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Company A treats its customers with respect, lets them maximise the return on their investment by giving them all the details and helping them keep the instrume

by zh3 7y ago

Company A treats its customers with respect, lets them maximise the return on their investment by giving them all the details and helping them keep the instrument going as long as possible. Company B releases a product that works pretty much as well as Company A's but is cheaper (because it isn't investing in the aftersales support). Since support is an expensive business, by cutting it Company B makes more profit. In the long run, Company B wins. Quite a few companies are smart enough to see how this works, and so morph from being an A type company to being a B. Evolution in action, the fitter (most profitable) company survives (shame about the prey..ah, "clients").

drongoking 7y ago
This isn't "evolution in action" in any inevitable sense. This only happens if the consumer values up-front price over TCO. Admittedly, with emphasis on quarterly earnings, this is the path many companies have chosen, but it's not universal.
- toohotatopic 7y ago
  But consumers value up-front price over TCO. Why else would most people finance their phones with their plans instead of buying them directly?
  - Swenrekcah 7y ago
    My guess is because that’s what they’re sold on and offered. Also perverse incentives come into play. With companies it’s quarterly results, with consumers it’s consumerism culture and the insane financing dependency people are hooked on. Valuing up-front over TCO only makes sense for very large purchases and for business investments.
  - Karunamon 7y ago
    Time utility of money. A lot of those financing plans are interest-free and surprisingly straightforward, and add up to the actual retail value of the device over the time of the plan, not one penny more. These proliferated as years-long contracts became unpopular. In the case of Verizon, signing up with such a plan also allows you to return and upgrade your phone after it's halfway paid off. With phones getting more and more ridiculously expensive, there's little reason not to do this unless you'd rather be out $1000+ immediately when you have the option to be out $40/month for a couple years with no downsides instead.
- georgemcbay 7y ago
  "This only happens if the consumer values up-front price over TCO." Which many, many, many... do. The world's largest retailer is Wal-mart for a reason (which has nothing to do with TCO and everything to do with up-front price of goods).
xg15 7y ago
Indeed. I think this is a textbook example of market failure: Something where the most profitable course of action very clearly does not align with the course of action overall best for society (which would be to maximize the lifetime of those devices if possible - but in any way not deliberately shorten it). Hence this is a prime example where regulation would be needed.
- wolfgke 7y ago
  > Indeed. I think this is a textbook example of market failure No, it shows that markets work perfectly - they just optimize for what the customer wants to buy, not for some noble goal that you desire.
  - xg15 7y ago
    The customer wants that you deny them schematics? The customer wants machines that are more difficult to maintain and repair? Is the customer a masochist?
    - wolfgke 7y ago
      As the market data shows, most customers value a very low price over anything else. So the market delivers. On the other hand, if the noble ethical goals that you list were more important for the customer, he would prefer devices that satisfy these goals (as much as possible) over low prices in his buying decision(s).
      - xg15 7y ago
        How does the market data show that? This is not an A/B test, there is usually not an equivalent alternative to compare against. See e.g. the right-to-repair debate. The function is important enough for farmers to demand regulation and drive the prices of old, non-locked-down tractors through the roof. And yet, it's still more profitable for John Deere to lock down their tractors. When deciding between the packages "modern, feature-rich tractors that are locked down" or "old, reparable but overpriced tractors", the former probably win. That still doesn't imply that farmers "want" locked down tractors or that reparability is of no importance to them. Also yes, we do need ethics in business. Last thing I've read, even some MBAs have heard of that by now.
neuralRiot 7y ago
Exactly, same happens in other markets like consumer electronics or cars, people complain all the time that “things aren’t built to last anymore” but when faced with the decision they will just buy the shiniest one for the price. So who are to be blamed? Us the consumers.

by zh3 7y ago

drongoking 7y ago

This isn't "evolution in action" in any inevitable sense. This only happens if the consumer values up-front price over TCO. Admittedly, with emphasis on quarterly earnings, this is the path many companies have chosen, but it's not universal.

toohotatopic 7y ago
But consumers value up-front price over TCO. Why else would most people finance their phones with their plans instead of buying them directly?
- Swenrekcah 7y ago
  My guess is because that’s what they’re sold on and offered. Also perverse incentives come into play. With companies it’s quarterly results, with consumers it’s consumerism culture and the insane financing dependency people are hooked on. Valuing up-front over TCO only makes sense for very large purchases and for business investments.
- Karunamon 7y ago
  Time utility of money. A lot of those financing plans are interest-free and surprisingly straightforward, and add up to the actual retail value of the device over the time of the plan, not one penny more. These proliferated as years-long contracts became unpopular. In the case of Verizon, signing up with such a plan also allows you to return and upgrade your phone after it's halfway paid off. With phones getting more and more ridiculously expensive, there's little reason not to do this unless you'd rather be out $1000+ immediately when you have the option to be out $40/month for a couple years with no downsides instead.
georgemcbay 7y ago
"This only happens if the consumer values up-front price over TCO." Which many, many, many... do. The world's largest retailer is Wal-mart for a reason (which has nothing to do with TCO and everything to do with up-front price of goods).

xg15 7y ago

Indeed. I think this is a textbook example of market failure: Something where the most profitable course of action very clearly does not align with the course of action overall best for society (which would be to maximize the lifetime of those devices if possible - but in any way not deliberately shorten it). Hence this is a prime example where regulation would be needed.

wolfgke 7y ago
> Indeed. I think this is a textbook example of market failure No, it shows that markets work perfectly - they just optimize for what the customer wants to buy, not for some noble goal that you desire.
- xg15 7y ago
  The customer wants that you deny them schematics? The customer wants machines that are more difficult to maintain and repair? Is the customer a masochist?
  - wolfgke 7y ago
    As the market data shows, most customers value a very low price over anything else. So the market delivers. On the other hand, if the noble ethical goals that you list were more important for the customer, he would prefer devices that satisfy these goals (as much as possible) over low prices in his buying decision(s).
    - xg15 7y ago
      How does the market data show that? This is not an A/B test, there is usually not an equivalent alternative to compare against. See e.g. the right-to-repair debate. The function is important enough for farmers to demand regulation and drive the prices of old, non-locked-down tractors through the roof. And yet, it's still more profitable for John Deere to lock down their tractors. When deciding between the packages "modern, feature-rich tractors that are locked down" or "old, reparable but overpriced tractors", the former probably win. That still doesn't imply that farmers "want" locked down tractors or that reparability is of no importance to them. Also yes, we do need ethics in business. Last thing I've read, even some MBAs have heard of that by now.

neuralRiot 7y ago

Exactly, same happens in other markets like consumer electronics or cars, people complain all the time that “things aren’t built to last anymore” but when faced with the decision they will just buy the shiniest one for the price. So who are to be blamed? Us the consumers.