General Electric (NYSE: GE) is flipping the switch on its CFL lightbulb factories, and halting production of the flickery bulbs in favor of more efficient and longer-lived LED lighting. That’s probably a bright idea — the LED market is booming, and CFLs are on the way out — but it’s also a reminder of the lighting industry’s remarkable volatility, and of the ways in which the world’s lighting giants are having to reinvent themselves as eco-friendly new technologies disrupt their core businesses. 

It’s easy to see the logic behind GE’s lightbulb moment: LEDs are already a billion-dollar niche for the company, and the LED sector as a whole, worth $13 billion in 2014, is expected to see its value balloon to $63 billion by 2020, according to Radian Insights. That’s being driven by the broad and rapid uptake of LED technologies, with usage rates expected to hit 70 percent in the residential sector by 2020. “The market is on a clear transition path from traditional lighting technologies to LED,” noted a recent McKinsey report. 

That’s especially true given LED bulbs’ expected role in the world’s shift to a low-carbon economy. At the Paris climate talks, the world’s governments agreed to curb energy demand by fitting 10 billion new LED bulbs, including 5 billion in China by 2018, and 0.8 billion in India by 2019. Overall, experts say, the global transition to LEDs could reduce lighting-related carbon emissions by as much as 735 million metric tons — good news for the planet, as well as for GE. 

Still, lighting is a zero-sum game, and if the future is bright for LEDs, it’s rapidly dimming for CFL bulbs. After grabbing 30 percent of the U.S. market in the mid-2000s, thanks in part to media hype, the eco-friendly bulbs’ popularity has waned sharply: last year, they accounted for just 15 percent of lighting sales. Next year’s more stringent Energy Star standards will likely prove the final nail in the coffin for the technology, with lighting companies preferring to invest in LED technologies rather than trying to create CFL bulbs capable of meeting the new standards. 

This isn’t the first time that the lighting business has radically changed its core technology, of course; it’s only been a few years since CFLs and other high-efficiency lighting swept away incandescent bulbs. While there are still a handful of markets for incandescent bulbs, mostly in Asia and Africa, global sales of the once-ubiquitous bulbs are expected to wane to just $48.5 million in 2018. 

That’s a sign of how far the lighting sector has come from the time when firms such as Philips (NYSE: PHG), Siemens (OTCMKTS: iSIEGY) and General Electric enjoyed a “license to print money”, says Barclays analyst James Stettler. Incandescents burned out frequently, ensuring a steady stream of repeat business — a fact the industry was well aware of, and actively exploited. In the 1920s, the “Phoebus cartel”, which included manufacturers including Osram, Philips, and General Electric, responded to an increasingly volatile marketplace by colluding to reduce the longevity of lightbulbs by more than half, even as they used patents and sales quotas to restrict competition and inflate prices.

Those days are long gone: the cartel’s collapse, along with the falling cost of incandescent bulb production and diminished barriers to entry for other manufacturers, left even the big-name lighting companies fighting for scraps. Ironically, that led the same companies that once colluded to make bulbs less long-lasting to fight for government measures to promote new, longer-lived technologies. General Electric, Osram Sylvania and Philips all lobbied hard in support of legislation, passed by Congress in 2007, that banned incandescent bulbs and sparked the CFL and LED revolutions. Killing off traditional, 25-cent bulbs opened the door for the lighting giants to sell greener bulbs for several dollars apiece, while allowing them to leverage their R&D and patent portfolios to once more shut out upstart competitors.

The companies’ strategy worked remarkably well — and even, perhaps, a little too well. The new bulb technologies now taking over the market last exponentially longer than the incandescents they replaced: CFLs last around 10,000 hours, or ten times longer than an incandescent bulb, while LEDs can last 50,000 hours before they need replacing. With LED prices plummeting 14 percent a year, companies could soon find themselves facing a profit squeeze similar to the one previously endured by the incandescents market, but without a steady flow of repeat business to carry them through. 

That realization has sparked a wave of restructuring across the lighting sector, and is forcing lighting companies to double down on both technological and business-model innovation. General Electric is betting on finding ways to fuse its LED lighting division with its smart-home and Internet-of-things initiatives. “The focus on our future really is on the smart, connected, commercial space for lighting,” says innovation chief Beth Comstock. Philips, similarly, is experimenting with advanced LED bulbs that provide not only visible light, but also geo-location signals for mobile devices. “If your core competence isn’t needed any more, then you need to adapt,” explains Gaia Nocchi, director at research firm Frost & Sullivan.

Troublingly, though, there are already technologies on the horizon that could one day send LED lighting the way of CFLs and incandescents. Researchers at MIT just announced the development of a new incandescent bulb that “recycles” energy that would otherwise be lost as waste heat, making it longer lasting and far more efficient than conventional bulbs. There are also new graphene-based systems in the pipeline that promise to be at least 10 percent more efficient than LEDs. The future may look bright for LEDs, but that will only be true until the next big thing comes along.

Companies to watch

Everlast and Finally are marketing lightbulbs using induction technology, which was developed by Nikola Tesla around the same time Edison was pioneering the incandescent bulb, and can run for up to 20 years before burning out.

*  Chinese investment fund GO Scale Capitalis in the process of trying to bootstrap a new LED lighting giant capable of competing globally. U.S. regulators last month blocked its $2.9 billion bid to acquire a majority stake in Phillips’ LED components unit, but officials say they won’t be deterred. “China will inevitably become the leader of the global LED industry,” says chairman Sonny Wu.

Graphene Lighting, a startup founded by Manchester University researchers with backing from Canadian financiers, is reportedly poised to start selling graphene-based LED bulbs, and is planning a flotation on the Canadian stock market.

Ben Whitford is the US correspondent for The Ecologist. He has written for the Guardian, Newsweek, Mother Jones, Slate, and many other publications.