In working to quantify the cost of technological obsolescence, I learned a couple things: Obsolescence comes in five forms and, while it is not quantified in terms of minutes per employee, it is budgeted for by nearly every business. Yet, without understanding obsolescence itself, the budgeting process is often understated, as it assumes products have a longer life than actual use suggests.
The term “Planned Obsolescence” was first introduced in 1932 (The Culture of Planned Obsolescence in Technology Companies). Prior to the 1930’s, consumers were expected to purchase products primarily when they broke and could no longer be repaired. It was during the early 1900’s that companies first began to limit the life span of a product through the purposeful use of inferior parts or components. It was also during this time period that General Motors developed the idea of changing the look of their cars every year to drive demand for the new styles, even though the cars themselves did not necessarily contain any new technology or features. Over the years, Planned Obsolescence has developed four subcategories, and is followed by its antonym, Unplanned Obsolescence.
- Planned Obsolescence
- Technical Obsolescence
- Functional Obsolescence
- Style Obsolescence
- Postponement Obsolescence
- Unplanned Obsolescence
Technical Obsolescence appears whenever a new release of a product supersedes the functionality of the previous. Consumers are motivated by marketing to replace their existing and functional product in order to gain the features or benefits of the new product. Often the next generation product is already being defined as the current is getting it first sales. This form of obsolescence can define product technology releases that coincide with buying cycles such as the push to release new electronic products every year in time for fall buying. It is less effective, but still used, for items that have longer life cycles such as TVs or refrigerators.
Functional Obsolescence is defined as the moment when a product can no longer be repaired at a reasonable cost due to the scarcity of parts or complex nature of the repair. It becomes cheaper to replace than to attempt to extend the life of the product. It also is applied to products where the life span of the product is intentionally limited, such that after a period of time, it must be replaced.
Style obsolescence is easily noted in the release of new cars where the look drives buyers to want to change cars far before the vehicle faces other forms of obsolescence. It is also prominent with electronic products where the look of the previous version is not acceptable to a group of users. It is style that is driving the purchasing decision, with features trailing behind.
Postponement Obsolescence occurs when a company chooses to offer different levels of features based upon the model or price of a product. Again, this is very common with cars as cheaper cars have the fewest features. Postponement, then, refers to the consumer deciding that the purchase of the more expensive fully featured item may need to be delayed until it is available at a lower price.
Unplanned Obsolescence, as it applies to the producers of products, can be devastating as it occurs without preparation or forecasting. It can be driven by a change in regulation, market behavior, unexpected technological advancement or the discovery that the product threatens the health or life of buyers.
Thursday, we will continue this discussion to understand the cost of obsolescence and how Hosted Unified Communications can assist in managing it.