Although the expectations are that the OLED lighting market will eventually generate billions of dollars in annual revenue, today’s revenues from these products are miniscule.  Many of the OLED lighting products that are being sold today are intended:  (1) to get the message out to designers, rather than create business directly; (2) to get feedback from designers on how to improve the product; and (3) to enable luminaire and consumer products companies to create new value-added products and opportunities, thereby helping to bring into being a market for OLED lighting that has never existed before. 

Interim Products:  Before the General Lighting Market Takes Off

NanoMarkets’ latest analysis suggests that – absent any major economic crises -- the OLED lighting market will start to see a transition to “real” products during 2010.  By “real” we mean products that are intended to be sold to customers other than designers/architects and not just limited editions or prototypes intended to impress the lighting community at trade shows.

What we are seeing this year is that several firms are starting to ship OLED lighting in sampling volumes.  These include GE and Konica Minolta (who are in an OLED lighting partnership), LG (which may have altered its plans since the Kodak acquisition), Showa Denko and Modistech.  By next year we expect the product launches to accelerate.  Still even then NanoMarkets does not expect the initial volumes shipped of these products to be all that great; no more than perhaps in the hundreds or thousands per item. 

And the products being sold at first will be of the luxury or specialty kind.  This is because of the technical performance, high pricing and competitive realities of OLED lighting, which mean that for a few more years OLEDs will not be able to chase after the general lighting market.  Instead, OLED lighting will first make its mark in areas where there is a premium for novelty and where the price sensitivity is not toogreat. 

Current and Future Pricing of OLED Lighting:  Too Expensive for Prime Time

Pricing is everything, of course.  At this early stage of market evolution, the price points of OLED lighting products do not come close to being competitive with conventional lighting.  In the past year or so, however, several firms have announced pricing for products and in some cases have also said something about future products too. 

In our most recent report on OLED lighting, we analyze these announcements in some depth.  We note here, however, that the products with the greatest mindshare are “designer kits” from Philips and Osram; two of the world’s biggest lighting makers.  Osram’s Orbeos product is priced at €250, while the Philips Lumiblade kit offers an OLED driver and electronics is priced at €70, with small pre-shaped OLEDs ranging from €72 to €248.

Future Products:  The Shift to High Volume OLED Lighting Production

The big question – the multi-billion dollar question actually -- is when will the OLED lighting industry shift to really high volumes?  On the supply side, there are still manufacturing and performance issues that need to be addressed and manufacturing plants capable of delivering high-volume OLED production will need to be constructed.  In addition, supply chains need to be established.  On the demand side, NanoMarkets believes that for OLEDs to really take off, the impact of regulation essentially banning the incandescent lamp will have to be felt. 

At the present time, all indication is that most consumers are not aware that the incandescents are about to go.  But by 2013 or so, the general lighting market is likely to be transformed by the changes in regulation and by new products put on the market by lighting firms in response to it.  Governments all over the world – but especially in Europe and the U.S – are legislating the phasing out of inefficient light bulbs.  

The replacement for incandescents will not all be OLED lighting products, of course, indeed most of them won’t be.  But, immediately after this 2013 “inflection point” there is a good reason to expect that OLED lighting firms will begin to ship in very large volumes with products that will in some sense compete with regular light bulbs.  As an indication of what we might expect out of a moderate sized firm early in this period, we note that Lumiotec has established a pilot mass-production line at a production facility, which by the middle of 2010 will have reached a production capacity of about 40,000 panels per year, with the company beginning mass production by 2013.  Organic Lighting, a Japanese OLED start-up, says that it can reach sales of ¥10 billion ($108 million) by 2014, although this does seem quite ambitious from a firm that is just getting started.

NanoMarkets believes that really large volumes of OLED lights will not be shipped until a few years after 2013.  This ties in nicely with Osram’s expectations that it does not expect to have a high volume OLED lighting product until 2016 and GE’s statement that by 2015 it believes that its OLED lights will be both efficient and inexpensive.  It is also important to look at this future potential in terms of expected revenues and with this in mind we note that Konica Minolta says that it will reach sales of over ¥100 billion ($1.0 billion) in OLED lighting by its 2017/18 fiscal year.  We suspect that few other firms are thinking quite as big as this.  Indeed, at the other end of the spectrum, there is Panasonic, which seems fairly pessimistic saying that OLED lights will become widespread as “supplemental lighting” within the next couple of years, but that “it may take about 10 years before they are commercialized as main lighting.”