Is Everything Becoming A Service?

from the products-into-services... dept

For a long time now I've been a big believer that there are no digital goods. If you want to sell a digital good, you actually need to sell a service (basically, the ability to provide the good in the future), or you're going to get forced to give it away for free. It's not hard to work into the basic economics of how that works. However, Paul Saffo is taking that idea and going even further with it, suggesting that all phsyical goods will be sold as services as well. He points out that it's already starting to happen with mobile phones: without a service contract they're just paperweights. However, he can't believe service providers haven't figured out that they should be giving out the phones for free to encourage more service usage. He says other physical goods will follow the same pattern. He even predicts that you may get your car for free, but you'll have to pay for the service to make it run - such as alerting you that it's time for an oil change, and telling you that the nearest garage is ready and waiting for you.
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  1. identicon
    Anonymous Coward, 3 May 2004 @ 11:29am

    Free Cars? Not today.

    Nothing new here. It's an old idea and been tried, at least in my state. A small business was offering a free new car with the purchase of a “service contract” on the car. But then the state attorney general threatened prosecution for fraud on the grounds that the car wasn't free if you have to buy a service contract to get it. When asked why the mobile phone industry was allowed to do essentially the same thing, the reply was that it was “accepted industry practice”. Law enforcement apparently defines acceptable practice based on who is doing it and not what it is. So that's basically the reason you haven't seen more hardware become a service. It will only happen when the mega corps want it to and until then you can go to prison for it.

    The article also mentions American Airlines' SABRE system. Remember Braniff airlines? They were at one time AA's biggest competitor. But then AA began to manipulate SABRE to put Braniff at disadvantage, according to Braniff and travel agents. Braniff eventually went out of business. Yet the story only characterizes SABRE as technology that “always created more new players” without mentioning this other aspect.

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