The Great Lightbulb Conspiracy

This year has seen many historical anniversaries, and one that has gotten some recent notoriety is the 90 year anniversary of the planned obsolescence of the light bulb by an industry cartel.

How exactly did the cartel pull off this engineering feat? It wasn’t just a matter of making an inferior or sloppy product; anybody could have done that. But to create one that reliably failed after an agreed-upon 1,000 hours took some doing over a number of years. The household lightbulb in 1924 was already technologically sophisticated: The light yield was considerable; the burning time was easily 2,500 hours or more. By striving for something less, the cartel would systematically reverse decades of progress.

It’s even more notable because last week three pioneers in LED technology just won the Nobel Prize.

We all know about the efficiency standards for light bulbs that are effectively banning incandescent bulbs in slow motion. I’ve noticed during my usual stops at the home improvement stores that the choices for the vintage bulbs are fewer and farther between, and the prices for what’s left are creeping up.

The promise of the new standards is that the new LED lighting is far superior. While it’s much more expensive, the steady drumbeat of the diffusion of technology is supposed to reduce the costs, eventually putting them within reach of the common household.

The costs have indeed dropped exponentially, but that’s undoubtedly been helped by government aid and deliberate shortages of the old technology. Besides the federal standards, every state has some sort of efficient lighting rebate program that artificially decreases the price. Tax breaks and other incentives have encouraged manufacturers like GE to expand production in the US and create a few hundred jobs, which, although nice, don’t quite make up for the thousands they shipped to China during the Great Light Bulb Leap Forward. How much of the price gains can be attributed to Moore’s Law type improvements and how much to government supports is a legitimate concern.

Now there’s some question about how long prices are going to keep falling going forward.

In stark contrast to the promised dynamics that the technology is supposed to follow, LED prices actually rose considerably last month.

In contrast, 40W equiv. LED bulb prices were up 14.3% in the U.S. market. Manufacturers including Cree, Philips, GE and other renowned brands have raised prices for certain products in the U.S. market.

Because of industry consolidation, the top ten LED manufacturers now control 61% of the market. That much control brings pricing power over the market, and they are apparently now using it.

With green energy executive orders on Obama’s agenda and the unelected EPA issuing mandates, the oligopoly is sure to get worse with permanently higher cost per lumens the possible result.

The LED industry, taking a page from the incandescent bulb industry so many years ago, is discovering the key to the rent seekers’ success – competition is for losers, and unfortunately sometimes so is progress.

21 thoughts on “The Great Lightbulb Conspiracy”

  1. Competition is not by price alone, and two of the reasons that people hate higher-efficiency lamps are a) because they break or fail prematurely, and b) because the light sucks. If I’m going to spend $16 on a single “Light bulb”, I’m either going to make sure that it is returnable if I don’t like it, or make sure that the Amazon reviews are glowing (even when buying locally).

    One of this things I’ve noticed about stores is that the products that have a high return-rate get clearanced pretty quickly. Not good for your long-term sales if you can’t convince the store to keep stocking the product.

    Light quality can include not just color-rendering but level of flicker (human sensitivity differs, what is undetectable to some is super-annoying to others), how quickly it achieves full brightness, whether it will work when it is cold outside, how acoustically noisy it is, how noisy it is in EMI/RFI emissions, and whether it is really compatible with existing fixtures.

    I’m cautiously optimistic that things are getting better. I had a house full of partially-enclosed base-up fixtures, and even after replacing all of the dimmer-switches with standard ones I was still getting less than 1000 hours (estimated by rounded hours per day times days in use) from most of the CFL lamps I used, and often getting pretty fireworks displays when they failed.

  2. I have what I hope is a life time supply of incandescents. I have a storage unit half full of three way, 60 watt and 100 watt incandescent bulbs. I used LEDs on my sailboat for battery life but I am not going to give in to the bastards unless I live to be 100.

  3. I’ll never use a CFL inside. With kids running around and lamps getting tipped over, I need even a slight risk of a hazmat situation like I need a hole in the head.

    I have tried to use them outside. I got a couple free ones a few years ago from the power company for doing some energy efficiency audit. Base up, fully enclosed, about a foot high by 8 in fixtures – the CFLs lasted about as long as a regular bulb. I learned later they needed more space and base down was required for full efficiency. There don’t seem to be any similar standards on LED lamps. At least I can’t find any.

  4. Welcome, Grurray!

    Like Douglas2 I’m cautiously optimistic. It’s clear that CFLs have been overhyped, are often poorly made and are flawed for many uses. However, LEDs really do seem better than incandescents in several ways. For example, I just bought an inexpensive LED desk lamp. It’s lightly built, but that’s OK as the light fixture weighs nothing. It makes plenty of light on 6 watts and runs cool.

    Also, I’m not so sure the LED industry is uncompetitive. The price trend looks similar to that of computer memory: steady long-term decline punctuated by short-term spikes.

    I also have a stash of incandescents but I’m not drawing it down fast.

  5. Having read that article the other day more details are coming back into memory, and I’m kind of surprised at the parallels between then and now — a very uncertain market with lots of new entrants and variable quality. I think many commenters on the article aren’t reading far enough down to note that the longer-life bulbs were no bargain, as the luminous efficiency was so poor. Many consumers in Japan and the west preferred the cartel bulbs, to the point where there was so no market in Japan for non-cartel lamps.

    For something so generic as a “light bulb”, if most of the market is low-priced but crap, how do you maintain or develop a “brand” and make something non-crap? How will people know that the extra cost is worth the money to them?

  6. For something so generic as a “light bulb”, if most of the market is low-priced but crap, how do you maintain or develop a “brand” and make something non-crap? How will people know that the extra cost is worth the money to them?

    Speaking of which, I’ve been reading reviews on various LED bulbs and they’re all over the place in terms whether the light is the right color, how long they last, whether they work on dimmer switches, whether they make noise, how much they cost, etc.

    Cree seems to get good reviews, and I have read comments on Philips bulbs saying they prefer Cree to those. Cree, at $10 a bulb, is expensive though. Cree 40W Equivalent Soft White. I have almost all my lights on dimmers, so good dimmer performance is a huge plus for me.

  7. Jonathon, thanks again for your gracious invitation to join the group.
    I have a lot of concerns the industry consolidation combined with the increasing political favors are going to mess up a good thing.

    It was mentioned in the conspiracy article that before the cartel, bulbs were better and lasted longer. A prime example is the Centennial Bulb which has been burning for over a century. The Shelby Electic Co built the best product around (obviously), but they couldn’t scale up and were bought out by GE.

    Now GE is at it again, buying up several smaller companies that they couldn’t out-innovate. There were also rumors last summer of Cree acquiring Philips LED division, so soon there will be fewer companies still.

  8. According to my reading the centennial bulb has a draw of 30W and the light output of a 4W tungsten incandescent nightlight. If you are wanting very red/yellow light and 8 times the heat output of a standard incandescent, there are several commercial/theatrical lighting vendors who will sell you handmade carbon-filament lamps for $15/ea in bulk.

  9. When I was a boy, we took burned out light bulbs to the local utility office and exchanged them for new ones. I seem to recall that there was no charge for the new ones. How did the cartel make money ? Charge the utility ?

  10. I was discussing this last night with my father-in-law who is well into his 80s, and he also mentioned how they were given free bulbs. In his family’s case it was part of the New Deal electrification programs. I believe the cartel was broken by that time.

  11. They gave the bulbs away because they were just an accessory to the real money maker, which was selling everyone electricity. It’s just like razors—they will give you the handles because the money is in selling you new blades every month.

    I remember my grandfather shaving with his double edge razor, and he let me heft it, it seemed really heavy and solid. I said, oh that must be expensive. He replied, no, they give it to me when I buy a double pack of blades. It’s the blades that make them the money.

    But anyway, why is anyone ever surprised or shocked when these ideological mandates that override ordinary economic decisions, or disregard preferences as expressed in the marketplace, turn out to be crap.

    It’s the same story every single time, and yet the elites, who always know better than anyone else about everything, keep doing it over and over, as if they expect that this time it will work out.

    That kind of attitude was cited as the definition of insanity, but, in fact, it’s merely the self-delusion of the arrogantly foolish.

    I could have a bit of sympathy for someone who’s truly insane.

    For the self-deluded, nothing but contempt.

  12. Detroit Edison had a bulb exchange program until the mid-70’s. I never bought a light bulb until it ended, which occurred due to an anti-trust lawsuit brought by a retail druggist who sold light bulbs. The case was eventually decided by the Supreme Court on appeal. Here’s the information I found online:

    At the beginning of the era of electric light, not too long after Edison finally perfected the bulb, hundreds of electric utilities sprung into existence. In Detroit, the Edison affiliate that dominated and eventually gained control of all of Metro Detroit’s power grid, came into existence. Taking the rather prosaic name of Detroit Edison, the company began a promotion that many other companies had undertaken to attract customers. This program provided new customers with complimentary lightbulbs for their lights. This was only half of it, however. As long as the customer could present a current electric bill, they could bring in all their burned out bulbs and get them replaced with new ones, with only a two dollar annual fee. This practice, beginning in the late 19th century, continues well into the 20th, only ending in the 1970s.

    This program, which had run for so long, was finally ended by one man: Lawrence Cantor. This man was a Detroit drug store owner who brought suit because Edison’s program denied him the ability to sell lightbulbs in his store. While he might stock them, who would by them when they could get them for almost nothing from Edison? He filed an anti- monopoly suit in 1972, and the case went through the local and state courts, each of which sided with Edison’s practice being legal, due to the permission of the Michigan Public Service Commission. However, the case was taken all the way to the United States Supreme Court, reaching this bench in 1976. Decided a couple of days after the nation celebrated its Bicentennial, in the case of Cantor V. Detroit Edison Co. the nations highest court decided against the Edison program, stating that acceptance by a state commission did not prevent anti- monopoly laws from applying to it. The court ordered the end of the program, which came in 1978.

    This practice, which was a popular service for so many years, today is but a memory. Gone are the times when one could simply save up their old bulbs and turn them in for new ones, with almost no charge to the consumer. It would be a wonderful perk for DTE customers today, but it will forever remain a banned practice in the United States. Only the U.S. Supreme Court can change that, and its doubtful that will happen. This may be a boon to stores across the country, but to the consumers it forever means more of their hard earned cash being spent on something that was once free

  13. Douglas2,

    Thanks for the reality check on the Centennial Bulb. The moment it was cited, I wondered how hot the filament burned (a major component in efficiency and light output on the one hand, and bulb life on the other–obviously inverse–hand.)

    Re CFLs: there are few places I can tolerate them, but for those spots I somehow seem to be leading a charmed life: great lifespan, no excessive turnon delays (though in winter the ones in our carport do start out a little dim and then get brighter over the next couple of minutes. This would be terrible if I were foolish enough to put them in my office or bedroom, but for the carport it’s fine.

    I hear all these tales of woe from other folks, look at my own experience, and think “Maybe I should be buying lottery tickets???”

  14. Douglas2,

    Thanks for the reality check on the Centennial Bulb. The moment it was cited, I wondered how hot the filament burned (a major component in efficiency and light output on the one hand, and bulb life on the other–obviously inverse–hand.)

  15. The CFL’s will last longer if the socket is down and they’re in open air.

    It’s been speculated that the secret to the long lasting Centennial bulb is the carbon filament and some unique features of the bulb

    Tungsten bulbs were invented in 1904 and assumed to be superior to carbon, but it turns out with some tweaks that played to the strengths of the (possibly still) misunderstood nature of a carbon filament, Shelby was able to make a better bulb than anyone ever imagined including probably himself.

  16. Correction – Adolphe Chaillet, that is, made the bulb

    Sometimes the best technology doesn’t win out for a variety of reasons.

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