Pump manufacturer programs their devices to fail prematurely and lowers price

http://www.xavitech.com/setting-prices-suit-service-life-want-pumps/

by bkraz • 11 years ago

28 24 11 years ago

daxelrod• 11 years ago

What's fascinating is that they're being upfront with their customers about this, rather than trying to sneak it in. They're also explicitly letting their customers decide how long the pumps should last, and pricing accordingly.

I wonder if other existing DRM-like mechanisms for hardware would be better received if their manufacturers took this strategy.

iamjdg4• 11 years ago

So they are basically renting their pumps? When the pumps fail, they must get them back and resell them to another customer. Else the economics would not make sense. Unless they send less to build a shorter life pump, but my impression was no, they program it to fail after a certain number of operating hours.

tonyarkles3• 11 years ago

The economics make perfect sense. Imagine you have a pump that lasts 1,000 hours, and it costs $10 to build. You have a reputation for making great pumps.

To recoup your R&D costs and make a profit, you decide that you're going to sell these pumps for $100. Those in the market for a 1,000 hour pump think that's a fair price, but those who only need a 100 hour pump think that that's outrageously expensive.

If you bring the price down to make the 100 hour pump people happy, you're cutting into your margins for the 1,000 hour people. So you segment your market: $100 for a 1,000 hour pump, $40 for a 100 hour pump. Your 1,000 customers continue buying the pump at the price they've always been paying, and some of the 100 hour people start buying at $40. That incremental revenue is all gravy; you didn't have to sink R&D money into a second product (other than building the DRM)

iamjdg4• 11 years ago

thanks. yes you are right. it is market segmentation. you move more units for a lower weighted average margin. just seems silly your actually modify the product to make it fail early just because someone paid less for it. i get it for software, you leave features off or put them on and charge less or more. but for an actual physical product, you are playing with operating hours as a feature, just seems new to me. if i was to do it, i would put some money into picking cheaper parts for the lower lifetime pump. then i could perhaps build it for $7 and get more margin for these sales. but i guess it depends on how much money you put into integrating cheaper parts. but even making it fail early by programming cost some money.

iamjdg4• 11 years ago

i still think they would make more money renting them to the 100 hour customer, bringing them back, then selling them to the 1000 hour customer at a reduced priced because it is used and only a 900 hour pump.

TodPunk• 11 years ago

This would logically mean they can make their pumps really cheaply and long-lasting, or they wouldn't have the markup to be able to do this. I'm not sure how I feel about their position, but I know I'm less comfortable about how this feels like "licensing" a product than I am about the markup they're admitting to making in the first place.

narrowingorbits• 11 years ago

Sounds like a market for an aftermarket service company to reprogram the pumps not to break!

ratfacemcgee2• 11 years ago

it'll take 15 minutes for someone to figure this out. then we'll have 0 day warez for pumps.

HeyLaughingBoy• 11 years ago

Lovely. So now software defects can directly affect product lifetime. Just the thing I need for something that has to live in the field for 15 years.

Well at least I know one more company whose products I should avoid.

toomuchtodo• 11 years ago

Or patron them, and sell a mod to override their premature obsolescence.

greenyoda• 11 years ago

Selling exactly the same hardware with different prices and performance is actually a pretty old practice. I've read stories of people long ago buying hardware upgrades for IBM mainframes and being surprised when the IBM engineer just came over and cut a wire on the backplane. "OK, you have twice as much memory now. Have a nice day!"

teh_klev• 11 years ago

A pal of mine told me about a make of car (could've been the Fiat 128 or the VW Polo - circa mid to late 80's) that had a small analogue clock as an optional extra.

Apparently it was always factory fitted into the dashboard. If you didn't order the clock, or whatever option pack that included the clock, the manufacturer just put a blanking plate over the clock face and (I think) disconnected the power (my memory is vague on this). He claimed to have discovered this on one of his, or his mother's cars, when curiosity got the better of him as to what was behind one of these accessory blanking plates.

This may have been a shaggy dog story though.

ratfacemcgee2• 11 years ago

reminds me of on disc DLC

moonka• 11 years ago

I have a Mazda 3, which didn't have the fuel computer display (shows you remaining mileage, current mpg etc). After I bought it I found out that by doing a little dance with the buttons and turning it on and off I could enable it. Now the only difference is that mine has a blank button to cycle through it rather than one that says "Fuel Comp".

crucini• 11 years ago

This kind of offends us as technologists, but it may be the wave of the future. I think business would generally prefer to buy a "defined benefit" rather than gamble on the longevity of a device.

wmoser• 11 years ago

I'm not quite sure how I feel about this. Mechanical equipment lifespan normally follows a well curve. Premature failures from manufacturing defects and improper component installation or commissioning taper off to a period where there is relatively low failure rates with proper maintenance until a certain point where equipment fails from age (fatigue, worn parts etc). If the end user is the one to specify the component, this could be great, you're not paying for unused time at the end of the components life. Some components are going to be replaced on a time schedule regardless of if there is usable life in it or not, some things are better to do on your schedule than a broken components. There is a warranty on the component for the full life of the pump so if you're doing the spacing you can be reasonably assured it will last its required life span or replaced. On the other hand, if I purchase a piece of equipment from a different company and expect it to last N years, but they are using this component to save money and only opt for it to last M years, and don't disclose the life span, I could end up paying for N-M years of expected service that I don't get to use. As an aside of other software limited hardware, Caterpillar c-series Diesel engines are software limited to a certain extent. If you need more horsepower call the service tech and they can increase the HP. Disclaimer: I heard this from another marine engineer so don't know if they need to upgrade other components as well or if it's completely a software de-rating.

JoeAltmaier• 11 years ago

Bought a dot-matrix printer years ag, the cheap one, without double-wide character support nor lower-case (just the capital letters). It arrived. Inside was a jumper block. Reversed it - now it had all the features!

noahbarr• 11 years ago

Synthetic, premature obsoleteness for pure economic gain is an engineering insult & represents environmental malice.

ianstallings2• 11 years ago

How do you know this wasn't requested by their customers?

maxerickson• 11 years ago

That's irrelevant to the point about environmental malice.

The pumps provide a value, which you are pointing out the manufacturer can capture more of by offering artificially limited pumps at lower prices.

GP poster is pointing out that the pumps have a cost to the environment and that the artificially limited pumps provide less offsetting value for this imposed cost.

ianstallings2• 11 years ago

Interesting how a lot of comments here attribute some inherent evilness to the manufacturer, when more likely it's customer-driven feature that they've been asking for or their sales staff saw the need for. If customers don't want or need it, it won't be profitable. So you have nothing to worry about.

Pump manufacturer programs their devices to fail prematurely and lowers price

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