Planned Obsolescence

What is 'Planned Obsolescence'

Planned obsolescence is a purposefully implemented strategy that ensures the current version of a given product will become out-of-date or useless within a known time period. This guarantees that consumers will demand replacements in the future, thus naturally supporting demand. In some instances, this can even motivate multiple sales of the same object to the same consumer. Obsolescence can be achieved through introduction of a superior replacement or a product design meant to cease proper function within a specific window, or by cultivating desirability of new versions over older ones.

BREAKING DOWN 'Planned Obsolescence'

Fashion and technology are known to be popular arenas for planned obsolescence, with stockings and personal electronic devices such as smartphones among the most cited targets of the strategy. It is widely accepted that nylon stockings are designed to ladder, thereby requiring replacement. The replacement cycle for mobile phones has been two to three years, as components begin to wear down and new generations of software or operating systems grow less compatible with the aging hardware. Software is also often designed to include new features and file types that are incompatible with old versions of the program. Automobile manufacturers began rolling out new versions of their models on an annual basis to combat market saturation achieved in the early 20th century.

Consumer Reaction

Consumers often react negatively to planned obsolescence, especially if new generations of products offer insufficient improvements over the prior versions. The strategy can be rendered ineffective in highly competitive markets, in which participants may compete on the basis of price or durability. Brands can be tarnished by artificially stoking demand through this method, ultimately driving customers away. However, planned obsolescence doesn't always have such a negative connotation. Companies can engage in this activity solely as a means of controlling costs. For example, a cell phone manufacturer may decide to use parts in its phones that have a maximum lifespan of five years, instead of parts that could last 20 years.

Appleā€™s Planned Obsolescence

Apple Inc. has frequently been at the center of skeptical consumer discourse. The company announced a plan to accept direct payments from iPhone users for hardware that could be exchanged annually. Observers noted the clear intent of the company to shorten the replacement cycle, which was viewed by many as an obvious attempt to stimulate demand at the consumer's expense. Skeptics doubted Apple's ability to engineer meaningful improvements to functionality so quickly, a problem many phone makers already faced with two and three-year replacement cycles.