This North Carolina maker of light emitting diodes aims to kill off the incandescent lightbulb. It’s already doubled its market cap to $7 billion in just one year.
In the ad for Cree lightbulbs you see snow whipping across a desolate field as a bagpipe creaks out “Amazing Grace.” An announcer holds up a lightbulb and speaks into the camera. “Mr. Edison, today we lay to rest your creation, the incandescent lightbulb. I know you’re not shocked, sir. You knew that it needed an unreasonable amount of energy to do its job and that it had the life span of a lucky bug.”
He fits the bulb into a tiny wooden casket and places it into a hole in the ground. Then we see Cree’s new LED bulb. “The biggest thing since the lightbulb,” we’re told.
It’s a fun commercial, and Chuck Swoboda, CEO of Cree, means no disrespect. “We made sure the Edison estate was okay with it,” he says. “There’s an Edison quote that has always been inspirational to us: ‘There’s a better way to do it. Find it.’ ”
Swoboda believes his company has done just that. More than 130 years after Thomas Edison created the first salable lightbulb, his design remains little changed. Electricity flows across a resistant wire in an oxygen-free environment and glows. Cree’s lightbulb, on the other hand, uses an array of light-emitting diodes to create a similar kind of rich, warm light without the headache-inducing flicker of compact fluorescent bulbs.
It does so with unassailable economy. A regular incandescent bulb costs $1 and uses $7 of electricity a year if used three hours a day. A Cree bulb may cost $10, but it uses 10% of the electricity, costing $1 a year. And while an old-school bulb will burn out in less than two years at that rate, LED bulbs will keep working for more than 20 years. At a cost of $9.97 for the equivalent of a 40-watt incandescent, or $12.97 for a 60-watt replacement, the Cree bulbs are cheaper than comparable LED offerings from rivals.
The industry’s elusive Holy Grail was a “white” LED. If they could somehow create a bright blue LED they could combine it with the red and green to make what the human eye would perceive as white light. For years physicists thought bright blue was an impossibility, until in 1994 a researcher at Japanese company Nichia proved it could be done.
Cree’s engineers followed soon after with their own bright blue LED chip, made from wafers of silicon carbide. “Everything came from this,” says Swoboda, who joined the company in 1993, when it had only 30 workers. It now boasts over 6,000.
Playing to their strengths, LED makers started marketing so-called downlights. Cree in 2007 bought Chinese light-fixture maker Cotco and in 2008 acquired LED Lighting Fixtures. It began a relationship with Home Depot selling downlights under its EcoSmart brand.
For now Home Depot is the only place you can buy the Cree, part of an exclusive deal to roll out the bulb in more than 2,000 stores. “The exclusivity is to be negotiated. We will look at other partnerships at some point,” says Swoboda.
But bulbs are just the start. Because they seldom need to be replaced, LED lights can be built into fixtures and furniture. Professor Michael Siminovitch, head of the California Lighting Technology Center at UC Davis, envisions a world of LEDs programmed to change color and intensity throughout the day, matching light from the sun. Since humans’ circadian rhythms take cues from sunlight, Siminovitch thinks smart LED lighting will improve moods and reduce seasonal depression. Cree and its rivals are making “really, really good first steps” toward this future, he says.
It’s all this unmet potential that leaves Swoboda far from satisfied. “I don’t think we’ve accomplished that much,” he says. “The world is still lit with incandescent bulbs.” Burying Edison will take a while.
This article appears in the June 10, 2013 issue of Forbes. To read to complete article, please visit Forbes.com.