There are a number of potential explanations why things have slowed down a bit in the OLED lighting market. Almost certainly the state of the worldwide economy has something to do with it. The ultimate goal is to sell OLED lighting on the basis of its energy efficiency, but for now OLED lighting is more or less a luxury item and such items do not easily succeed in difficult economic times.
In this context, NanoMarkets is particularly concerned about the economic situation in Europe, which seems to us to be especially negative for the OLED lighting market because so much of the OLED lighting industry seems to be Eurocentric. The largest suppliers at the present time are Philips and Osram and many of the OLED luminaire companies are also based in Europe.
Of course, most of these companies trade internationally, but European firms of all kinds understandably tend to have a disproportionate part of their business in Europe. And in the case of lighting firms, we note that Europe has always been the focus of high design content lighting fixtures of all kinds.
While the growth rates in the countries that are likely to be the sources of the overwhelming majority of the demand for OLED lighting will inevitably rise and fall over the next decade, the likelihood is that the high growth rates that existed in the economy when OLED lighting was first thought up are not going to reoccur for some time.
And with that in mind, NanoMarkets believes that it is certainly time to rethink our forecasts for the OLED lighting market in a lower economic growth world going forward.
Prospects of inflation: The benefits of long-term efficiencies from using SSL products of any kind are heavily discounted in an inflationary situation and we expect such a situation to arise as the result of governmental monetary policies hurting the prospects for growth in the OLED lighting market.
This kind of monetary-derived inflation needs to be distinguished from the impact of real price rises for energy and a return to hyper-growth in India and China would seem to ensure that higher real energy prices are also on the horizon. This could prove positive for OLED lighting as it will for any technology promising energy efficiency.
High unemployment: High unemployment in developed countries means less disposable income available for higher-priced lighting fixtures, which, for the time being, is what OLED lighting is. On the other hand, the highest unemployment in Europe and the U.S. is not found in the demographics where OLED lighting is most likely to be sold.
Continued problems in the worldwide construction industry: Such problems rob the OLED lighting industry of new construction opportunities; new buildings are an obvious opportunity for new types of lighting to be installed. If measured by the ratio of rents to capital values, among the major nations, only the U.S. and Japan have residential property markets that can be said to be undervalued and even there, construction markets are slow to recover.
Capital market uncertainties: Continuing uncertainties have reduced venture capital funding for OLED lighting companies that would have been common had the OLED lighting "revolution" occurred ten years ago.
Uncertainties about the phasing out of incandescent bulbs: When NanoMarkets began covering OLED lighting markets a few years back, we took it as a given that incandescent lighting would be phased out in all major countries during the 2011 to 2014 period.
We still think this is the most likely scenario. However, in the past year, U.S. consumers and their representatives seem to have become much more aware that an incandescent lighting phase out is planned and have expressed some displeasure at the plans. This may even become a minor issue in the 2012 national elections.
We also note that several Asian nations have general administrative plans to phase out incandescent lighting, but no actual formal regulatory or legal plans. This means that current expectations that incandescent lighting will be quickly phased out in these countries could easily remain unfulfilled. However, there are uncertainties of a more positive kind too. In Japan, following the earthquake and nuclear disaster, there is considerable talk of special government stimulus funding that might include subsidies for installing LED lighting. While, at the time of writing, this was merely speculation, it is hard to imagine subsidies for LED lighting that excluded OLED lighting.