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
    aNonMooseCowherd, 3 May 2004 @ 7:15am

    cost shifting and competition

    Artificially shifting the cost from the manufacturing cost to future service only works where the manufacturer can lock the customer in, for example through trade secrets. If someone else can offer competing service at a lower price, then the customer wins at the expense of the manufacturer.

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