Remember the roaring twenties? I don’t either, but it seemed like a lot of fun. The economy, jazz, flappers, and Art Deco boomed. Technology developed quickly as cars, phones, movies, and electrical appliances became a part of daily life.
The Phoebus Cartel
As modern technology blossomed and light bulbs were in demand, top representatives from major light bulb manufacturers gathered in Geneva. In January of 1925, they formed the Phoebus cartel. Light bulb manufacturers were worried about finding technological edges, competing amongst each other, and keeping sales numbers high. Therefore, the Phoebus cartel was an alliance that was meant to help these companies by controlling the manufacturing and sales of incandescent light bulbs.
Most notably, the cartel lowered light bulb life expectancy from 2,500 hours or more to just 1,000 hours. This allowed the manufacturing companies to generate higher sales. They produced more lower cost light bulbs and sold them at higher prices. Since they wouldn’t last as long, consumers would have to buy more of the bulbs. Because many of the major manufacturers, such as International General Electric, Osram, Philips, Tungsram, Associated Electrical Industries, and Compagnie des Lampes, were members of the cartel and had to agree to these standards, there wasn’t a fear of competition amongst them.
The cartel was able to pull this off by arguing that the less lasting light bulbs were higher quality bulbs that were brighter and more efficient. The cartel scientists invested lots of time in creating an inferior bulb, so their work made it possible to create a bulb that would burn out after 1,000 hours. Manufacturers would also have to regularly send samples to the cartel for testing.
Why Create an Inferior Light Bulb?
The reason they didn’t create a better light bulb was to ensure that sales, and most importantly profits, would continue to increase. The cartel was able to accomplish this initially. Between 1926-1927, the cartel sold 335.7 million light bulbs worldwide. Just four years later, the cartel sold 420.8 million bulbs. Since the costs to produce these bulbs were lower and prices were higher, profits skyrocketed.
Eventually, the Phoebus cartel’s success did not last. Competitors who were not a part of the cartel started selling lower quality bulbs for cheaper prices, and this was a hit with consumers. Further, many of GE’s patents expired, which also helped non-members. Ultimately, World War II started, and this greatly disrupted the cartel.
Defining Planned Obsolescence
Although the cartel lasted only into the 1930s, its legacy continues to live today. It established the idea of planned obsolescence, which is the designing of a product that intentionally has a limited life. The design is meant to phase out after a short period of time, whether it breaks or is unfashionable.
This results in consumers needing to purchase more of the product and at a faster rate, which in turn generates more sales. It’s a risky and controversial idea. Supporters argue that it forces consumers to keep their products upgraded and companies to continue with innovations. The opposition argues that it misleads consumers and results in more waste.
Planned Obsolescence and Automobiles
Some products are simply designed to break, like the light bulb after 1,000 hours, but others products are meant to be inconvenient or unfashionable. The latter is just a genius marketing move that makes consumers buy more than what they need. This type of planned obsolescence was introduced by General Motors CEO Alfred Sloan* to increase its sales, also in 1924. Although in a clever cover up, Sloan referred to this tactic as dynamic obsolescence.
At the time, Ford released the Model T in just black, which was popular, but caused sales to drop. Sloan suggested that GM release new models, new colors, and with slightly different features each year. Due to the small nuances, this would fabricate demand. When a new model was released, consumers would be unhappy with their current model and would buy the new one, even if they didn’t actually need it. As industrial designer Brooks Stevens, who popularized the robin’s egg-blue color that defined American kitchens in the 1950s, said - “Instill in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary.”
This strategy did help GM beat Ford in sales and dominate the auto industry through the 1960s. While GM hit other issues in the 1970s that caused it to lose its automobile dominance, the idea of planned obsolescence spread into other industries. It forever changed American economics and marketing. Today, its effects are seen in many markets, but primarily in technology.
So Is This Legal?
Is planned obsolescence ethical? Should companies be penalized for creating inferior products? Or is planned obsolescence just a marketing strategy that’s a part of the economy in capitalism? All of these are great questions. Each company has an opinion of its own, and laws in regards to this topic vary dramatically across each country.
Apple is a perfect example of a company that faces criticism for planned obsolescence. In Europe, there are laws that ban products with built-in defects. Namely, France passed the Hamon Law in 2015. It’s a law that fines manufacturers for selling products with undisclosed lifespans to consumers. An activist group in France - Stop Planned Obsolescence, or HOP in French - filed a complaint against Apple for slowing down older phones. It also filed lawsuits against printer companies Canon, Epson, HP, and Brother.
In the United States, there are no national laws prohibiting planned obsolescence. However, there are alternative laws that can be used to ensure that products last longer. Apple is facing US lawsuits for defrauding users by slowing down older phones. Apple says that the batteries do slow down, but to help the phones not shut off abruptly, not to make the older models obsolete. With that said, Apple always comes out with new phone models yearly and replacing a battery costs almost as much as a new phone.
It seems like awareness of planned obsolescence is coming to light as more regulations are being passed in the technological world. Nonetheless, many companies use this tactic when they release something new that’s simply marketed as better than the previous product. Going back to the light bulbs, the Phoebus cartel is relevant today as the lighting industry is replacing incandescent bulbs with fluorescent and LED bulbs.
If you’re at a halt with your legal marketing, perhaps turn to the Phoebus cartel or planned obsolescence for inspiration. It’s up to each business to decide whether or not planned obsolescence is a strategic marketing plan for its company. However, it’s also necessary for each business to consider the ethical, philosophical, and environmental effects of planned obsolescence on the consumer and planet.
*Some say this idea is mistakenly attributed to Sloan and that it was actually borrowed from the bicycle industry.
Sources:
https://spectrum.ieee.org/tech-history/dawn-of-electronics/the-great-lightbulb-conspiracy
https://www.hg.org/legal-articles/planned-obsolescence-should-be-an-offense-punishable-like-any-deception-33946
https://www.lawtechnologytoday.org/2018/01/planned-obsolescence-lawyers/
https://timeline.com/gm-invented-planned-obsolescence-cc19f207e842
https://fortune.com/2017/12/26/apple-lawsuit-old-iphones/
https://fortune.com/2017/12/28/apple-sued-battery-throttling-france/
https://www.treehugger.com/corporate-responsibility/how-planned-obsolescence-began.html