After 139 Years, General Electric Stops Making Light Bulbs

Public Domain. Thomas Edison with light bulb

There will be indignation, but this is the result of one of the most successful transformations of a market in our lifetime.

In 2007 President George W. Bush signed the Energy Independence and Security Act, which, among other things, was intended “to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles." Americans have been blaming President Obama ever since for taking away their incandescent light bulbs.

Now, almost exactly ten years later, John Flannery, the new head of General Electric, has announced that they are out of the bulb business. Many are outraged, blaming Obama and the EPA, writing comments like "another American industry lost, gone to China. The EPA demanded the change from filament to fluorescent to save energy. Now LEDs, invented here, now made in China." But their outrage is misplaced.

Indeed, GE has a long history in the bulb biz. It all started with Thomas Edison stealing improving on designs by Canadians Henry Woodward and Mathew Evans, as well as Briton Joseph Swan, commercializing them as Edison General Electric, then becoming General Electric in 1892. According to CNN Money, GE went on to invent the fluorescent bulb in 1938, the halogen in 1959 and the LED in 1962.

Mazda bulbs

Buy them in bulk!/Promo image

The problem for GE and for everyone in the business is that they used to be a consumable that had to be replaced constantly; now, quality LED bulbs last almost forever. As prices kept dropping, so did margins. David Goldman of CNN concludes:

In its presentation to investors Monday, GE said its future would focus on businesses with strong growth, predictability and cash generation. None of those apply to light bulbs.
Goldman sachs chart on LED lighting

© Goldman Sachs via ThinkProgress

Actually, we all owe a big debt of thanks to President Bush, because that legislation really was responsible for the explosion of innovation in lighting. Nobody much liked compact fluorescent Gorebulbs, but LEDs cost so little to operate, last so long and are available in so many different varieties that it is changing the way we use lighting. We now adjust color temperature the way we do thermal temperature with a thermostat. Billions of kilowatts of power have been saved. I cannot think of another transformation that happened so fast and had such impact.

GE left the business because the business had totally changed. And it has changed for the better.