How to Capture Returns During a Lighting Revolution

In a few years, your morning newspaper won't fall on your doorstep. Instead, it will probably be downloaded to a screen that looks and feels sort of like a piece of paper.

The revolution that will bring about this change is called OLED, or organic light-emitting diodes. Today, you'll find OLEDs in lighting systems, television screens, and some other visual displays. But that's just the beginning.

What is it?
OLEDs are self-illuminating devices that can be laid out on flat-panel displays. They're energy-efficient and use much less power than LCD screens do.

Universal Display (Nasdaq: PANL  ) is one such manufacturer of energy-efficient displays and lighting solutions, using its own technology called UniversalPHOLED. But that's just the beginning, as reports paint an optimistic picture of the OLED market.

According to market-research firm NanoMarkets, the OLED industry will be worth $4.8 billion globally by 2016, with sales in Japan having the potential to quickly reach $1.1 billion.

But even so, there are certain issues that need to be addressed first.

The OLED story
Several big names have been trying to find a footing in this market. One of the first to enter the game was Eastman Kodak (NYSE: EK  ) , which developed and patented a version of OLED technology and uses it in its imaging-solutions business.

Then there's eMagin (AMEX: EMAN  ) , which manufactures micro-displays that manufacturers of cameras and digitized headsets use. And TV manufacturers have created OLED TV models such as the Sony (NYSE: SNE  ) XEL-1.

But there are some roadblocks for the OLED TV manufacturers, including high prices. The XEL-1 costs $2,500 for an 11-inch set in the United States; in Britain it goes for close to $5,000. Sony's other OLED offering, the Trimaster monitor, costs a whopping $16,000.

Even with all the market confidence surrounding this technology, the prices could be an impediment to global expansion, especially in Asia's emerging markets. The falling prices for other types of flat-panel displays won't help, either.

End of the fat price tag?
However, prices could come down in the future. Last year, DuPont (NYSE: DD  ) tweaked its manufacturing process with an innovation that enables it to make large-area OLED screens while cutting some of the associated costs.

On the lighting front, General Electric (NYSE: GE  ) proclaims an "efficiency breakthrough" that allows it to manufacture low-cost OLED light bulbs. Phlilips (NYSE: PHG  ) has also been working on the development on OLED light sources. Last year, it developed a process with which OLED lights could be powered from standard wall outlets using alternating current. Philips manufactures and sells OLEDs for home and commercial use.

Foolish bottom line
These sexy, super-sleek OLED screens are hitting a massive roadblock when it comes to price. But as manufacturers continue to develop ways to lower costs, adoption could pick up quickly. When that happens, look out for an exciting investment opportunity.

Fool contributor Arunava De owns no shares of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 09, 2011, at 9:33 AM, funfundvierzig wrote:

    For the past decade, DuPont Management and their research people have been touting with much PR fanfare their OLED breakthroughs. But not much has come of it commercially or profitably for DuPont's long patient stockholders.

    Merely the viewpoint of one individual retail investor...funfun..

  • Report this Comment On July 09, 2011, at 2:56 PM, trysson wrote:

    This is the first time I have read about OLED, and I think there is great potential along these lines. I wonder if The New York Times, The Washington Post, or Gannett are looking at this technology. Could this be new live-blood for the print media industry? Save a tree, read an OLED!

  • Report this Comment On July 09, 2011, at 6:51 PM, pdoherty972 wrote:

    Your reference to Sony's Trimaster monitors, suggesting they were expensive, is misleading; if they're the monitors I'm thinking of (one a 17" and the other a 25") they're high-end production studio monitors, that will replace similarly-priced (but lower quality) LCD monitors. The OLED versions cost only 10% more.

  • Report this Comment On July 15, 2011, at 10:05 AM, pdoherty972 wrote:

    Also, your suggestion that Universal Display is "one such manufacturer of energy-efficient displays and lighting solutions" is wrong. They don't manufacture any displays; they license their patents/methods and sell OLED materials to manufacturers such as Samsung, LG, Philips, etc for producing displays and white lighting. Gabelli calls Universal Display "The OLED Gatekeeper" and for good reason. They have 1200+ issued and pending patents on OLED.

  • Report this Comment On August 02, 2011, at 4:54 AM, candyEllen wrote:

    Dear,

    As one of your loyal readers, I saw this post very helpful: http://www.fool.com/investing/general/2011/07/08/how-to-capt...

    We are the leading wholesale online marketplace, and we'd like to know if we can have a sponsored text link from this page pointing to our "Lighting" product category page.

    If yes, please reply me with the price quote; if no, thank you for your time and keep up with the good job.

    Regards,

    Ellen

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