July 6, 2008

As Oil Prices Rise, So Does The Demand For Energy-Efficient Electronics

Today's electronics consumers are concerned with the amount of energy products use.

"This year, nine out of ten people ask point blank whether a product will help them save money," said Kim Dong-han at South Korean electronics retailer Hi-Mart.  "Energy savings were not exactly a hot topic among customers last year."

Electronics producers may get an edge in the global economy if they can develop energy efficient products.  Consumers are engrossed with lowering their energy bills as electricity costs continue to rise.

"Going green is not only eco-friendly but crucial for business," said Kim Jik-soo, spokesman for LG Electronics Inc. "This goes beyond just products, extending throughout the development and manufacturing process."

Companies are fiercely developing products that use less energy and are putting a lot of marketing power behind products that are more energy efficient than competitor's products.

"My electricity bill more than doubles in the summer as we turn on the air conditioner," said Park Yu-jin, a housewife in Seoul.

"I also have to do lots of laundry for the kids. The bill now easily tops 170,000 won ($162) a month."

Consumers like Park are beginning to purchase front-load washing machines which use gravity to move water, and use less energy than top-loading washers.

New washers from Whirlpool Corp, and LG Electronics now offer the option to use steam instead of hot water.  The option cuts water and energy use by more than 70 percent compared to top-loading washers.

"We will gradually shift to front loaders and the steam technology will become more mainstream," said LG spokesman Kim.

Currently two out of every ten LG washers has the steam option, but the company expects that number to rise to four out of ten by the end of 2008.

LG's newest appliance plants have stopped building top-loading washers, although their biggest plant in South Korea still makes mostly front-loading units.

In the average home a refrigerator can consume nearly 30 percent of the overall energy.  New refrigerators are now being developed that use linear compressors instead of traditional compressors.  The linear compressors use almost 40 percent less power and are much quieter.

Power saving has been a key priority in the computing industry for a while.  As larger, power consuming products were designed, battery life and energy use in computers had to be addressed.

Many PC manufacturers like Apple Inc, and the Lenovo Group are now replacing screens lit by cold cathode fluorescent lamps (CCFLs) with light emitting diode (LED) displays.

"LED saves up to 40 percent of the power used in traditional backlights," said Jeff Kim, an analyst for Hyundai Securities. "Next year they will be commonly found in notebook screens, and will be increasingly used in TV panels from 2010."

DisplaySearch, a market researcher, expects LED displays to count for half of the notebook panels in 2010.  $6 billion worth of sales will be generated when all laptops use LED displays in 2015.

LED is also expected to replace traditional lighting on streets and in buildings.  Recently, Samsum Electro-Mechanics CO replaced the lights in the South Korean parliament building.  The new LED lights reportedly used a sixth of the power the incandescent bulbs were using.

These energy saving products often carry a large price to reflect the cost of development.  That, in turn, makes the new products slow to catch on.

For example, Whirlpool's traditional washing machines are priced at $700 while machines with the steam feature are priced between $1300 and $1500.

Manufacturers insist that the lifetime savings from energy-efficient products will easily pay for the extra upfront cost of the appliance.

When referring to a new TV model with a sensor that adjusts brightness to match surrounding light levels, LG's Kim said "You could buy another 32-inch LCD TV within 3 years with the money saved on electricity from our 52-inch power-saving TV."

A little incentive can help.

Bic Camera Inc., a Japanese electronics retailer, is holding a campaign where buyers of eco-friendly products receive points that can be redeemed for future purchases.

"That's a little nudge to help people buy products that are more efficient, even if they are slightly more expensive," said Naoko Ito, a Bic Camera spokeswoman.

A recent U.S. survey by Forrester Research found that green consumers are more brand-loyal than average consumers.

"More than 25 million U.S. adults fall into this segment, enough for even the largest consumer electronics marketers to target," said Christopher Mines, an analyst for Forrester.

According to Mines, an energy-efficient product that sets new standards and appeals to involved buyers "will have an iconic market presence if done right."