Is Your Product in Danger of Becoming Obsolete?

By QuickBooks

3 min read

“People don’t want gadgets anymore. They want services that improve over time.”Jeff Bezos, founder and CEO of

Once upon a time, building a quality product and offering it at an attractive price was the key to success. However, that time has passed. In the 21st century, the products that succeed are also social devices.

People today use computers, smartphones, and tablets as an extension of themselves, notes Peter Semmelhack, author of Social Machines: How to Develop Connected Products That Change Customer’s Lives. As a result, any product should be designed with an eye toward technology.

Supporting Data

Semmelhack’s theory is backed up by a wealth of data. For example, Ericsson [PDF] and Cisco predict that 50 billion products will be connected to the internet by 2020. Morgan Stanley analysts place that figure at 75 billion devices. In addition, Forbes magazine proclaimed the 2013 Consumer Electronics Show (CES) as “The Breakout Year for the Internet of Things.”

As a result of this changing tide, companies that build unconnected products will see their value rapidly depreciate, because these items are only designed to meet a single need, and then quickly reach a state of obsolescence, compared to products that are designed to be a platform. According to Semmelhack, an unconnected product is a “hermit,” whereas a social product serves the community. It is designed to interact with various customer types, user interfaces, and use scenarios, all of which extends the product’s lifespan.

Real-World Examples

The Kindle book reader by Amazon is an example of a product that’s designed to be social. It’s a gadget, but Semmelhack argues that it is also a “portal.” Amazon’s primary objective was to design a product with a network interface. That interface allows Kindle users to perform a variety of tasks, such as download books, rate specific titles, and share notes and their “reading status.” He predicts that the device will become more valuable over time, because as authors continue to generate new content, Amazon can continue to offer more books for readers to purchase, download, and share with their social networks.

Semmelhack presents Apple’s iPhone as another example. Rovio Entertainment, a game developer, created Angry Birds in 2009 for the iPhone. Since then, it has sold more than 12 million copies of the app through iTunes. It was a win-win situation for Apple and Rovio: The success of this collaboration prompted Rovio to develop versions for Android, Windows Phone 8, and other platforms, including PCs and game consoles. Meanwhile, Forbes reports that at Apple’s 2013 Worldwide Developer Conference, the company said it had 1.25 million apps in the app store, generating 50 billion downloads.  And it’s not burdened with the responsibility of coming up with content, because the company learned early that if you build a developer-friendly platform, developers will come.

And other companies are also capitalizing on social products. For example, Progressive Insurance uses its “Snapshot,” a black box installed on the user’s vehicle, to track such driving habits as vehicle speed, acceleration and deceleration,  which the company uses to provide discounts for safe drivers.  Nike+ has shoe sensors that measure the number of steps taken calories burned, and can send this message to the user’s smartphone app or laptop.

Small-Business Takeaway

You may be thinking, “That’s great, but I’m not Steve Jobs, Jeff Bezos, or the owner of one of the other behemoths. I’m just a small-business owner.” It doesn’t matter. The takeaway is that you can use creativity and insight to make your product social.

According to Semmelhack, this involves answering three questions:

  1. How would having access to my product’s data help others?
  2. What external sources of data could make it easier, more convenient, more fun, or more efficient to own my product?
  3. How can the data be made easily available — and irresistible — to third parties?

For example, he says, if you own a small HVAC company, you could give customers the ability to operate their HVAC unit remotely, to program when the air turns on and off, and to examine usage reports. Your business could use the usage data to send prompts reminding customers when it’s time to change the filters or to offer recommendations for improving the efficiency of their unit.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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