Anticipating this -- and building on lessons it learnt from sliding semiconductor prices -- the 119-year old company is scaling up its LED output. Where before it used to sell just light bulbs, in LEDs the offer is a packaged "solution," such as a luminaire, or the lamp and fitting combined.

"The manufacturing technique is quite similar to that seen in semiconductor manufacturing, where foundries compete mainly on price," said De Vroe. "In that sense we think it is wise on the part of Philips to move their focus toward 'solutions'."

Philips sold a majority in its semiconductors business to a private equity consortium in 2006, retaining a minority interest in the company, renamed NXP. But it remains committed to lighting: in the business since 1891, it's a veteran of illumination.

Price Hurdles

But even if the company has a savvier strategy in approaching the modern LED market, the challenges it faces include current high prices which are deterring some retailers from stocking the products.

The quality of LED that can deliver a light that feels "warm" -- a type that only large companies like Philips are currently able to produce -- is very expensive.

It now costs about $46 to deliver 1,000 lumens -- a measure of the power of light --, or units of "warm" light, compared with $25 for the "cold" light variety.

By 2015, the cost of "warm" LED lights is expected to slide to $4 per 1,000 lumens versus $2 for "cold" lights, according to estimates from the U.S. Department of Energy. To produce incandescent globes, it said, currently costs $0.29 per 1,000 lumens.

It expects the cost of producing LEDs to fall below that of compact fluorescent lamps in about 2013, but still be more expensive than an incandescent bulb.

Business users are enthusiastic, said Yvan Dejaeghere, director at wholesaler Technische Unie, a subsidiary of French electronics equipment distributor Sonepar.

"In our business-to-business professional segment we are seeing huge demand for new applications and new fixtures," Dejaeghere said. The cost of replacing one conventional globe with an LED could be earned back within two years, he said.

LEDs are most frequently being used to replace conventional bulbs in restaurants and hotel lobbies, where they can take on a decorative effect due to their ability to change colors. Factories have yet to switch due to the high cost.

Philips' business clients include the Marriott hotel chain and Heineken, which uses LED lighting in its Amsterdam brewery shop. Vodafone is also a client, while supermarkets Sainsbury and Tesco use LEDs in their refrigeration displays.

For consumers, it's not so simple. The array of choices in lighting outlets can be dazzling: LEDs, conventional bulbs, fluorescent tubes or halogen lights?

Ralf Buehler, vice president for Europe and Middle East and Africa at LED lighting specialist Cree, said it may still take a while before LEDs will be available to all customers.

"We are five to six years away from a situation where you would go to one of the large do-it-yourself stores where they have lots and lots of these products at a commercially viable price in stock," he said.

Gert Spaargaren, a professor in the Environmental Policy Group at Wageningen University in the Netherlands, said lighting retailers are proving slow to embrace the new technology.

"What is needed is that retailers ... embrace the new products, integrate them into their mainstream assortment," he said. "Consumers show a really high willingness to go along with sustainable alternatives if they are offered in an appropriate way by appropriate providers."