They've been around for years in traffic lights and alarm clocks. Now light-emitting diodes are bright enough to illuminate high-end electronics such as pricey flat-panel TVs--and consumers, electronics companies and LED makers stand to benefit big.
Take Lumileds, a former division of Hewlett-Packard that's becoming a major supplier of the next-generation lighting components. Its LEDs will light up the Qualia 005, a 46-inch liquid crystal display television due out from Sony this spring. Samsung Electronics, the biggest maker of LCD panels, will use LEDs in future displays. And this summer, LED-based portable projectors small enough to fit in the palm of your hand will be released by Mitsubishi.
"LEDs are a genuine improvement, and you can always charge more for that, which is especially useful in markets with rapidly declining prices," said Bob O'Donnell, vice president of research at IDC. He added that despite heftier price tags and dimensions, LED-based TVs offer picture quality that consumers will find hard to ignore.
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What's new:
Light-emitting diodes have become bright enough for use in flat-panel TVs and other consumer electronics.
Bottom line: LEDs could give a significant boost to brand name consumer electronics makers struggling against rapidly deteriorating margins. But how much will consumers pay for the bright lights?
LEDs, chips that light up when a charge is applied to them, last up to 10 years longer than current lighting systems and use less power. In addition, they don't contain mercury, which makes them environmentally friendly.
The $3.7 billion LED industry is made up of several markets--mobile appliances, automotive, traffic lights and more. Mobile appliances, mainly handsets, represent 58 percent of the total market. However, with market saturation in handsets, LED makers such as Lumileds and competitors Cree, Nichia and Osram are eyeing the electronics business.
LEDs are neither cheap nor abundant enough to replace the common household lightbulb any time soon, but they could give a significant boost to brand name consumer electronics makers struggling against rapidly deteriorating margins.
Established industry players such as Sony and Royal Philips Electronics have been feeling the heat as unknown Asian manufacturers enter the U.S. market and gain share by cutting costs. What's one way to combat the effects of falling margins? Build products competitors can't make, and charge a premium for them, at least for a while.
The Sony Qualia 005 LCD-based television uses more than 400 Lumileds chips and costs about $15,000, which could yield healthy margins. The LEDs are only used in the backlighting system of the set and thus don't completely account for the exorbitant price--Qualia is part of Sony's highest-end product line, featuring advanced technologies meant to carry a hefty premium--but backlighting systems are among the priciest elements in a set, and LEDs cost.
"Products using LEDs are ridiculously expensive, which likely translates to high prices for the LEDs, but it's abundantly clear they will be the standard in backlights for LCD TVs," O'Donnell said.
LCD TVs are locked in fierce competition with plasma and rear-projection sets for consumer dollars, and LEDs could give liquid crystal displays an advantage in the flat-panel battle. But while LCD sets represent the top of the line in appliances that can use LEDs, more mundane high-volume opportunities exist in products such as flashes in digital cameras.
Color me LED
Backlights, the light source in LCD televisions, shine light through the LCD panel to display the images viewed by consumers. The LCD panel absorbs some light, so the full strength of the backlight isn't viewed.
Many current LCD sets use backlights with cold cathode fluorescent light, or CCFL, tubes as the light source. Those televisions meet only about 70 percent of the National TV Standards Committee's color range specification for broadcasting in the United States; cathode-ray tube sets meet about 85 percent to 90 percent. More vibrant colors are one of the reasons TV buffs say CRTs are still the superior television technology to flat-panel TVs. But LEDs can improve the picture for LCD TV makers.
"Samsung is pretty excited about LEDs, particularly because of the increase in color gamut that LEDs can provide versus traditional fluorescent-tube backlight systems," said Jim Sanduski, vice president of marketing for the visual display products group at Samsung. "We're looking at an NTSC color gamut reproduction of about 105 percent."
Companies other than Lumileds are working on LEDs, which will help to drive down costs and expand the overall market, but Lumileds has a significant head start with electronics makers. That advantage means
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LEDs could give a significant boost to brand name consumer electronics makers struggling against rapidly deteriorating margins. But how much will consumers pay for the bright lights? 
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