[TAG] The Public Domain: Here Today, Gone Tomorrow
mso at oz.net
Sat Sep 3 08:27:46 MSD 2005
Jimmy O'Regan wrote:
> The ESB, Ireland's electricity company (erm... semi-state company)
> provides a hire purchase facility for electrical goods, where the
> charge is added to your electricity bill (which is pretty convenient).
What kinds of "electrical goods" are available?
>> Or a printer with a guaranteed upgrade every year? Then the
>> manufacturer would have an incentive to make it long-lasting and with
>> recyclable parts, to cut down their expenses. If you buy an
>> appliance and
>> it falls apart or was a bad technological choice, it's your problem and
>> the manufacturer can ignore it (and sell you a new one). But if you
>> an appliance and it falls apart, it's their problem. I don't quite buy
>> this leasing argument completely coz I don't see how to prevent price
>> gouging; i.e., I've seen cars and computers leased for more than they
>> would cost to buy, but I assume the right company could come up with an
>> attractive lease.
> That example is terrible, as it underlines exactly why people seek to
> sell things that could be leased, and I fail to see how leasing
> something could ever cost *less* than buying it outright.
You have to assume a non-evil company that cares about their customers
and the environment. Say Google or Magnatune decided to build air
conditioners. A small unit costs $120. The initial working goal is a
rate that equals the purchase price over the lifetime use of the
product. $2/month is likely not profitable, but maybe $5 is. If the
person only needs it for a few months and has a return-anytime lease,
they're obviously ahead, and the company can redeploy the unit
elsewhere. The person doesn't have to go to the trouble of selling or
disposing it. But say the person keeps it more than two years, they'd
lose. That's what happened in the 60s and 70s in the US with
telephones, people leased them for ever and ended up paying several
hundred dollars for them. But they got a new one free if it broke. Say
the company not agrees not only to replace a broken air conditioner for
free, but to give you an upgrade to the latest model every two years.
If you're the type who buys one air conditioner and runs it into the
ground over twenty years until even duct tape won't hold it together,
you won't be interested. But say you're the type who replaces stuff
every two years anyway like some people do with cars, then you won't
have a net loss even the third or fourth year. And you'll gain a bit by
keeping the money you would have spent up front in a savings account.
Now say the new model uses half the electricity of the old one. Wow,
your expenses go way down. No biggie if you would have bought a new one
anyway, but a big gain if you wouldn't. Plus you don't have to get rid
of that old air conditioner: convenience for you, and the fish will
breathe easier without that toxic waste. The company knows it will get
the unit back eventually, in two years maximum, so they have an
incentive to make the parts long-lasting and reusable in their new
designs. Their engineers certainly know how to do this better than you
do. And if they were somehow paying for the energy cost too (e.g., if
they were providing a "cooling service" rather than a product), they'd
have an incentive to keep that down as well. So there are a lot of
variables involved, which would make some products more attractive for
leasing than others. A company that does this would obviously have a
small niche at first, but if they had a superior service (we can't say
"product") they might find it turning into a big niche as demand rose.
The Starbucks factor. :) Now if the company designs this right (and
otherwise they should not do it at all), their profit would be at least
as high as selling said commodities (which would be crap quality), so
the shareholders would be happy. Then they could start designing a
second produt to lease....
Obviously there are problems, like if it's stolen or your house burns
down and you have to pay for all the appliances. Or if the company is
not as benign as it seems and gives you a WinPrinter for an upgrade.
(But then you'll just tell them where they can stick their printer.) Or
if they're price gouging for the toner. (But printer companies don't do
that, do they?) But these can all be worked out for the right product
with the right plan and some kind of insurance.
More information about the TAG