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Posted by Tom Cheesewright on

Instant Obsolescence

While clearing out my parent’s loft the other day I found some entirely forgotten boxes of my stuff. Stuff is really the only description here: two boxes containing a random collection of old birthday cards, letters, photographs, postcards, gig tickets and wristbands, and of course, old gadgets.

One gadget in particular caught my attention because it is just such a perfect example of what you could call ‘Instant Obsolescence’. It is a gadget designed to transfer MP3s to a MiniDisc player. I have no memory of ever buying this gadget, nor of ever using it, but for a while before I got my first iPod I was indeed a MiniDisc devotee. I still think the MiniDisc has a strange, slightly retro-Sci-Fi cool.

I’ve talked about technologies similar to this before. Transitional devices designed to bridge the gap between different generations of technology. Like the LiveScribe Echo pen, which enables digital capture of paper written notes — a device for which i have recently discovered a group of absolute devotees. This technology smooths the move from writing on paper to writing on digital surfaces — if we continue to use handwriting at all.

The difference between the LiveScribe Echo and this MiniDisc gadget is that the former is helping people to migrate from a technology embedded in our culture, that has hundreds of years of history behind it. I believe the digital pen is transitional technology but it probably has years of opportunity and use ahead. By contrast the MiniDisc barely achieved any kind of market outside the radio industry where it was used for both capturing audio and playing it back in studios before everything went digital. In my experience the only place you might still see a MiniDisc deck in use is in a radio studio.

Launching an accessory for such a transitional platform with a small user base is ambitious: you have to get it to market quickly and capture a large proportion of the users if you are to make a profit. If, of course, you realise that the market is transitional. Launching an accessory that explicitly acknowledges the coming supremacy of an alternative platform — in this case digital music — shows either a great degree of confidence in your ability to execute, or a total lack of vision for what is coming.

The former option is the most interesting because it says a lot about where we have got to in our ability to design, manufacture, and bring to market electronic goods. We can translate an idea into a product in a matter of months — maybe less — in order to service a market that only exists for a minimal period. Modern examples might be cases or docks for the latest generations of smartphones, always due to be superseded within a matter of months.

These products are almost instantly obsolescent, or at best move very quickly from being on the shelves of the shop to being in the car boot sale or on eBay. But companies can get them to market so quickly and with such practical margins that creating products of such fleeting value is clearly profitable.

This has consequences. The approach of built-in obsolescence for consumer goods enabled costs to fall for us as consumers but dramatically increased the cost of technology to the planet, increasing the rate at which we burned through our supply of fossil fuels. The chance to profit from instant obsolescence has further increased the rate at which we plough through these limited resources.

 

Posted by Tom Cheesewright on

Coming Soon: Electric Cars You Might Actually Want to Own

It may surprise you to know that most petrolheads love the idea of electric cars. At least I believe the real ones do. Sure we will miss the raw sound and contained fury of the combustion engine, but real car lovers are excited by the prospect of great electric cars: perfect weight distribution, huge torque, and rapid, unremitting acceleration.

Sadly the reality is some way from this dream. As well as being ugly, electric cars today are utterly impractical, requiring long charging times for very short (circa 100 mile) ranges. No petrolhead lusts after a Nissan Leaf.

They might however, desire a Tesla Model S.The exception to the electric car rule for some years now has been the Tesla Roadster. The Lotus Elise-based two-seater had supercar performance and looks to match. Sadly it didn’t have much in the way of space for passengers or the weekly shop and came in at a tidy £87,000. Not exactly a practical option for most.

This summer though, Tesla brings the Model S to the UK. It’s still expensive, starting at an expected £40,000+ for the base model, but this sleek Aston-esque saloon is a genuine alternative to some of the more upmarket family car options. If you were considering a high-spec BMW, Mercedes, or even Maserati (you lucky thing) then the Tesla is worth a look. With a 300 mile range it is a lot more practical — it would actually get you from Manchester to Reading and back (my usual business round trip) with a bit of a top up during the day — something no other electric car on the market today could achieve.

This is just the start though: advances in battery technology particularly will see electric cars fall rapidly in price and increase dramatically in performance over the next 20 years. Take this week’s announcement from BAE for example. The company has managed to integrate battery chemistry into a carbon fibre-type material, enabling the actual structure of a vehicle to be turned into a giant battery. It’s some way off commercialisation with the requisite level of output but it shows the direction in which things are moving.

Of course we we still have to generate the electricity in the first place, and if one study this week is to be believed, this process generates more pollution than burning petrol inside a car engine. Researchers in China looked at particulate emissions (rather than CO2) and compared the output from a variety of different vehicles and their power sources, concluding in headline-grabbing fashion that electric cars were more polluting than their petrol counterparts.

This is, of course, not remotely true unless the vast majority of your power happens to come from coal, and you have very low standards for emissions control — as is the case in China. In just about any western country where the power is generated from cleaner sources, and the emissions are filtered, the math looks very, very different — not that you’d know that if you read the Daily Mail story on the subject.

In summary then, electric cars are coming and they will (eventually) be both, cool and practical, appealing and green — whatever the Daily Mail might say. You just need deep pockets if you want one in 2012.

Posted by Tom Cheesewright on

Facebook’s IPO: Bargain or Bubble?

Facebook is expected to file for its initial public offering today, with an initial placement of around $5 billion valuing the company between $75bn and $100bn. Should we (or our pension funds) all be piling in with our cash?

Not in my opinion.

Facebook is a fascinating company with a very successful product, as is clear from its 850 million users worldwide. I use it daily, as do most people I know. Facebook is also believed to be fairly profitable, with estimates ranging from $1bn-$2.5bn for 2011 — we won’t know for sure until it files.

But even if the top end of these estimates is true, it is being valued at 40x its profit. And I’m afraid I just don’t see it growing to justify those valuations.

To give you some context, total global spend on online advertising, the primary source of Facebook’s revenue, has been estimated in the region of $70bn. There are a lot of companies competing for a share of that pie. The valuations discussed put a premium of $100 on every one of Facebook’s users: when did you last pay for something on Facebook?

Most importantly for Facebook as an investment proposition though, is the fast-moving and fickle nature of the tech industry. You only need to look at once-lauded names like Bebo and MySpace (or Nokia and Blackberry) today to see how far and how fast user affections can shift. Innovation in this sector rarely comes from companies encumbered by shareholder expectations. It is the nimble start-ups driven by ideas and enthusiasm that tend to shift the market. Start-ups like Facebook once was.

For me the rot has already set in at Facebook. The platform reminds me of RealPlayer in the 2000s: a once-great product that became bloated and slow as time went by and the drive to extract revenue from its users became ever more imperative. I watched this change closely, as I was doing PR for RealNetworks at the time. Today Facebook has endless features and bolt-ons, and multiple pages of settings to tweak. As sleeker, slicker, less involved options come along I can see users progressively, even without consciously making the decision, slipping away.

For this reason I don’t expect Facebook to justify investment today — certainly not in the long term. It’s just opinion, and I may be proven wrong, but that’s part of the joy in predicting the future.

Tom Cheesewright