My laptop failed two months after the warrantee expired, and with repair parts no longer available (can you say “expensive paperweight”). It makes me suspect that our industry may have moved from MTBF (mean time between failures) to MTRS (mean time to replacement sale.) Having worked since the IBM 360 days for computer manufacturers, I recognize the business model problems they face, and we, as a profession need to recognize these – and some of the emerging solutions/threats/opportunities that result.
Companies (that will remain in business) need a continuing (and ideally growing) stream of profitable income. If your customer consumes your product (gas, electricity, food) then your business models can focus on a different set of factors than the situation where your product has a long life. In effect, companies want an ‘annuity’ source of income from customers. For computer hardware, this could be from leasing (IBM’s initial model), field replaceable upgrades, and more recently outright replacement. For software it has been the “new release”, with the carrot of ‘new features’ and the stick of “older version no longer supported”. Tied to these models is the issue of “what does the customer need?” Coming back to my laptop experience, I realized I’d purchased a top-of-the-line unit for performance that would allow me to play video games, and interact in Second Life -- for educational and professional reasons of course. But my real need for a computer is a set of must-have (not killer) applications. These include word processing, spread-sheet, presentation, email, browser, financial management … and actually not much more. As my computer was dying, I moved quickly to backup all that I could (backup is your friend, and one at least I ignore too often.) So I was able to move quickly (between my return from a trip to Montreal and my trip to Korea – laptop essential events in both cases) to a replacement unit that cost one third of my recently deceased unit (actually costing less than the quoted price of the unavailable replacement part.) The new unit is not as fast, no video games, I’ve not tried Second Life, but it does my essential tasks … and is well rated by Consumer Reports for reliability – and as you might suspect is from a different supplier. I expect my electronic devices to outlast their usefulness – as my 2006 desktop is well on its way to doing.
But how is our industry broken? This ties to the business models that are inconsistent with a changing world. The “software annuity” model (new version, no support) is threatened by open source where there are no incentives to not have (and share) a robust implementation with every incentive to maintain consistency and revisions that fix real problems or add real value. As you might imagine, I’m a user of Open Office, where changes are typically mandated for compatibility with annuity driven commercial offerings rather than functional reasons. Microsoft has realized that its current business model is at risk, and is moving in an interesting direction: cloud computing.
Cloud computing addresses critical user needs. In the application/service model, it allows the user to ignore software versions (what version of GMAIL is current? … no one outside of Google knows or cares as long as updates don’t disrupt the user experience.) It addresses the backup problem, with professionals using the latest techniques and best practices (I hope) to maintain transparent 24x7 availability.
Cloud computing also gets right back to my starting point. My laptop fails – thank goodness I have backups of data and applications … and with a few supplier interactions I’m able to get back and running (software does not always like to be installed on a replacement system, I still haven’t had time to figure out how to get my iTouch synchronized without losing everything on that device.) However, if all of my essential applications are in the cloud, I need less compute power in my hands, and less likely to need replacement units (or software upgrades.) This is bad news for computer industry folks who are working on a “sell another unit to our existing customers” model. Notice that Microsoft’s entry into Cloud Computing (Azure) is not just software … they are rolling out “blade containers” that have everything you need in a shipping container … everything for a full data center, not a laptop. By eliminating the hardware manufacture (as a visible element), they avoid much of the pressure to create new software … and since they charge by the cpu-minute (parallel to and potentially based on kilowatt hours) they have model that can provide the annuity they want. I fully expect Microsoft to drive for efficient, robust, secure hardware components to minimize their lifecycle costs – a much different model from the current three year replacement model.
This leaves the question of the “user” device. Here there are some significant opportunities, many tied to IEEE/CS related standards. Clearly we have been on the leading edge of connectivity standards … both wired and wireless – these will be the essential umbilical cord for cloud-edge devices. IEEE Std. 1680 is a step towards green computing (environmental assessment). There are more possibilities here that can reduce the waste associated with disposable devices. At some point suppliers will realize that a different charger is not needed for each device… or at some point major buyers like government may adopt standards (IEEE opportunity) that call for common connections (plug polarity, voltage, amps) – yes, it affects the parts market for vendors. But, consider what a “parts market” or “replacement market” means … electronic garbage that often has contaminates, and is not easily recycled. So, opportunity #2 is for standards and vendors who operate on a “we keep you running” model, rather than we sell you a disposable unit -- the user device equivalent of the cloud. Oddly enough, we return to IBM’s initial leasing model (vendor annuities remember) and the economic incentives for suppliers is to minimize the number of changes, replacements, upgrades etc. In short – back to business models that focus on long life products. As the CRT’s, cell phones, batteries, desktops, laptops and emerging iTrash and mTrash fills special bins at our dumps, we may come to see the value of new business models that provide the essential value for users, and much lower impact on our environment and user frustration.
As a foot note – my laptop supplier indicated I needed a new motherboard … I ordered one, but they apparently ran out of their inventory after accepting my order. When I followed up, they became oddly supportive – providing a free repair for my system (no doubt a recently resolved class action suit involving one of the key components was a factor.) So I now have a functioning unit again … although apparently the OS update sequence was mangled and I needed to do a full from-scratch re-installation. Thank goodness for backups .. and how soon can I get into “MyCloud”?
Footnote: recent issues of IT Pro (Sept/Oct) and Security and Privacy (Nov/Dec) are focused on Cloud Computing challenges and opportunities.