Zia Eftekhar, Philips Professional Luminaries CEO for North America give us the inside scoop on Philip’s new 12 Watt LED light bulb. Officially launched today, the new bulb is the industry’s first LED replacement for a 60 watt incandescent light bulb. More than 425 million 60-watt incandescent light bulbs are sold in the United States annually. This represents about 50% of the domestic incandescent light bulb market. According to research done by Philips, this new LED replacement has the potential to save 32.6 terawatt-hours of electricity in one year, enough to power the lights of 16.7 million U.S. households or 14.4% of the total number of households in the entire US. It would also eliminate the generation 5.3 million metric tons of carbon emissions annually. The new lamp is expected to last 25,000 hours; an incandescent bulb typically lasts 1,000 hours. So a homeowner or business should expect a savings of $120 per lamp. The new product will be sold in stores in the US in the fourth quarter of this year.
Zia Eftekhar: If you look at the Philips lighting in aggregate total consists of a number of businesses, lamp is one of the largest component than the fixture business or as we call it, lumineer’s business, is actually the largest one. And then you get into like the electronics which are all the gears and the components all the different light sources. And then lastly, you get into the specialty products for automotive or specialty products for entertainment lighting or other types of niche markets. We have all of that. Then addition to all of that, we are one of the very few lighting companies that is virtually integrated and have our own LED chip manufacturing. Philips is truly the virtually-integrated company that consists of multiple businesses in lighting. Professional lumineers is the segment that deals with mostly commercial aspect of the lighting, and we have a consumer lumineers that deals with the residential and the consumer lumineer products.
Ben Lack: And you oversee both sides of that in North America?
Zia Eftekhar: My responsibility consists of physically running the commercial side but also being in the terms of the overall lighting that includes the consumer as well.
Ben Lack: Talk to us about, there’s this phase out of the old Edison incandescent lighting. What’s Philips doing to help with the phase in of more efficient lighting technology?
Zia Eftekhar: The circle legislation that was passed really has a requirement for the various tax if incandescent lights in the terms of their efficiency and those that will be banned completely. The specific one that everybody is focused on is the Edison medium-based light bulb that all of us grew up with. The 60-watt is the one that they’re specifically talking about. There are a number of alternatives for the various tax of incandescent light that we are phasing in as a very, very appropriate solution to the old technology that starts with, obviously, our compact fluorescent product. And it also includes much more efficient incandescent product that replaces the old inefficient incandescent product. Halogen is our product brand name for it. And then ultimately, getting into the LED light sources that would replace an existing form of the incandescent light form that, again, all of us are going to love and grow with.
Ben Lack: Well, there’s so much talk right now about how advancements of LED is really kind of happening quite rapidly in this short term. How does Philips balance the go-to-market strategy for superefficient incandescents with CFLs when this emerging technology LEDs is really starting to become quite a viable option?
Zia Eftekhar: Well, as you indicated, it is emerging. And as you look at the whole equation, this is really a balance between cost benefit and balance of technology application and technology imperativeness with the cost-curve. It all comes into one single sort of equation. From our perspective, the various energy efficient light sources that are available or are foreseeable period of time will be very applicable to satisfy this specific application, and they don’t all end up being LED, at least not within the next decade or so. Now LEDs are improving very fast. Our own company growth in the terms of LED sales has been very, very high triple digit growth over the last two years. We anticipate somewhere around fifty percent of light sources utilized by 2015 to be an LED. So we do see a rapid rate of or an accelerated rate of production but nevertheless there are multiple products that we do see as viable products, viable technologies over the next decade.
Ben Lack: One of the big concerns about customers moving to these new emerging lighting technologies is the color. They’re so used to having this bright yellow color from an older Edison incandescent. What types of things is Philips doing to curb those concerns as you guys build out these new products, whether it’s superefficient incandescent, CFLs, LEDs?
Zia Eftekhar: Without getting to technical about the color, the color that all of us love to see is a color that is actually a lot warmer than actually daylight color. And that’s about twenty-seven hundred Kelvin. That’s the temperature of that color, a measurement, sort of a number, if you would. We have designed the products, the LED products to operate within that exact range. They have the same color and characteristics of what you’re very familiar with. That’s a part of that whole analogy that we are using. And, in fact, this light bulb that I have what it does, this phosphor coating, the jacket of this light bulb changes, transforms different color. In this particular case, blue into the white that is very, very tightly controlled at that twenty-seven hundred Kelvin. Now it is also true that some of the earlier entries into this field, the LED field, did not do an appropriate management of the color. And that is something that the consumers should be concerned with. But we are clearly, clearly controlling the process on making certain that the color temperature is exactly what we say it is which is the closest color temperature available to incandescent light.
Ben Lack: As it pertains to the government doing what they can to help push the products that are in your line out to the marketplace, could you give the government or the current administration a grade on their efforts for trying to help you do what you need to do best?
Zia Eftekhar: Oh, I don’t think I’m really in the place to grade the government. I think it’s always been the other way around. I think over the last several years in particular, DOE, EPA, Energy Star effort, all of those have really come a long way trying to support the technology transformation. Clearly, this whole partnership between government and industry has to accelerate, and we have to do a lot more to educate them and train the end-user. And also, I think we need to work very closely to make sure there are standards that people are not going to be disappointed that there is consistency, that we talk. So those are areas that I think we have to work much closer with the government and make sure we push the envelope forward.
Ben Lack: The government does a lot to push advance lighting technologies out to the marketplace. What are you guys doing to handle lighting controls? Because that’s an emerging market here in the states, and you guys are becoming or already a big player but want to capture more of that market. What types of strategies do you have to really tackle this emerging market of lighting control?
Zia Eftekhar: Well, especially in the commercial side of our business, we are absolutely committed in promoting and selling, if you would, the total solution to the project or look at the total application from its totality. If you go back and look at the number of lighting companies all included, we were in the business of selling components. And they were this sort of separate components that came together in a final application. We got a lot of interface with each other. We believe that is changing. It has to change. It has to change to provide the best possible results as well as it needs to do it for energy efficiency and the economy and all of that. And control is a significant part of that. If you really take a look at how we use lighting in terms of just turning things on and off, well, that’s an unbelievable antiquated way of looking at it. How the space is used, the time of the day, the impact of day lighting, the occupancy, the kind of the usage of that occupancy. Those are all elements that you can’t get without some intelligence and control. So we believe that control is a significantly integral part of solution selling. We are completely committed to make sure that becomes the significant part of our total package selling in the marketplace.
Ben Lack: So if you can, talk to us about a little bit about the bulb that you have in your hand.
Zia Eftekhar: Approximately a year and a half ago, the Department of Energy announced an award, if you would, a prize, if you would, for challenging the industry to develop a light source, a light bulb that would be a very good replacement for the incandescent 60-watt incandescent lamp, and they have a series of criteria that dealt with energy efficiency, life, the color, in all aspects of what that light should be. So I’m very proud to tell you that we took that challenge by putting several teams together on a global basis. There’s a significant number of them right here in the United States. And we are not only the first company to submit that product to the Department of Energy, but so far the only company to have done that. This product that I’m holding in my hand is that L-price, that particular product that was developed for the Department of Energy. The outcome of this product is the winner. We’ll receive not only a one-time award of ten million dollars which is a lot of money but not enough to pay for the R&D of this product. But also we’ll be the recipient of receiving the contract with the government. So this product is obviously being tested. That’s a part of the process with the DOE. And hopefully within the next few months, they will publish the result of the test, and we will move forward towards commercializing this particular product.
In the meantime and while we are moving forward and commercializing, I’m really pleased to tell you that another product of the similar nature will be released this year. This product will be commercially available by the end of this year. But it is a product that is significantly more efficient than all the products that are currently in the marketplace in the terms of not only other technologies but also in LED. This is roughly a 12-watt lamp that we’ll produce an equivalent of up to an incandescent lamp of a significantly more, 50- or 60-watt light bulb.
Ben Lack: And is there a cost?
Zia Eftekhar: We are in the process of finalizing all of those. And we are very much certain that there will be a very, very viable economic story with respect with this product.
Ben Lack: Final question. And this is more about you personally. I’m curious to know why you do what you do.
Zia Eftekhar: Well, actually, that’s probably the simplest question that I can answer you. I started my career needing a job to get a master’s degree. And lighting, to me, was another unknown business. It was from my perspective a short-term business. And four decades later, I’m still a lighting person. Because frankly from my perspective, it is sort of a combination of the art, the science, and then most importantly, it really affects everything that all of us do. We have a saying in our company that I really completely believe in and that is everything we see, much of what we do and most of how we feel is impacted by light. There is nothing else and no business that can make that kind of a strong statement. From Philips’ perspective, we believe that that as a company, we are focused and committed and have a responsibility to enhance life, both with respect to health and well-being, and we believe lighting can do that in its fastest and simplest and more direct way. So I wouldn’t choose another career if I had that opportunity all over again. It’s been a meaningful career, and I think it’s very a very impactful career.
Ben Lack: Well, it’s always nice to meet people that are passionate about what they’re doing and that’s something that you definitely are, Zia. Thank you so much for the time today, and we appreciate your insight on what Philips is doing to advance lighting technology. And we wish you much continued success.
Zia Eftekhar: Thank you very much. I appreciate it.
Ben Lack: Appreciate your time.