Triangle ama cree102011

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Greg Merritt's presentation to the Triangle AMA October 2011 luncheon.

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Triangle ama cree102011

  1. 1. MARKETING THELED REVOLUTIONOctober 20, 2011Greg Merritt
  2. 2. Agenda • Cree • Why LED Lighting? • Barriers to Adoption • Cree’s Approach / Examples • Q&A Copyright © 2011 Cree, Inc. pg. 2
  3. 3. Who is Cree? • Headquartered in Durham, NC • Founded in 1987 by 5 NC State University graduates • Invented the “blue LED” in 1989 • Now >5800 employees (>2000 in Durham) Copyright © 2011 Cree, Inc. pg. 3
  4. 4. Cree: A Global CompanyR&D Manufacturing Sales•Durham, NC •Durham, NC •Durham, NC •Hong Kong•RTP, NC •RTP, NC •Racine, WI •Shanghai•Racine, WI •Racine, WI •Germany •Shenzhen•Santa Barbara, CA •Huizhou, China •France •Singapore •Italy •Japan •Turkey •Taiwan •United Kingdom •South Korea Copyright © 2011 Cree, Inc. pg. 4
  5. 5. Cree Businesses Cree SiC/GaN SiC/ Materials Copyright © 2011 Cree, Inc. pg. 5
  6. 6. Cree Company Mission LEAD THE LED LIGHTING REVOLUTION to obsolete energy- inefficient lighting
  7. 7. Track Record of Growth $1,100 LED Power & RF $1,000 $900 $800 $700 CAGR $600 23%Revenue $500($ Millions) $400 $300 $200 $100 $- FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Copyright 2011, Cree, Inc. Copyright © 2011 Cree, Inc. pg. 7
  8. 8. The Market is Large and Adoption is Low Global Lighting Market Large LED Lighting Opportunity • Adoption is growing, but still low $108 Billion* • The tipping point is near, but Fixtures Outdoor** Outdoor ** disruptive technology requires Residential demonstrable end user Lamps Fixtures Commercial Industrial applications Commercial IndustrialResidential • Recent success has proven that a vast upgrade opportunity exists beyond the traditional market Our strategy is not to wait for the market, but drive adoption ourselves *Source: Freedonia Group estimate for 2012 (Excludes manufactured goods) / **Non-Building / *** Source: Philips Lighting Copyright © 2011 Cree, Inc. pg. 8
  9. 9. So, what’s the Big Deal about LED Lighting?Copyright © 2011 Cree, Inc. pg. 9
  10. 10. Why is Lighting important? • 2nd largest user of electricity behind Heating and Air Lighting conditioning 22% • For businesses, the percentage is much higher – up to 65% for retail stores US Electricity Usage* Widespread use of LED Lighting can cut electricity usage for lighting by up to 67% -- a 15% reduction in total U.S. electricity usage (1987 levels) *Source: U.S. Department of Energy Copyright © 2011 Cree, Inc. pg. 10
  11. 11. We’ve Seen This Before…. Vacuum Transistors Tubes 1940s – 1960s VHS DVD 1980s – 1990s Flat CRT Panel TV TV and 1990s – 2000s Displays Film Flash 1990s – 2000s Memory Light Bulbs/ Solid Fluorescent State Tubes Lighting 2000s – … Copyright © 2011 Cree, Inc. pg. 11
  12. 12. What Are the Barriers? • LED Lighting initial cost higher than traditional lighting in most cases – “sticker shock” • Willingness of Customers to accept Life-Cycle Cost Argument – “It’s good for you” • New technology – Fear of the Unknown – Risk of technology failure – Risk of financial failure – Don’t want to go first – “pioneers and arrows” • Acceptance or Belief of the Benefits Copyright © 2011 Cree, Inc. pg. 12
  13. 13. And, Good Ole Skepticism… Everyone is trying to talk “green” •Eco-friendly •Energy-efficient •Sustainable •Renewable •Reduce your carbon footprint Copyright © 2011 Cree,2011 Copyright © Inc. pg. 13
  14. 14. Addressing the Issues “Houston, we have a problem” Copyright © 2011 Cree, Inc. pg. 14
  15. 15. Higher Initial Cost – Financial Benefits Accumulated Upgrade Savings Using Cree Fixtures instead of CFLs• Education $15,000• Payback “calculators” $10,000 $5,000• Work through their #’s $-• Customer examples $(5,000) Years of Operation (50,000 Hours) Copyright © 2011 Cree, Inc. pg. 15
  16. 16. Raleigh, NC Raleigh Convention Center - 2009 49% less energy than HID Payback in just over 3 years Estimated $636k savings over 15 years Copyright © 2011 Cree, Inc. pg. 16
  17. 17. City of Los Angeles Number of street lights 140,000 being replaced in LA Total program cost $57 Million Estimated cost savings $10 Million/yr Estimated payback 6 Years Or period Less* Estimated energy savings 55%** Enabling the largest LED lighting retrofit undertaken to date*7 years initial target / **40% initial target Copyright © 2011 Cree, Inc. pg. 17
  18. 18. Consumer Marketing • Relevant • Compelling • Straightforward Copyright © 2011 Cree, Inc. pg. 18
  19. 19. Countering Technology Risk • History of Success • Conservative Claims • Third-Party Endorsement – Testing – Standards – Testimonials Copyright © 2011 Cree, Inc. pg. 19
  20. 20. Do You Have a Track Record? 260 240 R&D Capability 231 LPW 220 200 208 LPWCool White (lumens/Watt) 180 186 LPW 160 161 LPW XM-L High Volume 140 Production 131 LPW 3 yrs XP-G 120 HID XP-E 100 XR-E Fluorescent 80 XR-E 60 CFL 40 LED 20 Incandescent 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Copyright © 2011 Cree, Inc. pg. 20
  21. 21. Don’t Overreach • Pushing the limits on benefits claims is dangerous • Only takes one counter-example to damage your cred. • Under-promise and Over-deliver Copyright © 2011 Cree, Inc. pg. 21
  22. 22. Independent Testing Copyright © 2011 Cree, Inc. pg. 22
  23. 23. LED Lighting – Other Benefits • Emits Very Little Heat • Long Lifetime • High-Quality Light • And, more…. Copyright © 2011 Cree, Inc. pg. 23
  24. 24. LED Lighting Emits Very Little Heat… Let’s melt some Chocolate Bunnies! Over 43,000 views – average views 1-5k Copyright © 2011 Cree,2011 Copyright © Inc. pg. 24
  25. 25. LEDs Last a Long Time…. LED Lighting product warranties of 3 years, 5 years and 7 years depending upon product type Well-designed systems with Lighting-class LEDs at low TA, TJ will run a very, very long time…Copyright © 2011 Cree, Inc. pg. 25
  26. 26. Lifetime of 50,000 hours is: 137 Years at 1 hour/day 68.5 Years at 2 hours/day 34.2 Years at 4 hours/day 22.8 Years at 6 hours/day 17.1 Years at 8 hours/day 11.4 Years at 12 hours/day 5.7 Years at 24 hours/day A very long time…. Copyright © 2011 Cree, Inc. pg. 26
  27. 27. Very High Quality Light…“Identify the LED” Contest – Would you have been right? Copyright © 2011 Cree, Inc. pg. 27
  28. 28. Beautiful LED Light Copyright © 2011 Cree, Inc. pg. 28
  29. 29. Retail Display – Light Quality ImprovedLighting Before – Total Wattage = 158W; CRI = 81Cree LED Lighting – Total Wattage = 36W; CRI = 93 Copyright © 2011 Cree, Inc. pg. 29
  30. 30. BUT, The Best Argument is…. • “Aw Mom, Everybody is Doing it” • Peer examples • Competitor examples • “Light post” examples Copyright © 2011 Cree, Inc. pg. 30
  31. 31. CreeLEDRevolution.com Copyright © 2011 Cree, Inc. pg. 31
  32. 32. Case Studies Copyright © 2011 Cree, Inc. pg. 32
  33. 33. Case Studies Copyright © 2011 Cree, Inc. pg. 33
  34. 34. Case Studies Copyright © 2011 Cree, Inc. pg. 34
  35. 35. Let Your Evangelists Tell The Story Copyright © 2010 Cree, Inc. pg. 35
  36. 36. Let Your Evangelists Tell The Story Copyright © 2010 Cree, Inc. pg. 36
  37. 37. Key Component – Revolutionary Tone • A little irreverence or cheekyness • Not take ourselves too seriously - Anti Al Gore • Challenge the staid and the traditional • It is a revolution, and some people are going to get hurt • Have a little fun… Copyright © 2011 Cree, Inc. pg. 37
  38. 38. Benjamin Moore Paint Store – Staunton, Va. BEFORE 28 T12 fluorescent tubes 2,240 total watts consumed Copyright © 2011 Cree, Inc. pg. 38
  39. 39. Benjamin Moore Paint Store – Staunton, Va. BEFORE AFTER 18 CreefluorescentTroffers 28 T12 CR24 LED tubes 792 total watts consumed – 65% savings 2,240 total watts consumed Copyright © 2011 Cree, Inc. pg. 39
  40. 40. Walmart Cree LRP38 Copyright © 2011 Cree, Inc. pg. 40
  41. 41. McDonald’s • 78% energy reduction from baseline store • 97% of lighting is high- performance LEDs Courtesy of Derry Berrigan, DBLD Copyright © 2011 Cree, Inc. pg. 41
  42. 42. Burger King, Ben & Jerry’s • 80% Energy Savings • Excellent Color Rendering (CRI >92) Cree LR6 Copyright © 2011 Cree, Inc. pg. 42
  43. 43. Red RobinReplacing Incandescent and Halogen lamps withGE LED technology as part of an interior lightingretrofit program in 274 restaurants • 77% energy reduction per lamp • Lasts more than 6x longer than previous types Courtesy of GE Lighting Copyright © 2011 Cree, Inc. pg. 43
  44. 44. Yum Brands• 81% energy reduction from baseline store• 95% of lighting is high- performance LEDs Courtesy of Derry Berrigan, DBLD Copyright © 2011 Cree, Inc. pg. 44
  45. 45. U.S. Pentagon – Washington D.C. Before – 432W Copyright © 2011 Cree, Inc. pg. 45
  46. 46. U.S. Pentagon – Washington D.C. After – 288W = 33% Savings Before – 432W Copyright © 2011 Cree, Inc. pg. 46
  47. 47. Where Can You Find Us? Facebook.com/CreeLEDRevolution Twitter.com/Cree YouTube.com/CreeInc CreeLEDRevolution.com/blog Copyright © 2011 Cree, Inc. pg. 47
  48. 48. Thank You! Greg MerrittGreg_Merritt@cree.com (919) 407.7836

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