Henry Ford did not like the constant stream of model-year changes because he clung to an engineer’s notions of simplicity, economies of scale, and design integrity. GM surpassed Ford’s sales in 1931 and became the dominant company in the industry thereafter. The frequent design changes also made it necessary to use a body-on-frame structure rather than the lighter, but less easy to modify, unibody design used by most European automakers. Manufacturers and repair companies will typically cease support for products once they become obsolete as keeping production lines in place and parts in storage for a shrinking user base becomes unprofitable. This causes scarcity of spare parts and skilled technicians for repairs and thus escalates maintenance costs for obsolete products. Obsolescence risk is the risk that a process, product, or technology used or produced by a company for profit will become functionally obsolete, and thus no longer competitive in the marketplace.
- On a smaller scale, a particular product may become obsolete when a newer version replaces it.
- Obsolescence of desirability or stylistic obsolescence occurs when designers change the styling of products so trendsetting customers will purchase the latest styles.
- Henry Ford did not like the constant stream of model-year changes because he clung to an engineer’s notions of simplicity, economies of scale, and design integrity.
- Although his concept was borrowed from the bicycle industry, its origin was often misattributed to Sloan. Sloan often used the term dynamic obsolescence, but critics coined the name of his strategy planned obsolescence.
Where older versions of software contain unpatched security vulnerabilities, such as banking and payment apps, deliberate lock out may be a risk-based response to prevent the proliferation of malware in those older versions. If the original vendor of the software is no longer in business, then disabling may occur by another software author as in the case of a web browser disabling a plugin. When a product is no longer desirable because it has gone out of the popular fashion, its style is obsolete.
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For example, before the late 1990s, most households had bulky, heavy tube televisions, with entertainment centers being constructed to accommodate their weight and size. Fast forward to today and most households have low-profile flat-screen televisions, rendering the old entertainment centers functionally obsolete. To keep pace with the technological advances of consumer electronics, furniture manufacturers often redesign their products.
As free software and open source software can usually be updated and maintained at lower cost, the end of life date can be later. Software that is abandoned by the manufacturer with regard to manufacturer support is sometimes called abandonware. By continuously introducing new aesthetics, and retargeting or discontinuing older designs, a manufacturer can “ride the fashion cycle”, allowing for constant sales despite the original products remaining fully functional. In some cases, the tech companies actively put policies in place, such as refusing support or updates for old models, to make products functionally obsolete. For instance, Apple Inc. has been criticized for not maintaining updates and customer service for older, outdated iPhones and other devices. To maintain unit sales, General Motors executive Alfred P. Sloan Jr. suggested annual model-year design changes to convince car owners to buy new replacements each year, with refreshed appearances headed by Harley Earl and the Art and Color Section. Although his concept was borrowed from the bicycle industry, its origin was often misattributed to Sloan. Sloan often used the term dynamic obsolescence, but critics coined the name of his strategy planned obsolescence.
For example, central processing units (CPUs) frequently become obsolete in favor of newer, faster units. Singularly, rapid obsolescence of data formats along with their supporting hardware and software can lead to loss of critical information, a process known as digital obsolescence. Within the technology industry, the constantly changing parade of smartphones and the evolution of smartphone technology is another example of functional obsolescence. New smartphones are able to do more and include more features that make old ones functionally obsolete.
Russell Jacoby, writing in the 1970s, observes that intellectual production has succumbed to the same pattern of planned obsolescence used by manufacturing enterprises to generate ever-renewed demand for their products. Additionally, updates to newer versions might have introduced undesirable side effects, such as removed features or compulsory changes, or backwards compatibility shortcomings which might be unsolicited and undesired by users. To a more limited extent this is also true of some personal-use electronic products, where manufacturers will release slightly updated products at regular intervals and emphasize their value as status symbols. New colorways introduced with iterative “S” generation iPhones (e.g. the iPhone 6S’s “Rose Gold”) entice people into upgrading and distinguishes an otherwise identical-looking iPhone from the previous year’s model.
For example, in real estate, it refers to the loss of property value due to an obsolete feature, such as an old house with one bathroom in a neighborhood filled with new homes that have at least three bathrooms. It may also refer to outdated technologies, such as an older version of a mobile phone or computer processor. Obsolescence of desirability or stylistic obsolescence occurs when designers change the styling of products so trendsetting customers will purchase the latest styles. Products may also become obsolete when supporting technologies are no longer available to produce or even repair a product.
Real estate can exhibit functional obsolescence if its design features are outdated, not useful, or not aligned with market tastes and standards, such as when an old house is located within a neighborhood of new homes. Companies also take functional obsolescence into consideration in long-term business planning. Companies can use various accounting methods to calculate the depreciation of an asset on its books, but the overall goal is to measure and track an asset’s declining usefulness over time. This method of business planning also helps companies anticipate the need to sell or repurchase new assets. The strategy of contrived durability is generally not prohibited by law, and manufacturers are free to set the durability level of their products. While often considered planned obsolescence, it is often argued as its own field of anti-customer practices. This strategy had far-reaching effects on the automobile industry, product design field and eventually the whole American economy.
What Is Functional Obsolescence?
Consumers can mitigate losses caused by functional obsolescence by considering the long-term usefulness of purchased goods. An item can be unattractive to consumers if its design prevents upgrades or connectivity with compatible devices. Many consumer electronics are known for their functional obsolescence due to the constant introduction of newer, refreshed versions.
Understanding Functional Obsolescence
Obsolescence is a notable reduction in the utility of an inventory item or fixed asset. The determination of obsolescence typically results in a write-down of the inventory item or asset to reflect its reduced value. Obsolescence can arise when there are less expensive alternatives in the marketplace, or when customer preferences change. Consider a 1950s house with three bedrooms and one bathroom located in a gated subdivision filled with two-story houses containing five bedrooms and four bathrooms. Because the old house does not have the capacity that buyers in this market want, it is said to be functionally obsolete even if it is still in good condition and is perfectly livable. Functional obsolescence is the reduction of an object’s usefulness or desirability because of an outdated design feature that cannot be easily changed or updated.
By the late 1950s, planned obsolescence had become a commonly used term for products designed to break easily or to quickly go out of style. In fact, the concept was so widely recognized that in 1959 Volkswagen mocked it in an advertising campaign. While acknowledging the widespread use of planned obsolescence among automobile manufacturers, Volkswagen pitched itself as an alternative. “We don’t change a car for the sake of change.” In the famous Volkswagen advertising campaign by Doyle Dane Bernbach, one advert showed an almost blank page with the strapline “No point in showing the 1962 Volkswagen, it still looks the same”.
Sometimes marketers deliberately introduce obsolescence into their product strategy, with the objective of generating long-term sales volume by reducing the time between repeat purchases. One example might be producing an appliance which is deliberately designed to wear out within five years of its purchase, pushing consumers to replace it within five years. Technical obsolescence usually occurs when a new product or technology supersedes the old one, and it is preferred to use the new technology instead. Historical examples of new technologies superseding old ones include bronze replacing flint in hand-tools, DVDs replacing videocassettes, and the telephone replacing the telegraph. On a smaller scale, a particular product may become obsolete when a newer version replaces it.
Obsolete also refers to something that is already disused or discarded, or antiquated. Typically, obsolescence is preceded by a gradual decline in popularity. This could be a problem for the user, because some devices, despite being equipped with appropriate hardware, might not be able to support the newest update without modifications such as custom firmware. Obsolescence differs from the ongoing decline in the value of assets that is caused by normal usage, resulting in wear and tear. For example, governments wanting to increase electric vehicle ownership could increase the replacement rate of cars by subsidising them. Legal obsolescence refers to the undermining of product usability through legislation, as well as facilitate purchasing a new product by offering benefits. Obsolescence management, also referred to as “Diminishing Manufacturing Sources and Material Shortages” (DMSMS), is defined as to the activities that are undertaken to mitigate the effects of obsolescence.