Ownership Is SO Overrated. Products as a Service.
Roopinder Tara posted on January 08, 2018 | 1118 views
1Renting products, being termed
1Renting products, being termed "products as a service," makes increasing sense for manufacturers. Consumers will end up paying more over the long run, and it will change the way products are designed.

In the not-so-far off future, you may not own a bike, scooter, car or boat … definitely not an airplane. Many things you are proud to own and have forever, like your computer, refrigerator or anything over a thousand dollars, you may end up renting.

You already are familiar with automobile leasing. The concept of “products as a service” is similar. When you lease a car, the dealership retains ownership, you get the latest model, do minimum upkeep for some length of time and then lease another vehicle. The concept of “leasing” software has taken hold and now many companies provide “software as a service.” I am using Evernote, Office, Slack, Dropbox … the list goes on.

For products as a service, the manufacturers own the product and let you use it a cost every month or year. You don’t have to worry about throwing it out. That’s the manufacturer’s problem. You always will be using or driving something new—or close to it— and you don’t need a lot of money up front.

You will end up paying more for the same product over time if you were adding it up, but who does that? For most of us, the payments, a little bit at a time, will be so painless we won’t mind.

The traditional ownership model used to make sense. You bought a new car and drove it over 10 years, into the ground. Two hundred thousand miles later, the cost of the car per year got pretty low. It would be towed to the scrap yard.

But who needs that these days? Who wants to take care of a creaky old rust bucket, pay registration and insurance, or get tickets for leaving it too long in front of your place or on street cleaning days? You could pay $500 a month for a garage … Ah, who needs to have those problems. Who still owns cars? People with land lines? Let’s just take an Uber – or better yet, a Lyft. 

Just waiting for a rider. See a Scoot in San Francisco and you can ride it across town for as little as $3. It is turned on with an app. When you get to your destination, just leave it there for the next person. Really, who needs to buy a scooter when you can do this? (Picture courtesy of Scoot Networks)
Just waiting for a rider. See a Scoot in San Francisco and you can ride it across town for as little as $3. It is turned on with an app. When you get to your destination, just leave it there for the next person. Really, who needs to buy a scooter when you can do this? (Picture courtesy of Scoot Networks)

In San Francisco, you can hop onto a Scoot you see coming out of your apartment, open it up for the helmet (two are offered in different sizes), and ride it across town for as little as $3. You just leave it on the side of the road for the next rider.

Aircraft engine manufacturers are getting into the act—saying they are in the business of selling “power by the hour,” not selling engines, as our Verdi Ogewell mentioned in a recent article. An air conditioner manufacturer reclassifies themselves as a cooling service, not a seller of air conditioners.

So why is this better for products, and how does it change how products are designed?

Once ownership stays with the manufacturer, everything changes. No longer must the manufacturer make shiny bright objects, the chrome gilded metallic flake showroom beauty that hooks the buyer but loses its luster after the first winter and all its appeal with next year’s model–which is ever so much better looking. It has been working to the manufacturer’s advantage to have a car not last too long, but one becomes a bother after a few years or starts looking less stylish. The buyer is right back in the showroom. If the car is owned by the factory that made it, it’s going to have less gild and more thick steel. It’s going to be built like a tank. It’s not going to require a lot of maintenance. It won’t look like last years’ model next year. And it will be OK. It’s not your car. What do you care how pretty it looks?

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