simondelliott

The hidden cost of planned obsolescence

The postwar American industrial boom saw car sales take off. But by the time of the moon landings the car manufacturers had noticed that their sales were parked in a steady orbit and possibly were about to fall back to earth.

At that time the automotive industry attracted the most brilliant minds, and collectively they could not figure out why this fall in growth was happening. The most popular car manufacturers had complete control over the domestic car market, and yet their sales figures were falling. After some long and hard head scratching they realized that the reason for their poor performance was due to their past success.

The reason that sales had fallen off was quite simply because they had achieved market saturation. Everyone who wanted a car had a car. The only sales that the market leaders were making were due to the replacement of old worn out products.

As we all know shareholders demand growth and the market leading position was not sustainable.
So what was the solution?

Planned obsolescence

Quite simply the cars had to wear out faster so that they could be replaced faster and sales would start to rise again. Instead of engineering components to the highest quality they were machined to an adequate quality which caused them to expire in a known length of time. By today’s standards we consider this an environmental crime, however this practice and this method of controlling a market is a cornerstone of modern business practice.

Times and fashion change. Since the 80’s the ultrapreneurs and brilliant minds have been drawn into the world of computing.  But people are not the only thing that has migrated to the world of computing many of the working practices of the car industry have also made the leap into cyberspace.

How long will my software last?

For the past 10 years computer developers have been toying with the Toyota production system, many of the principles of kaizen are behind google, facebook and other modern world engineering feats.

But automotive business practices have also found a place in the new world of computing. When you look at the releases of windows you will see that closed source companies are clearly using their position as market leaders to make the most out of the principles of planned obsolescence.  All the languages, databases, office products and addon packs that they sell all have a shelf life. The next version of a computer language includes fixes for lots of issues, but in order for it to maintain a market leading position it must also introduce new issues.  This may sound a little unfair to the big software companies but they are not the only ones, planned obsolescence is a part of the very fabric of the IT market. Step back in time just a little further and you will see that everyone is doing the same thing.

It makes good business sense that your software is just good enough – not great, but just enough to last a couple of years before you need to buy the new more stylish, more secure, more better upgrade.

Take software depreciation into account.

The next time you look at new software think about how long that software is valid for and take the upgrade cost into account. Lots of packages offer free upgrades but do they offer free upgrades to the latest version? If you deploy a Windows 7 license what is the cost of the inevitable upgrade to windows 8, 9, 10 … ? Will your servers be running Oracle 11 for ever? How much will it cost you to change your business processes, how much do your people cost you, do you have to train every time you upgrade? Do you have to rewrite your application endlessly?

Comparing open source to closed source

Many governments and enterprises are looking into opensource as a possible route to cut costs. And I have been involved in a number of conversations looking at just how much an opensource alternative really costs.

The reality is that the short term costs are roughly similar. However when you look at the long term costs the equation becomes very different and this is because of the hidden cost of planned obsolescence.

Designed to fail.

My point of view is that it stands to reason that license revenue model software is deliberately designed to fail. It’s just good business.

However the practice of planned obsolescence is not only anti consumer;  wasting their time, resources and money, but it is also anti engineer.  If an engineer makes something using components of a computer language that are designed to fail over time then their products will also degrade, effecting the longevity of their product and the amount of time that their product can be retailed for.

I am primarily someone who makes a living by making and selling software, and for me this is the most compelling argument for using opensource throughout the whole delivery chain.

The reason I support opensource is not because it saves me money … it makes me money.