Saturday, October 01, 2011

Business Model

From a note posted by my nephew on Google+

We have an iMac. It's 5 years old. Recently, Netflix stopped working on it. The operating system (Tiger) was too old. We updated the OS to Snow Leopard. Now it works again.
We wouldn't tolerate this kind of nonsense with a television or a stereo. Why do we tolerate it with a computer?

The modern business model is to force the consumer to repurchase the same object over and over again.  In computers it is S/W, O/S, H/W ...  And of course we all know what a "Subscription-Service" is.  And what a "Maintenance Agreement" is.  

Recently our 20 year old Frig. underwent what I thought was a 'minor' issue.  The repairman asked if we had the Maintenance Agreement, We said yes and he slapped a yellow sticker on it and said go get a new Frig, We did and the total cost of the swap was $75.00.  I thought that was super till I totalled up the agreements we had paid over the last 20 years and even given the odd visit from the maintenance folks they made money on the transaction.

Also about the stereo and the TV --- once they fail (in almost any way) you find at that point that the device itself is so integrated and optimized that the 'repair' far exceeds the 'replace' and you purchase the same object again.

I think this business model is at its core an unsustainable model and should be changed.  The changing of the model must occur and there are quite a few businesses that understand this.  The lure of quick easy reoccurring is very powerful and will not easily be dislodged.  I first noticed this model when the US Car makers designed and produced autos that would not last 100,000 miles.  The German and Japanese car makers eventually 'fixed' this but at great cost to the United States.