TECHNOLOGY SPECTATOR: Breaking the upgrade cycle

Technology Spectator

Other than gaining new users, the principle driver of growth for technology companies is in forcing consumers into a regular cycle of upgrade and replacement. In a recent report, Recon Analytics showed that consumers in the US were replacing their mobile phones every 22 months. This is in part due to the heavy subsidising of phones by US telecommunications companies making it relatively inexpensive to buy new phones. But it has also been driven by companies like Apple developing new phones on an annual cycle and adopting strategic decisions about what features they include, or more importantly don't include, in each year's models. The most recent example of this was to only include Siri in the newer iPhone 4S and not allow it on earlier phones even though there was no technical reason for that.

In this way, Apple and other companies like Microsoft, have been accused of building "planned obsolescence” into their products. The way this manifests is actually quite wide-ranging and sometimes subtle. The way Microsoft has done this in the past however was anything but subtle and affected not only their own products but the hardware it ran on.

Each version of their application software and the underlying operating system increased in size and demands of the machines they ran on. This forced users into a cycle of upgrades in size of memory, disk and processor power. More importantly, Microsoft kept changing the way the operating system worked and how it interfaced with hardware. This ensured incompatibilities with hardware and particular versions of software. To buy newer versions of both guaranteed the necessity of upgrading the version of Windows and the PC it was running on.

In the early stages of product evolution, you could argue that making previous versions incompatible and increasing resource demands are inevitable. In the first several versions of Windows, there were few obvious attempts to ensure backwards compatibility. Microsoft was trying to ensure that they could get encourage sales of new products but were also attempting to limit the costs of supporting older platforms. This became even more of an issue when the security of the platform was in question. Constantly plugging leaks in older versions of software is expensive and consumes energy that could be spent on building new products.

There is also the factor of the level of maturity of the market. The challenges of getting new users are different from those of getting existing users to constantly upgrade.

There are signs now that for technology companies, relying on the constant upgrade cycle through planned obsolescence is going to become increasingly difficult. This is due to several reasons. Firstly, hardware in both the PC, tablet and phone market has largely got to a stage where it comfortably handles the demands of its software and use. Cheaper memory, disks and CPUs have led to machines that have a buffer of capacity. If a PC runs Windows 7 for example, it won't have any issue in running Windows 8. The same is also largely true with smart phones. Even though the phone manufacturers keep increasing the speed of the processors in their phones, there is little visible difference to the consumer of this. It would be impossible to really tell the difference for example in applications being run on an iPhone 5 and an iPhone 4S.

The other major reason why hardware and the operating system has become less of a constraint has been the move of applications to the Cloud. Google has essentially demonstrated that for most, if not all, things anyone wants to run, the main processing and memory requirements can be shifted to the server leaving the phone and PC to only need to run a browser.

Of course, Apple and others will argue that to get a truly "amazing” experience, you need to run a stand-alone app and these apps are still bound to the version of the operating system. But as the platform matures, even this becomes less of an issue.

In the hardware space, the bait for change is becoming the appearance of the device. Apple's marketing vice president Philip Schiller reemphasising this with the comment "Isn't it amazing how something new makes the previous thing instantly look old?”. Well, actually, no. The iPhone 4S is still a modern looking phone that is just "different” to the iPhone 5 (but not by much). Even the perceived social stigma associated with not being on the latest thing is becoming less relevant. In the case of other products like the iPad, the differences are imperceptible.

All of this means that as the phone market in particular matures, all of the companies involved are going to find it increasingly difficult to find sufficient distinction between old and new. This is good for consumers who may learn that throwing away a perfectly good device even every two years doesn't make sense. It is less welcome to the companies that will have to seek revenue in other ways.

David Glance is a director at the Centre for Software Practice at The University of Western Australia.