The traditional business of light

With the latest developments of LED technology with increased product lifetimes and integration into smart systems, there has been increasing focus on the idea of servicizing lighting. This is a far cry from the traditional lighting industry model with its focus on the product and power consolidated in the hands  of the big three producers) was so great, that producers protected their interests and profits by forming the Phoebus cartel.

The cartel was formed to ensure quality of products and safeguard production capacities. The cartel also agreed to standardization of lamp (by wattage, shape and screw-in mounts), with the argument that standardization ensured quality for consumers.  In 1925 the cartel also codified the life of a lamp to 1000 hours despite the technological capability lamps to last twice as long. Those producers found to be producing products with lifespans longer or shorter than 1000 hours were fined. The formation of the cartel represented one of the first examples of planned obsolescence. Besides the cartel, there were other lighting industry alliances, including the Patentgemeinschaft (“patent pool”) that influenced production quotas though its control of the patents needed to make the core lighting products and the Internationale Glühlampen Preisvereinigung that endeavoured to control lamp prices in Europe . These alliances and actions reflected the producers’ desire for greater market certainty in an industry focused on a low cost product and vulnerable to significant market fluctuations (for example, in 1923 Osram had experienced a drop in sales from 63 million to 28 million lamps).

osram lamp 1910

Ultimately, World War II broke through alliances and changed the lighting industry’s focus beyond lamp sales. War necessitated longer life and more energy efficient products – and a focus on the customer’s needs rather than the company’s sales alone. This need spurred further development of fluorescent lamps with longer lives and better energy efficiency. The market diversified and new actors entered, but lamp producers have remained focused on developing and diversifying lamp products. Also, despite increasing market share from smaller firms outside of Europe and the U.S., the industry remained dominated by the 3 or 4 largest producers.

lightbulbs variety

The variety of lamps increased after WWII

Will LED be the technology that forces this industry to evolve beyond the product?  It certainly looks that way.  Already the big producers are giving indications that LED lighting is a new business for them. This time new entrants like Opple, Cree, TCP and Acuity seem to pose a real threat to the big 3 producers. Most producers remain focused on the product (but some, like Aura Light, focusing on maximizing the long-life and sustainability aspects as a selling point), but already the big producers have reshuffled or made their lighting operations independent from the parent companies.  They have also indicated that the future of the lighting industry is now moving beyond the bulb into the business of selling light as a service.


About JL Richter

I am currently researching about policy instruments for energy efficient lighting products and how questions related to design, disposal, collection, labels and procurement can be addressed in a synergistic way.
This entry was posted in Closing loops, General Knowledge, LED/SSL, The future of lighting. Bookmark the permalink.


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