Samsung’s smart TV Evolution kit announcement this year may be “the closest thing to heresy” ever heard at CES, according to prominent tech blogger Lance Ulanoff. The New York-based Mashable blogger wrote that he believes the plans may foretell a move away from planned obsolescence by the lords of technology creation.
Planned obsolescence, of course, has long been understood as a means of stimulating demand by deliberately designing products that will wear out or become outmoded after a limited period of time. In 1932, it was promoted as a way to kick-start the severely depressed US economy by fast-tracking consumer purchases in a US pamphlet written by one Bernard London, entitled Ending the Depression Through Planned Obsolescence.
London characterised the depression as “stupid”, arguing there was “a paradox of plenty”, where “millions were suffering amid glutted markets and surpluses”. He wrote: “The essential economic problem has become one of organising buyers rather than stimulating producers. [And] In the earlier period of prosperity, the American people did not wait until the last possible bit of use had been extracted from every commodity. They replaced old articles with new, for reasons of fashion and up-to-dateness.”
His words seem peculiarly apposite for the IT industry in today’s tough times, when the channel is up against ever-longer refresh cycles, finding it increasingly difficult to convince customers to invest in new technology, despite the fact that hardware in particular becomes outdated very quickly.
Doing more with less
If Ulanoff is correct, the world’s largest IT manufacturer appears to be going against the tide. Instead of thinking of ways to increase the turnover of product, Samsung is deliberately moving to enable users to do more with less. This may please users, but, if the trend were to spread across the technology market - as other consumer tech phenomena have - what might it mean for the channel?
“It is the closest thing to heresy I have ever heard at a CES press conference: ‘Buy these new products and keep them indefinitely, upgrading only the software with, essentially, BIOS updates.’ What happened to the idea that consumers would upgrade their CE products every few years whether they wanted to or not?” wrote Ulanoff. “I saw examples of companies that were more interested in creating ecosystems than pushing new gadgets into the home.”
David Watkins, senior market analyst at Futuresource Consulting, says he has not heard of any other initiative similar to Samsung’s Evolution kit for smart TVs. “None that we are aware of, although we do not believe Samsung’s upgrade idea is anything new. Many manufacturers sell products that are upgradeable. Samsung has just made the upgrade process easier by adding a hardware extension,” he says.
However, Samsung’s upgrade kit definitely provides another way for the company to differentiate its products from the competition. Watkins notes that as the TV industry becomes more commoditised, vendors will need to make their offerings more appealing than others. Especially in tough times, one imagines.
Watkins picks apart Ulanoff’s headline around the end of planned obsolescence. In Watkins’ view, TV manufacturers have not and do not utilise planned obsolescence as a strategy.
“Most consumers upgrade or change their TV, before they actually need to through the TV dying. Hence manufacturers do not need planned obsolescence so long as they keep innovating - as they are doing,” he says. “Another point to bear in mind within the TV industry is that TVs, unlike other CE products, are a piece of furniture.”
Therefore, Watkins adds, TVs can be made obsolete from a design point of view by changes in interior decor. This generally is, of course, independent of CE companies. “Hence, obsolescence may be thrust upon them,” he says.
Watkins says the story is similar in the mobile phone industry, where again manufacturers do not use planned obsolescence to any great degree. “This is because many consumers tend to upgrade their phones after 18 to 24 months - mainly because they want the latest device from a status and functionality standpoint.”
Smartphones in particular tend to have a short life cycle as the way they are used means they are more likely to break down than traditional CE. People take them everywhere, and they lose them too. Furthermore, the upgrade process and operator subsidies mean that for consumers price is less of an issue. Regular upgrades are part of the mobile culture, says Watkins.
Planned obsolescence, he agrees, is not good for the end-user customer. “Consumers ultimately have to pick up the bill of getting rid of and replacing a product that has come to the end of its life,” he says.
Watkins adds that, outside of the strictures of a low-growth economy, the industry shift to software and services as opposed to hardware in itself means hardware refresh cycles will lengthen and markets become more commoditised. Therefore, vendors must ensure they can still generate sufficient revenue from the products they sell, even if they are ultimately selling fewer of them.
“[Also] hardware vendors are judged on how environmentally friendly their products are. Initiatives such as this will only boost a brand’s green credentials,” concludes Watkins. “As smart technology has enabled hardware vendors to become more service-oriented, they will begin to forge stronger ties with the end user. Consumers will start to associate brands with accessibility to certain types of content.”
To maintain brand loyalty, then, end users must have few reasons to go elsewhere. Here, of course, the channel can play a role.
Evolution rather than innovation
Ulanoff also wrote that CES 2012 (pictured above), while just as busy as ever, seemed to promote evolutionary product changes, rather than outstanding innovations - reflecting that users, for
He noted the trend in automotive technology, where cars are increasingly becoming a platform for connectivity and other “smarts”. Ford, he wrote, had told him at CES that some enhancements would soon become backwards-compatible, with customers able to upgrade vehicle software themselves online.
Jim Stinziano, senior vice president of Samsung Electronics America, said in his CES keynote that a 2012 line of TVs will ship with a slot at the back that supports Samsung’s Evolution kit to boost certain features and performance.
“We want people to enjoy the latest developments today and still have access to what is coming tomorrow. We will deliver the [Evolution] kits from 2013 and beyond,” Stinziano promised.
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