As Edison and his staff experimented furiously to develop a lamp that would be commercially viable, they also worked on other parts of the electrical system, most notably the generator. Edison had initially thought that he could use the Wallace arc-light dynamo for his incandescent lighting system. However, after experimenting with the Wallace and other arc-light dynamos he began to doubt their suitability for incandescent lighting. Edison began a set of fundamental experiments related to generator design that included extensive experiments with electromagnets intended to produce a fuller understanding of the principles of electromagnetic induction of current. By the beginning of January 1879, after what Charles Batchelor described as "a few weeks hard study on magneto electric principles," they had advanced their understanding of generators sufficiently that Edison set the machine shop to work building a new design under Batchelor's direction.
During February and March, Edison, Batchelor, and Francis Upton conducted extensive generator experiments that led to a major breakthrough in the design of dynamos for incandescent electric lighting. Although it is unclear whether these experiments were informed by the important experimental work on generators published by Philadelphia electricians Elihu Thomson and Edwin Houston in late 1878 and early 1879, he and his staff reached the same conclusion—generators with equal internal and external resistence generated maximum current, while those with a small internal resistance produced more efficient power output.
Edison considered the economic efficiency of his system to be related to the number of lamps per horsepower. He and his staff therefore measured the work output of their generators by employing an electrodynamometer to convert the electrical energy obtained from their generators into foot pounds. (Thomson and Houston had made similar measurements.) Edison and his assistants decided that they could design a more efficient dynamo for incandescent lighting by making the internal resistance much smaller than the external load, rather than having equal internal and external resistance as was standard in other generators of the time. By July Edison could claim that his machine "delivers in the form of current 96% of horse power applied to it. . . .this will give us about 80% of the total horsepower applied that will be useful for lamps." And Francis Upton wrote to his father "We have now the best generator of electricity ever made and this in itself will make a business."