new products and government regulatory constriction on incandescent technology possibly even accelerating that timetable.
But while that kind of progress looks great on the newsreels under the heading, “Time Marches On!,” it has another effect entirely on the economics of the industry it affects. “The light bulb is our version of the gasoline engine,” is how Jack Kelly, president of lighting systems distributor Group One Ltd., expresses it. “There have been improvements, but they’re incremental, not exponential. The LED still hasn’t replaced what we can get out of the conventional discharge lamp in terms of power, but given time, it will. And that’s going to change the game for more than just the technology side of this business.”
In that sense, the pro lighting industry has been more like 1979 Detroit than 2011 Silicon Valley — it largely continues to rely on a relatively small number of product types whose revenue model is low unit sales and high unit costs and prices. The inherent inefficiency of incandescent and related illumination sources has been widely acknowledged, but the model has worked so well for so long that there was little incentive to change it. Then the LED comes along, imposing the more modern paradigm of decreasing unit cost and higher volume sales. But it’s also doing so within a context of further market destabilization as more and more manufacturers — many of them China-based — also enter a market with lowered manufacturing barriers. Unfortunately, that absorbs a significant amount of the extra volume engendered by lower prices. The good news is that as LED color and intensity continue to improve, the technology will be able to be used for a greater range of applications, expanding the market’s frontiers. The bottom line, though, will be a more volatile market overall going forward.
Lighting companies with a large presence in entertainment have eyed LED warily. Philips Vari-Lite product manager George Masek says concerns about LED’s ability to meet the artistic expectations of lighting designers held them back until relatively recently. But, Masek points out, the economic pressures that LED is putting on the business were affecting even companies that hadn’t committed yet in a big way to the technology. “The electronics used for control in lighting have been coming down for years now,” he says, recalling that when he started with Vari-Lite in 1990 the control boards in most fixtures cost as much as $1,000 each. “Now, users would rather replace them when they fail rather than fix them, because they’ve become so much less expensive.”
A Game-Changer
LED changes more than the economic dynamics of lighting — it changes the fundamental nature of the business. As Ted Konnerth, president and CEO of Egret Consulting Group, pointed out in LEDs Magazine in 2009, LED eliminates the barrier between the fixture and the light source. “Traditionally, a lighting fixture manufacturer manufactured the electro-mechanical device that incorporated electrical elements that generated ‘light,’” he stated. “The [fixture] manufacturer worked with the lamp and ballast and controls manufacturers, but they didn’t specifically supply those devices.” Rolling all of that into a single entity changes everything, from design to manufacturing to sales and application, even product liability. With LED set to become the primary source of illumination for entertainment and other industries in the next couple of years, anticipating how the industry’s infrastructure needs to adapt will be interesting. Enjoy a front row seat.
