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Published Mar 01, 2024
9 mins read

Obfuscation and Overload Part 1: Introduction to the Series & Flooding the Brand Zone

Prologue

Let's say you wanted to buy a car: pretty quickly, you could assemble a list of candidate manufacturers and models, go for a test drive, and make a decision.

To create that candidate list you could start from your own general awareness. You know what car you already drive, and likely have strong opinions about whether it's right for you. If you kept your eyes peeled on the street, talked to a few friends, read the news, or browsed YouTube or one of the established review sites (Consumer Reports, JD Power) your candidate list could grow by a few more makes and models. At the end of the day, the universe of car options would be easily knowable, features to compare somewhat straightforward (5 seats? 7? AWD? FWD?), MSRP prices slapped on the window, financing options obvious (cash, loan or lease), and insurance companies well advertised and regulated.

All this transparency for a $30,000-$50,000 purchase that is, for most households, the number one source of greenhouse gas emissions produced.

But in the world of HVAC – a purchase of $10,000-$20,000 that is the second highest source of greenhouse gas emissions for most households – we are in a wildly different world:

Over 100 heat pump brands exist, many hiding the fact that the same manufacturer produces them. With few exceptions, pricing information is completely hidden from consumers. Installation expenses are even more variable and hidden. Product features and performance data poorly understood. And – for something that can cost a good chunk of the median household's annual income – financing options mostly seem like back-alley deals with terms all over the place from institutions you've never heard about unless you live in certain states and happen know the right things.

Beginning to tell a story

As I wrote two weeks ago, we are far behind in driving adoption of HVAC heat pumps at the rate required to hit net zero greenhouse emissions by 2050.

A big part of my motivation for starting this newsletter is to try and use writing to explore why we are so far behind and what we can do about it. But also I don't think writing will be enough. Some stories will have to be told with data.

This week, writing for Heat Pump Review has been mostly quiet while I've parsed, cleaned and researched the over 100,000 HVAC and hot water heat pumps certified by the Department of Energy's Energy Star program ( raw data here ).

To be honest, I'm not quite sure what the full story is that I'm trying to write here, nor what the full story is from the data I'm analyzing; I think there are several stories, but for now they are simply adding up to a larger feeling or "vibe."

The vibe:

The current state of the HVAC market is working against everyone. The climate, consumers, installers, brands, banks and manufacturers – we're all losing right now. There's too much obfuscation and information overload. And nobody benefits.

In my analysis, which I plan on continuing and publishing in additional parts over the following weeks, I have been astounded by how much obfuscation and waste the industry appears to be burdened by. For the remainder of Part 1 of this series, I want to explore the first problem I've uncovered: Manufacturers are Flooding the (Brand) Zone.

Flooding the Brand Zone Exhibit 1: Lennox

Out of the 115,782 unique heat pump systems (unique combinations of brand name, outdoor unit model, indoor unit model, and auxiliary parts submitted by manufacturers and certified by Energy Star), 14,488 (13%) were submitted by one Lennox International .

But, of those 14,488, fewer than half (6,743) were submitted with "Lennox" as the brand name found on the unit outside of your house. You see, Lennox International owns several brands selling entirely undifferentiated products. Visit the dedicated "Heat Pump" pages for Armstrong Air , Allied , AirEase , Concord Air , and Ducane and you start to get the picture. Lennox isn't giving consumers an amazing set of options – providing 14,488 ways to improve your home's air quality, reduce greenhouse gases, or save money – rather, Lennox is muddying the waters: taking the same products and slapping on different nameplates.

In an analysis by Heat Pump Review , we found that 13,733 of Lennox's 14,488 certified systems were a part of one of these "duplicate packs," calling something a "M Series" one place and a "4DH Series" in another, all while providing the same appliance under the hood. And the bad news: they're not close to being the industry's worst offender.

Et tu, Carrier?

I share the Lennox example first because in many other industries, if I told you one company accounted for 13% of sales across at least 6 brands, you'd think they were the biggest conglomerate. Alas they are the 3rd biggest HVAC conglomerate in the HVAC heat pump world (to be clear: as measured, again, by unique "systems" certified by Energy Star, not sales – data I am still acquiring).

Carrier, meanwhile, is the 800 ton gorilla and #1 by far, accounting for 57,241 systems – an astounding 49% of all systems – certified by Energy Star as of February 2024. Of these, only 8,887 are sold to consumers as "Carrier" systems, while the rest are spread across brands like Bryant , Tempstar , Airquest , Acroaire , Comfortmaker , Day & Night , Heil , and KeepRite .

Let's take one of Carrier's "best" ducted models, for example: a 18.5 SEER2, 12 EER2, 8.5 HSPF2 , 33,000 BTU/hr cooling capacity, 31,800 BTU/hr heating capacity, continuously variable heat pump marketed as the Infinity® Variable-Speed Heat Pump . Indeed, while sold under (and linked to above) every brand mentioned above, there is nothing architecturally different about the Carrier model vs any other of them. Like the Lennox example, half are marketed on websites sharing the same design, copy and product photograph (logos photoshopped and all). Some share the same cool "Ion™" technomarketing name while others enjoy fancier ones like "Evolution™." But unlike our car industry comparison – where the Honda/Acura or Toyota/Infinity share similar platforms, but are tangibly different cars in dozens of ways – there is technically zero difference about these models. Your house will not cool or heat differently. You won't get better or different access to Demand Response programs. It won't take up a different amount of space on the pad outside your home or use different refrigerants. Same. Same. Same. Same.

In a deep dive of Carrier systems by Heat Pump Review , we found that 55,605 of the Energy Star Certified systems were actually a part of 7,082 duplicate packs of the same product spread out across multiple brands.

More Offenders

Again, if it was just the largest and third largest manufacturers maybe there wouldn't be a story here. But we see the same with everyone. As seen in our table below, even the 10th largest duplicates 74 models across its three brands. This is endemic to the industry. This is the industry.

# Parent Company Energy Star Certified Systems Sold as Brand E.g., Other Brands Duplicate Clusters
1 Carrier 57,241 8,887 Bryant, Tempstar, Airquest 7,082
2 Johnson Controls 14,518 2,347 York, Coleman, Luxaire, Champion 2,017
3 Lennox 14,488 6,743 Armstrong Air, Allied, AirEase, Ducane 4,228
4 Trane 4,913 2,465 American Standard, Ameristar, RunTru 1,640
5 Brock Air Products 1,626 0 ACiQ, 1HVAC, MRCOOL, Stealth Comfort 402
6 Rheem 2,027 705 Ruud, Friedrich, Sure Comfort, WeatherKing 569
... ... ... ... ... ...
10 Daikin 467 199 Amana, Goodman 74

So Why Do They Do This? Who Benefits? And What's the Harm?

Readers of Heat Pump Review should already know that I am new to the industry. The fact is I don't know what I'm talking about, and I look forward to revisiting these early articles with a deeper understanding developed over time, especially after I have had the opportunity to interview folks who do have experience here.

But if only as a non-expert heat pump consumer – I am, after all, needing to buy one of these systems soon – and certainly as a founder/entrepreneur, I can't help but try and understand why are they the way that they are .

Here's what I've come up with:

Many of these companies have been built via multiple acquisitions over time. Given HVAC systems can live in a home for 20+ years, and repair folks still need to buy parts there's a need to keep operations around for brands long after they've been merged into a larger enterprise. Meanwhile, if customers have had a working system for 20 years, I can imagine a strong bias toward staying with that brand when they make their next big purchase, no matter if under the hood all the parts are now from the parent company and nothing other than the brand lives on.

That's my generous take.

I can't help but be less generous with my remaining takes.

By flooding the market with identical-but-the-brand products, manufacturers and installers can give the customer a feeling of optionality without delivering optionality. "Work with us: we can sell you a Trane or an American Standard."

Or maybe it's the opposite. Maybe by flooding the market we are meant to be confused. "Oh, there are so many options. Let us give you a bid that helps our bottom line. We've intentionally made it too complicated for you to choose yourself but we're only giving you this unit because we had it in inventory and knew you wouldn't be able to challenge us."

If consumers don't win from all this obfuscation and overload, certainly the manufacturers and installers are winning... Right?

But as a "business guy" I can't help but shake how much inefficiency there is here, keeping prices higher simply because costs are higher, taking manufacturers' efforts away from the R&D that will make heat pumps even more efficient or cheaper or better in some way we haven't even thought of. Putting it in the form of a hypothetical: if I took one of these companies private, would I keep all these brands around? Or would I streamline?

When you have to hire 100 people just to update manuals and warrantees and websites and financing pages and product photoshop files all to pretend you have different brands when you don't actually have different brands, that's 100 people not building the future. When you have to separate your warehouse into different section and carry more inventory just to stay in stock across all brands, that's space and dollars not investing in the future. When your customer service department has to answer questions in 4 different ways to pretend they are supporting 4 different brands, that's effort taken away from making people happier and keeping customer service costs low.

Did I mention the number of tests performed and applications prepared and submitted to Energy Star, and the number of government bureaucrats paid to process those tests and applications?

So, again, tell me who wins because I'm thinking it's none of us.

To be continued...

I am baffled but I am a beginner, so there will be more. As you can tell, I've been playing a lot with the Energy Star data, and one of the ways I've been trying to get smarter is by building an application around that data in a way that will benefit you, my reader, as well as anyone else who is trying to better understand the products being offered.

Next week, I'll continue this series and start to share these tools for your benefit as well.

Nate Westheimer
Nate Westheimer Editor, Heat Pump Review
Nate Westheimer is the Editor of Heat Pump Review. He as worked in the tech industry for nearly 20 years, including as a Director of Technical Product Management at Amazon, the CEO of Picturelife, and as the Executive Director of the NY Tech Alliance.
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