How long should things last?
Implications of product durability
Hugh Cameron
[email protected]
Manchester Institute of Innovation Research, Manchester Business School, University of Manchester, Oxford
Road , Manchester, UK
Abstract: The durability of manufactured artefacts is a design choice for businesses. It has
profound consequences for society, affecting sustainability capacity and the decisions of
consumers over much of their spending in affluent societies. It shapes a large proportion of
aggregate demand in developed economies, and provides an incentive for firms to innovate.
It also determines recycling and waste disposal requirements. This paper reviews the factors
which influence durability decisions and the implications of extending the lifetime of
products. In particular, it reflects on the implications for products experiencing continuous
innovation, and for the flexibility of economies in response to urgent policy needs. Durability
is becoming prominent in sustainability debates, but is a complex subject with some
counterintuitive aspects. Though it is a strategic issue for R&D managers and a design issue
for engineers and designers, their technical choices are not independent of commercial
factors, in particular the maturity of products, expected trajectories of innovation and
business models such as methods of service provision and payment. The movements away
from outright purchase and towards payment for service flows, and the possibilities for
'sharing' durables offered by the new IT and communications technologies, provides a new
environment in which durability offers a new strategic choice for businesses as well as
opportunities for assisting sustainability.
An earlier version of this paper was presented at the R&D Management Conference at the Istituto
di Management, Scuola Superiore Sant’Anna, Pisa in June 2015. The author would like to thank
the various colleagues who offered comments, in particular the paper's discussant, Neil Kay,
Edinburgh Business School, Stan Metcalfe and Jonathan Aylen, Manchester Institute of
Innovation Research.
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1.Background
Writers on sustainability have frequently noted that a
major problem with advanced economies and societies is
their inclination to replace manufactured products
frequently, resulting in a ‘throwaway society’ (Cooper,
2010). It seems intuitively plausible that the production of
goods involves materials and energy use even if there is a
high degree of recycling. Extending the lifetimes of
durable products should therefore reduce energy and
materials demands. The immense capabilities of
technological advance can enable us to produce artefacts
with extended lifetimes, so it reasonable to ask for more
durable products from this sustainability point of view.
However, the very same technological ingenuity which
imparts the ability to design and produce long-lived
products also generates improved products for consumers.
Improvements may consist of performance improvements
such as more fuel efficient vehicles, more capable
computing and communication devices, and more energy
efficient consumer ‘white goods’. So we can argue that in
product areas that are experiencing rapid innovative
improvements, there is a far weaker argument for
increasing longevity. Would we wish to be saddled with
20 year old laptop computers, or 50 year old cars with
poor environmental performance?
The focus of this paper is on the question of 'how long
should things last?', in particular whether there is a
reasonable concept of ‘optimal durability’ where there is
innovation and what factors affect the choice of product
durability. In order to discuss this question, most of the
paper is devoted to describing some very different
perspectives on durability. The literature is voluminous
and from several disciplinary perspectives, so a
necessarily selective and brief treatment is given.
Business interest in the topic can be traced back to the
1930s in the US where one opinion was that limiting
durability could end the Depression by encouraging
demand (London, 1932). Businesses should deliberately
limit the useful lifespan of their products in order to
generate replacement sales. The reaction to this 'planned
obsolescence' came in the 1950s and 1960s when
consumers' criticisms of short-lived products became
common. Vance Packard's influential book 'The Waste
Makers' (1960) revealed the extent of strategic
manipulation of lifespan to the detriment of consumer
interests. Packard identified practices such as premature
deletion of spares, lack of service manuals and even
deliberately obscure details of model numbers became
common. Another aspect discussed at far greater length in
Packard's previous book 1 was how manufacturers could
persuade people to buy new products when they already
owned perfectly serviceably ones. The beginning of
consumers rights pressure groups in the US and later in
the UK, and subsequent consumer protection legislation
was partly a response to such phenomena. A third wave of
interest has been from an environmental perspective,
where the excessive materials and energy use, waste
disposal and social impacts of short product lives have
been heavily criticised. Public policy has for more than
three decades identified durability as a matter of concern.
In the background, there has been a thin seam of
economic theory investigating some more specific issues.
2. Objectives of the paper
Is durability special? To non-economists, the concept
of durability is clearly interesting and important yet a
significant, perhaps dominant, view amongst economists
is that durability is not in itself noteworthy; it is just one
particular type of 'quality' of goods, perhaps with one or
two interesting characteristics, that can be analysed like
many others, using the standard tools of economics.
Robbins (1932, p.42, footnote 1)2 considers that there
is a great danger of 'sectionalism' in economics, whereby
studies become too narrowly focussed on particular
'industries' (products or technologies in our terms) rather
than the system as a whole:
"But, as experience shows, sectional investigations
conducted in isolation are exposed to very great dangers. If
continual vigilance is not exercised they tend to the gradual
replacement of economics by technological interests. The focus
of attention becomes shifted, and a body of generalisations
which have only technical significance comes to masquerade as
Economics. And this is fatal." Robbins (1932)
Durability is a technical design choice, the details of
which differ between products and industries. In order
that economists can investigate the concept, it is necessary
to understand the technical basis for that design choice
2
Robbins' influential book is significant because it contains the first
statement of the definition of 'economics' which has now become almost
universal: "Economics is the science which studies human behaviour as
1
In both this book and his previous book, 'The Hidden Persuaders'
the relationship between ends and scarce means which have alternative
(1957).
uses."
Page 2 of 17
before generalisations can be made. The paper's first
objective is to convince the reader that there are many
particular aspects of durability that are worthy of
attention, and are significant in the world today.
So the claim is that durability is special, not just one
product quality among many. It does this by investigating
the many facets which are involved, and the perspectives
which have illuminated the concept. In doing so it shows
why one economic view considers durability to be of little
(theoretical?) significance, but also why other views
identify its importance and implications.
All of this may be seen as fairly general, but the precise
purpose is to lead into a consideration of durability in the
presence of continuous innovative improvement, whether
incremental and radical. So the second aim is to examine
two strategies for extending durability, involving
technical standards and modularity. Finally, the full
significance of durability in the context of system
transitions is examined, namely the transitional inertia
generated by long-lived products. Transitions are crucial
for environmental policy reasons in particular, and their
most important aspect is the time taken for transitions to
take place. And it is durability that determines the rate of
change during transitions.
3. Definitions
It is necessary to clarify the subject under discussion.
First, the common feature of durable goods is that they
exist over extended periods and generate a flow of useful
services over their life. This must be distinguished from
'consumables' which normally denotes associated goods
needed for the operation of durables. Ink cartridges are the
consumables providing input for the durable printer.
Durable goods are investment goods bought by
consumers. Their purpose is to increase the well-being of
the consumer by offering an alternative and preferred way
of providing a stream of services over time, at the cost of
an initial investment or commitment to payments over
time (leasing). The preferences may be entirely cost
driven, so a washing machine will be cheaper than use of
a commercial laundry, but may also be convenience, so
that washing can be carried out conveniently without trips
to deliver and collect washing. They may also offer a
preferred distribution of costs and benefits over time. So
durability models are usually investment models.
Second, we are considering only manufactured articles,
or physical artefacts. So we are not concerned specifically
with the longevity of product types, models, or particular
abstract designs, though these may have implications
which are noted appropriately. ‘Durability’ itself needs
some explanation. Some economists have considered this
implicitly as a general description, or perhaps the best
example, of the ‘quality’ of a product, while others have
restricted the word to meaning the temporal lifespan of an
article, resulting from other particular qualities such as
robustness or wear–resistance, and so on. This conflation
of meaning by economists has resulted in some ambiguity
in discussions of durability. In the present work we will
use the words durability, longevity, and lifespan in the
latter sense, with the specific focus on time. Additionally,
we will restrict attention to the first purpose of the
product: how long an article is used in its designed
function. Many artefacts, at some point in their existence,
are subjected to changes in use; they are ‘repurposed’,
sometimes in quite different ways. But the point of this
paper is to examine design choice for the intended use. So
the durability of a product will be defined as the time
elapsing between the acquisition of the product up to the
time at which it ends its role in its first use, which we will
define as the 'service life'. This may include first and
subsequent owners because, as will be shown, this itself
has implications.
Some other aspects concerning definition will be
discussed as they arise in the paper.
4.Maintenance and upgradability
Maintenance is the routine process of restoring an
artefact's original performance. This may involve
replacement of consumables and original components,
raising interesting economic, legal and philosophical
questions.
The philosophical paradox of the 'Ship of Theseus' is
illuminating. According to Plutarch, the mythological
founder of Athens returned to the city he founded, in an
un-named ship, after slaying the Minotaur in Crete. In his
honour, the ship was preserved in Athens’ harbour for
centuries. When any timber decayed it was replaced, as
the ship had to complete an annual voyage to a religious
site on the island of Delos. Plutarch speculated whether
the ship could eventually be regarded as the ship of
Theseus if it had been entirely replaced. Thomas Hobbes,
in a later era, extended the puzzle by considering if the
original planking had been kept, and later assembled into
a ship, whether either ship should be considered the
original? The question has reappeared many times - John
Locke's darned sock; George Washington's (or Abraham
Lincoln's) axe, and other as cases where maintenance has
compromised originality.
Additional complications ensue if we consider the
different concept of 'upgradability'. This refers to the
process of improving on the original performance of a
product by modification or the replacement by parts
incorporating subsequent improvements. We are all
familiar with software upgrades. In some sectors,
upgrading is the rule, in particular where there is a
'performance imperative', that is where current maximum
performance is crucial to operational success.
The defence industry is a significant example of this, in
particular involving large and expensive kit such as
aeroplanes or ships. The US Air Force's Boeing B52
intercontinental bomber was introduced into service in
1955, and the aircraft currently still in service were
produced in 1961 and 1962. However, these aircraft have
been subjected to continuous programmes of modification
and upgrades which have progressively replaced major
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and minor airframes parts (wings), engines (more
powerful and more fuel efficient types have periodically
been examined for performance and cost reasons), control
systems, avionics, and weapons systems. It is planned that
the aircraft will be in service until at least the 2020s,
probably the 2040s, and engineering studies suggest
longer than that.
Gertler (2014), in his report for the US Congressional
Research Service, discusses in detail the many issues
pertinent to durability, in particular the decisions whether
to upgrade or replace aircraft and the impact of new
technologies, new threats and new defence doctrine on
this. Although the USAF is committed to the development
of its Long Range Strike Bomber to replace the B52, B1
and B2, it will only reach operational capability in the
2030s. Therefore the existing aircraft are to be maintained
well past this date to allow a phase-in. The B2 is currently
planned to be in service until at least 2058. The report
gives a detailed insight into the nature of decisions
concerning very long-lived artefacts.
parts over many years, and due to accidents and changes
of ownership and function.
The legal dispute arose between a seller and a
purchaser (it was sold for £10million) about its status as
being 'The Old Number One'. The legal judgement is an
excellent primer for the student of originality. 4 Though
the judge decided it could not be called the 'Genuine Old
Number One' as it was not composed of the original parts,
nor was it 'original', but it was certainly 'authentic' in that
it had evolved with a continuous record of its identity, nor
was there any other car that could lay claim to the name.
Plutarch should have used the concept of 'authenticity'
rather than 'originality'.5
Bentley 'The Old Number One', 1929
Boeing B52 intercontinental bomber, 1955 introduction into service
5. A model of optimal durability
Defence products are subject to the performance
imperative: only the best performance is adequate,
whereas in most areas adequate performance is sufficient.
Therefore it seems paradoxical that in fields where
technology is rapidly changing, many of the major
products are the oldest in existence. This is not a new
phenomenon. If we look at the service life of wooden
battleships, if they were built from seasoned timber and
maintained correctly, they frequently had service lives
exceeding 100 years, and were often converted to
incorporate radically new technologies successfully. 3
Lambert (1984) discusses the fascinating transition
between wooden ships-of-the-line to iron, steam driven
battleships in detail, going through the brief phase of
wooden, steam driven battleships in the 1850s.
The question therefore arises: when is an original
product still the original artefact, from a durability
perspective? The paradox arose during litigation in the
UK, most notably concerning vintage Bentley cars. In
1990, a case involved disputing the originality of 'The Old
Number One' which had won the Le Mans 24 hour race in
1929 and 1930. As is the case with racing cars, it was
subject to continuous improvement and replacement of
Durables are purchased because they generate a
preferred stream of services over time. Using a simple
intertemporal choice model (Fisher, 1907, 1930,
Hirschleifer, 1958), we can calculate the present value of
this stream of services with a discounted flow model, the
value of each dated service being discounted to the
present with an appropriate discount rate.
A simple investment view of the meaning of optimal
durability in the case of a product with durability as a
design choice can be described briefly. If we take a life
cycle cost view, then the life cycle cost of marginally
increasing the durability of a product will consist of all the
dated costs of production, maintenance, repair and
disposal discounted at a suitable rate to give the present
value (PV) of costs of the increase. In Figure 1 the curved
line is a locus of points each representing the discounted
life cycle costs of alternative designed lifetimes of a
product from a manufacturers' perspective. As the
designed lifetime is extended, it becomes ever more
expensive to add additional increments as we approach
the limits of current technology. Thus the shape of the
curve.
4
http://www.gomog.com/articles/no1judgement.html
3
5
The oldest commissioned naval vessel is HMS Victory, built in 1765,
‘Authenticity’ has become a popular concept in marketing, denoting
and the oldest commissioned ship still afloat is the USS Constitution
goods that display the characteristics of durability: long-lasting,
(1797).
traditional designs and manufacture.
Page 4 of 17
Note that the vertical line on the right denotes the
longest lifetime possible with current technology,
whatever the cost. This extreme case represents only the
particular circumstance where in-service maintenance and
improvement is not possible: i.e. the initial cost. Earth
orbiting satellites are very expensive to produce but their
cost is dwarfed by the cost of inserting them into earth
orbit. After launch, there is little prospect of servicing at
acceptable cost. The Hubble telescope upgrade was a rare
exception to this. NASA's New Horizons probe which
took the first close images of Pluto, was launched more
than 9 years before the planetary encounter, and therefore
had to be designed to work satisfactorily for a decade
without any possibility of physical intervention - though
software was upgraded. So in such extreme cases it is
economically acceptable to use any means of increasing
service life almost irrespective of cost. Saleh (2008) has
produced empirical evidence to analyse the particular case
of satellites.
Figure 2. Optimal durability, where PV(benefits) = PV(costs)
We can modify this assumption to allow a degradation
of performance over time, and this will produce a
similarly shaped 'benefits' curve but adding a further fall
in PV over time to account for a given percentage rate of
deterioration. The optimal durability is given by the
intersection of the two PV curves, at which point for a
particular chosen durability the PV of benefits from
marginally increasing durability equals the PV of costs of
the same increase.
We could examine slightly different curves where the
social costs and benefits are included rather than only the
private costs and benefits. Social and private choice of
optimal durability is clearly important. For example
policy should aim to include the full costs of production,
maintenance and disposal as well as other environmental
costs by levying appropriate charges to internalise the
decision. This type of problem will be further discussed
towards the end of the paper..
Figure 3 shows the effect of increasing the rate of
performance deterioration: a shorter optimal lifetime.
Figure 1. The marginal cost of increasing durability.
It is reasonable to assume that there will, at any one
time, be a minimum acceptable durability (for legal or
customer acceptability reasons), represented in Figure 1
by the vertical line to the left.
Similarly, for the consumer there will be a present
value of life cycle benefits from the services of the
product, shown in Figure 2 as a curve with declining
gradient. The curve represents the effect of discounting:
as longevity is marginally increased, the services from the
additional period of use are discounted therefore become
successively less in present value terms as we consider
additional periods of service life, even if we are assuming
no fall-off in physical performance of the product over its
service life (a usual assumption of most economic models
of durability).
Figure 3. Change in the rate of product performance deterioration
The effect of a change in the discount rate will depend
upon the detailed time-profile of the distribution of costs
and of benefits over the product's lifetime. 6 Increasing the
discount rate will move both curves closer to the
horizontal axis, but the exact point of optimality may shift
to the right or to the left. Normally, if we expect the
balance of costs to occur earlier than the balance of
benefits, an increase in the discount rate will affect
benefits more severely than costs, so we would expect the
optimal durability to be shorter. Higher rates would
normally imply a shorter lifespan.
6
This is not the same as the PV curves in the diagram in which each
point on a curve is the PV of the time-series of cost or service flows for a
particular choice of lifespan.
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In this model there is no 'demand for durability' per se,
just a design choice. Optimal durability is merely the
result of the investment decision.
Saleh (2008) speculates on alternative shapes of the
cost curve for his particular examples.
Discussion of which discount rate is appropriate is a
contentious issue involving many viewpoints, for example
either a risk adjusted commercial rate or an alternative
very low social rate which would give more importance to
future generations' wishes, as is generally used for longlived public investment in infrastructure projects (e.g.
Figure 4). 7 On questions of long term social investment
(such as socially optimum durability) the discount rate is
both important and controversial. The Stern Review
(2006) on the economics of climate change used low
intergenerational discount rates, with much of the ensuing
heated debate identifying this as the most contentious
issue.
Figure 4. HM Treasury’s view of long-term discount rates (HM
Treasury, 2011)
An additional possibility is to consider different rates
of discount for the producer and the consumer, considered
by Beath & Katsoulakos (1991, p.83 et.seq.). In the
context of optimal durability, this would be the case
where individuals' time preferences display lack of long
term concern but social decisions require a far longer
perspective. But detailed consideration of these
possibilities is beyond the scope of the present paper.
6. The product life cycle, markets and
macroeconomics
An insight from the Product Life Cycle is that in the
initial stage of a product's life it is bought by new
customers, but as time passes there will be a gradual
change to replacement purchases until in a saturated
market all sales will be replacements (Cameron, 2013).
Durability has a profound impact on replacement sales. In
a saturated market, the main determinant of market size
will be how frequently customers replace their product.
An everlasting artefact would quickly lose any sales
once everyone who wanted the product had bought one. If
this seems rather far-fetched, consider the case of
pharmaceuticals companies. Would they choose to
develop a drug with symptomatic effects - alleviating the
symptoms of a condition - or would they prefer to develop
a cure, which is a 'one-time-buy'? So, in mature markets,
there is pressure to develop products that persuade people
to replace their existing products even if they are still
serviceable. Strategies can include technological
innovations and performance improvements, cosmetic
changes, social pressures ('be seen with the latest iPhone'),
etc. We see repeated generations of improved products
being marketed to maintain product demand.
Discussions of product innovations often ignore the
obvious but fundamental commercial point that if
products are very long-lasting, a main way to persuade
buyers is to offer a clearly superior product, rather than
wait for their existing article to break down. Innovation
theorists tend to emphasise the necessity of firms'
innovative performance in order to remain competitive
with alternative suppliers, or alternative products, or for
national competitiveness, or even to increase public wellbeing.8 The cold fact is that in the overwhelming majority
of durables markets, the main aim of innovation is to
persuade potential consumers that a new variant of a
product is worth buying to replace their existing, still
functioning, version. The fashion clothing trade has
exploited this fully.
In times of recession, customers tend to hold on to their
durable products and extend their life, when in more
affluent times they would replace before obsolescence.
But the resulting slump in demand for new products
causes a fall in aggregate demand, exacerbating the
recession. So we see all the commercial techniques being
used to encourage sales: better credit terms, new models,
and pervasive advertising. London (1932) suggested that
durables should be controlled by governments, and in
recessions should be withdrawn, forcing people to buy
new products. This could be viewed as a rather unusual
and direct approach to Keynesian demand management,
probably also being far-fetched and unrealistic. However,
during the financial crisis beginning in 2008 many
governments, fearing the collapse of the car
manufacturing and retail distribution sectors, introduced
'scrappage allowances' whereby owners were given
considerable subsidies if they scrapped their older cars.9
The UK scheme gave £2,000 to buyers of new cars if they
scrapped their existing cars of 8 years or more in age.
These schemes were generally considered to have been
fairly successful, especially by the manufacturers and
retailers.
7. Economic theory and durability
Analysis of durability has a long history in economic
theory. Hotelling (1929) introduced the idea of durability
as a type of quality, not captured by the normal economic
focus on price, as well as the use of durability as a proxy
for other types of quality, leading to persistent confusion
in the literature between these two uses of 'durability'. The
Hotelling model imagined a quality - location - as
continuously variable on a linear scale and producers
having a choice of a particular value. An example is two
ice cream sellers on a linear beach with an even
8
See, for example, Porter (1980, 1985), Christensen (1997)
9
7
See, for example HM Treasury's ‘The Green Book’, 2011
These included Canada, Germany, Austria, the UK and the USA, where
the Automotive Stimulus programme was more commonly known as the
‘cash for clunkers’ scheme.
Page 6 of 17
distribution of buyers, who each choose to buy from the
nearest ice-cream seller. The sellers will choose to cluster
near the centre in order to maximise their sales. However,
with three sellers there is no stable solution: there is
always an incentive for a ‘central’ seller to move to the
outside of another seller. As with other models of
durability, the outcome is determined by the assumptions.
If we change to a continuous scale (a round lake instead
of a beach) there is always a determined solution: evenly
spaced sellers. So choice of durability may be a tool of
product differentiation with choice exploiting variations in
consumer preferences.
Chamberlin (1953), following his focus on imperfect
competition, explicitly analysed durability as a significant
example of quality, which enabled suppliers to
differentiate their products and avoid direct competition.
Up to the 1970s, economists' interests were almost
entirely concerned with the relationship between
durability and market imperfection, specifically the effect
of monopoly supply and whether this would reduce the
durability of products, which was generally the accepted
view. For example, Prais' 1974 paper on monopoly and
the durability of lightbulbs has become a minor classic in
the field. He analysed the lifetime costs of bulbs with
varying powers and lifetimes, including the costs of
electricity and bulbs, and concluded that in the UK the
consumer's interests were not being served by the lack of
competition in supply: longer lived lightbulbs would
provide cheaper services over their lifetime. He
recommended to the Monopolies Commission (who had
investigated the issue) that an increase from 1000 hour
lives to 1,500 or even 3,000 hours would be better - all of
these being easily available in other countries. However
this has remained contentious to this day. For example,
Kay (2004) uses this example to argue the opposite case,
citing Swan (1970), to show how effective markets are in
preventing cartels.
Waldman, in an excellent survey of the subsequent
literature on durability, identifies four phases of
discussion, all originating in the 1970s but developed over
later decades. Until 1970 there was agreement that
monopolists would always choose durability less than
would be the case for a competitive market. Swan's very
influential paper (1970) disagreed with earlier writers by
finding that monopolists would produce goods with the
same durability as competitive markets, and this debate on
durability and market structure (competition vs.
monopoly) dominated the 1970s. Swan's model used the
flow of services idea to emphasise the minimisation of
services costs, with durability being a side effect. To
illustrate, if a buyer has a choice between two varieties of
razor blades, with different durabilities, the choice will
focus on the cost per shave, not on durability as such. So
there is a demand for shaves, but not for durability.
Subsequent use of alternative assumptions produced
various results. Of interest here is what these assumptions
(reflecting real markets) are. For example, outcomes are
affected if there is a constant flow of services from a
product, in which case there is no possibility of secondary
(used goods) markets unless we have additional
assumptions that generate different types of consumers.
Why would any user sell, or buy, a partly used durable if
both sellers and buyers have the same view of the value of
the remaining service life?
Similarly, if we assume a declining flow of services
from products over time, then different optimality results
ensue.
Coase (1972) introduced what he called 'time
inconsistency'. A monopolist would attempt to maximise
profits by using a time discriminatory pricing strategy,
reducing prices over time after early capture of those
willing to pay high prices. But many consumers will be
unwilling to buy early at high prices if they know that
prices will fall in future. This consideration has the effect
of limiting the ability of monopolists to exploit their
power over prices. But Coase underestimated the
importance and possibility of secondary markets, which
introduce expectations of the impact on residual values if
monopolist producers reduce prices over time.
The third phase introduced asymmetrical information.
Knowledge of the quality of used goods by potential
buyers was analysed by Akerlof, another Nobel Prize
winner, in his celebrated ‘lemons’ paper (1970),
investigating used car markets. But Akerlof's Prize was
awarded for his contribution to information economics
rather than his impact on durability theory. He introduced
'adverse selection' which refers to secondary markets
having a lower average quality of goods than the whole
set of goods, because owners will hold back examples
with a higher quality, only selling those examples which
are of lower quality (‘lemons’). Leasing enables producers
to avoid the adverse selection problems (see Section 8
below).
Waldman considers that these academic debates
advanced understanding of theoretical models, but not our
understanding of real world markets. 10 However the
subsequent literature (from the early 1990s) changed this.
Choice of durability models can stem from relaxing
the assumption of a constant flow of services (i.e.
artefacts deteriorate) so that old goods are imperfect
substitutes for new. And consumers vary in their
perceptions of the value of products, creating the
possibility of secondary markets.
New product introductions are significant because
they affect the durability decisions concerning existing
durables. Firm strategies will involve the choice of
durability bearing in mind the impact on future secondary
markets of their own new products. The depreciation of
car values (the major cost of car ownership) can be
heavily affected by discounting new car prices, so
manufacturers with a long term strategy will prefer not to
use discounting due to its long term impacts on both
prices and reputation (the Coase point). Planned
obsolescence reappeared in theoretical discussions, but
specifically considering the impact of future product
introductions on current strategy: will manufacturers
reduce durability in order to expand future sales. How
much should firms devote to R&D?
Advances in understanding real markets have included
practices such as (reduced price) sales, restricting the
availability of used products (e.g. by leasing only), and
10
Kay (2004) disagrees, noting that "One of the merits of Akerlof's
analysis was that it met a test failed by too many economic models consistency with common sense. After all. everyone knows that buying a
used car is a depressing experience."
Page 7 of 17
the growth in leasing itself. Of particular interest here is
'aftermarket monopolisation'. Even producers in
competitive markets may be able to monopolize
aftermarkets such as spares and tie-in consumables. Most
of us are familiar with computer printer and replacement
ink cartridge markets, in which the initial purchase is
often at cost or even subsidised in order to buy allegiance
to high priced and highly profitable consumables
protected by intellectual property restrictions such as
interface designs. Producer's strategies can include the
introduction of new products with incompatible interface
standards (see below) in order to prolong their market
power. When Nestle's patents over Nespresso capsules
began to expire, and the company were confronted with
competitors' products that fitted their own coffee
machines, one part of their aggressive intellectual
property rights strategy was to slightly change the
interface between capsules and machines in such a way
that competitor's products would not be useable in such
machines.
Conversely, a market with a monopolistic seller but
competitive maintenance will cause consumers to delay
new purchases.
The early work of Harold Hotelling was noted above.
Intriguingly, Hotelling is probably better known for his
seminal contribution to another field of economic theory,
the theory of exhaustible resource depletion (Hotelling,
1931, Devarajan& Fisher, 1981). The link between this
and durability theory is that the Hotelling's depletion
model is based on a Fisherian inter-temporal choice
framework. This has not been used previously in the
context of durable goods11, but may offer an alternative to
the models described above.
Hotelling considers the case of a fixed, known
resource (say an oil field) and the choice of the owner is
the rate at which depletion should take place. The
objective is to maximise the PV of revenue, which is the
result of gross revenue per barrel minus costs per barrel the royalty. The model focusses on the relative rates of
increase of this royalty and the discount rate. The oil
should be depleted if the discount rate (return on
alternative investments) is greater than the rate of increase
of the royalty, because the royalties could be invested and
gain a better return than if the oil was left in the ground.
The royalty (not the price) is assumed to rise at a constant
rate to the point at which the oil price per barrel equals the
price of the next most economic oilfield (the backstop) at
which point the first oilfield is completely depleted and
the next most economic oilfield comes into operation.
Therefore the asset value of the oilfield is maximised.
If we draw the analogy of a durable good that is
capable of producing a fixed quantity of services, but
there is a choice of when to consume these services, it is
clear that this can describe the case of an important type
of good whose lifetime is determined entirely by quantity
of use rather than by time. For example disposable ballpoint pens and shavers, or even cars if they have a limited
number of miles available to users. Further, in the case of
continuous product innovation, the analogy to the
backstop oilfield would be the next innovative product
that can replace the present product. Service flows may be
designed or chosen to run out just as the next product
becomes available. The mathematics of this dynamic
process optimisation would, however, be fairly complex.
8. Information, life cycle costs and
purchasing alternatives
In considering the purchase of any product, there is
usually in the background the additional problem of
information, specifically the possibility of information
asymmetry between buyers and sellers, described by
Akerlof, 1970 (also see Hirschleifer & Riley, 1992;
Chapter 8). Models of service flows must assume that the
buyers have knowledge or foresight about their
consumption over time and of the durability
characteristics of the goods or varieties of goods
available. This will include their own use, perhaps
changing over time, but more significantly the
characteristics of the product especially the possible fall in
performance over time and the cost of maintenance, and
reliability. These may be difficult for a buyer to assess,
and must be based on a series of sources of information,
such as past experience, the reputation of the supplier,
warranties or guarantees, legal rights and even
comparative reviews by independent experts, which are
freely available on the internet and in consumer
publications. But past experience and reviews may be of
little value if the product experiences rapid model
changes.
A related factor can be brought in here: the alternatives
of purchase or rental. One solution to the general problem
of information asymmetry between producers and buyers
is for the purchaser to rent or lease the product for a fixed
payment per time period, leaving the risks of reliability
and durability to be dealt with by the manufacturer or
financier. An important development in retail marketing
over recent decades has been the extension of the
common use of leasing from the commercial sphere to the
domestic buyer. Large aero-engines, commercial vehicles
and private cars are all increasingly provided on a fixed
term, or a price per unit time or use basis (engine hours or
car years or mileage). 12 Apart from information
implications, this has the intriguing possibility that if the
durability of the product becomes the financial
responsibility of the designer/manufacturer or wellinformed finance providers, so there will be a different
designed durability outcome to that determined by the
outright purchase case. Packard (1960) accused car firms
of deliberately shortening the service lifetimes of their
products by various means in order to generate more long
term sales. This would become a pointless strategy if
producers bore the cost of sub-optimal durability.
In a business model where the manufacturer has
responsibility for the long-term life cycle costs of the
product, including servicing and repair as well as
durability, there will be a different set of design
12
11
As far as the author can find.
Commercial bus tyres are usually provided to larger companies on a
mileage basis: look at the offside rear hub of city buses and you will see
a meter recording the mileage of the vehicle for the tyre provider.
Page 8 of 17
requirements leading perhaps to longer lived products, or
more exactly lower costs of service provision. In
particular, servicing and maintenance generally involve
significant labour costs. In the traditional car market, the
symbiotic relationship between car manufacturers and
retailers who rely upon servicing business for much of
their profits is affected by the leasing model. Even
insurance may be provided by manufacturing companies
at the time of purchase/lease, and a major part of
insurance costs are repairs and parts. If these are included
at the design stage, for example by making frequently
damaged body parts easily and cheaply replaceable then
life cycle costs can be reduced and potential profits
increased. Overall, the manufacturer will have far more
knowledge of the implications of the cost/durability tradeoff (see below) than the purchaser, and will therefore
design the product to have the best design from their own
view of the present value of service flows. For the
potential buyer, the transparency of clear and comparable
leasing agreements with no unexpected repair costs will
result in a more competitive market.
A final note on the leasing issue. Leasing has been
viewed by writers on information asymmetry as a way of
dealing with the 'lemons' problem. Leasees do not have to
confront the results of their lack of information if the
manufacturer (or leaser) is responsible for all costs. But
there are two problems here that have not been discussed
in the literature.13
First, in the real world of car leasing, almost all leased
cars are new or fairly new, far younger than any designed
life. So they are released after the end of their initial
leasing (often less than a year, usually within 3 years)
onto the secondary market where again there is an
information asymmetry between seller and buyer. Leasing
only 'solves' the asymmetry problem if it is for the
lifetime of the car, not just for a small part of its initial
use.
Further, the dominant model of leasing for cars is the
'lease-back' arrangement in which a buyer leases the car
for a fixed period, say three years at a fixed rate, and it is
then returned to the leaser, unless the user decides to
make a final purchase of the vehicle. The decision is
therefore up to the user for three years who has very
detailed information about its intensity of use and the care
taken of the vehicle and therefore its current condition.
Over the whole population of leasees, the cars that are
finally purchased by the original user will be those in
better condition: the poorer ones are sent back for resale
on secondary markets, resurrecting the information
asymmetry problem in a different direction as well as the
adverse selection problem: the leaser/owner does not
know the condition of the car and neither does the
potential new purchaser. 'Company cars' are frequently
bought by their employee/users if they have been able to
ensure that their cars have had a very easy life and are in
excellent condition. Retiring employees are frequently
allowed to purchase their own company cars on
preferential terms and are able to acquire vehicles in
remarkably good condition for advantageous terms.
13
As far as the author can find.
Therefore the secondary market contains a greater
proportion of 'lemons' than is present in the population as
a whole. So, in several ways, leasing is not in practice the
solution to the overall asymmetry and selection problems.
9. Service life profiles and the sharing
movement
By the term 'service life profile' I mean the temporal
distribution of the delivery of services from an artefact. In
simple products these services may be fairly evenly and
closely distributed: toothbrush use, car mileage, computer
use, etc. However there are difficulties in defining 'use'.
We live in a world in which most artefacts are not being
actively used most of the time! Most cars are inactive
most of the time. Books are not being read most of the
time; pens are not being written with most of the time;
watches and clocks are not being consulted most of the
time; tools are in use for very little time.14
There is a resulting and increasing interest in the 'stuff'
argument. Why is it that in affluent economies we acquire
more and more 'stuff', which is actually used for a smaller
and smaller proportion of the time? Individual ownership
has resulted in the acquisition of many products and this
implies that each product has a lower utilisation rate. An
aspect of consumption almost entirely ignored by
economic theory comes from the observation that
'consumption takes time' (an exception being Steedman,
2003). In Schopenhauer's words (quoted by Steedman):
"Buying books would be a good thing if one could also buy
the time to read them: but as a rule the purchase of books is
mistaken for the appropriation of their contents."
- Arthur Schopenhauer, Parerga and Paralipomena, 1851
Given the need for time in consumption, there is a
tendency for the affluent to acquire more products and
reduce utilisation time of particular artefacts. In the case
of major durables we are now witnessing the recognition
of the implications of this, for example the sharing
movement. Major durables such as cars are suitable for
sharing between many users under certain circumstances,
in particular in large cities
Various technologies are providing new ways of
arranging sharing schemes for products such as cars,
bicycles and tools. Of course in many fields this is not
new: specialised tool hire has long been available for
many categories of use: gardening, motor maintenance,
building, and so on. The durability implications of the
rapid growth of this are debateable: will a heavier
intensity of use result in shorter product lifetimes, or will
there be more pressure from users for more robust and
durable products? Some proponents believe that there will
14
The question of what constitutes 'in use' is not pursued here. For
example, cars may only be in active use for 5% of the time, but for the
remaining time they are offering the service of being ready to be used
with no notice. This may be a problem for the 'sharing economy'
movement mentioned below.
Page 9 of 17
certainly be a lower overall demand for 'stuff' - an explicit
objective of the sharing movement.
10. Systems and networks
The most crucial characteristic of modern products is
that they are components of systems or networks (Arthur,
1989). This is clear in the case of technological systems,
where distinct products must be able to fit (physically,
electronically, etc) with associated products throughout
the supply chain (hard drives for laptops...) and also in use
(DVD players and TVs). Products are required, either
legally or by market pressure, to conform to interface
standards (USB, SCART, HDMI, etc). As innovation
theorists have long known, a major problem for radical
innovations is that they must replace existing standards
designed for earlier technologies and circumstances,
overcoming 'lock-in' (Arthur, 1989). The well-known
'QWERTY' keyboard is the usual paradigmatic example
of 'lock-in' to existing standards (David, 1985).
We should not confine this view to what are clearly
technological products with cables, plugs and sockets or
wireless interfaces. For example, clothing is part of a
complex set of systems. The textile manufacturers and
dye manufacturers must create compatibility with washing
machine and detergent manufacturers in order that
clothing may be safely washed without adverse colour
effects.
Lock-in can have two opposing effects if we are
considering durability. It may extend the life of a product
due to the inertia of a system, but changes in standards
may cause the end of service life before economic
obsolescence of the artefact itself. This is explored below.
11. Durability as a design choice under
conditions of technological progress
A question addressed by this paper is: what are the
factors that will influence the desirability of extending the
service life of manufactured products where there is
continuing innovative improvement.
There has been a general neglect of this aspect of the
significance of continuous innovation. Packard's views on
planned obsolescence were nuanced: he criticised the
replacement of products that were still functioning, but
recognised that replacement was necessary for
improvement. This is another fundamental feature often
ignored in innovation discussions: in order that innovative
new products are diffused and bought by consumers, they
must abandon their existing products. In recent times
technological obsolescence has been caused by innovative
changes, in particular in sectors with a considerable
IT/computing content. Consumers are encouraged or
pressured into replacing serviceable products with later
versions having claimed performance improvements,
either incremental (faster responses, longer battery life,
higher screen resolution, etc) or discrete improvements
(inclusion of a camera in a mobile phone, Wi-Fi, NFC &
GPS capability in a camera, etc). In the case of product
sectors undergoing such change, can designers
incorporate plans for upgrading that will allow consumer
products to have extended lifetimes? What are the factors
which will influence this? For example, many of the
recent advances in personal computer hardware and
software have generated performance improvements
which are of little utility to most consumers, but they are
nevertheless pressured into new product and software
purchases by the deletion of support for, or compatibility
with older versions of software. The pressure from
Microsoft on Windows users to abandon use of Windows
XP seems remarkably similar to the old version of
planned obsolescence, but with a veneer of innovation
generating performance improvements, often with rather
limited improvements in utility. While the original iPhone
was a radical innovation with a host of useful and valued
features, for most users the magnitude of the
improvements between later versions is questionable –
except to Apple devotees. A useful framework for
analysing this would be that of Christensen (1997), whose
‘disruptive innovation’ model has an upper limit of
performance for products, beyond performance is
irrelevant to most consumers.
There is a considerable literature on the subject of
replacement decisions, but this has had limited influence
on the innovation field which focuses on the initial
purchase and diffusion of new products, processes and
technologies.
12. Why do products reach the end of their
service life?
We can address an interesting question: why do products
reach the end of their service life? Or, why do users
replace or dispose15 of their products? (see, for example
Harrell and McConcha, 1992).Then we can investigate if
it is possible to change the disposal decision, which turns
out to be extremely important for reasons given above
(aggregate demand, company sales, and also for policy
reasons [see below]). There are many specific reasons for
this disposal decision, but they can be conveniently
grouped into just a few categories:
1. Economic or technological obsolescence. An article
may be beyond economic repair because it is cheaper to
buy a new one than to repair it. It may be financially
worthwhile replacing a functioning product as an
15
It is difficult to choose a word suitable here: 'disposal' implies
permanent extinction of the artefact, but we are considering only the end
of service life - the first user or perhaps for further users. The article may
well continue in its physical form. From the point of view of the
environment the former is the focus but for the firm trying to achieve
replacement sales, the latter is more pertinent. We must also distinguish
what has been called (in the US) the 'disposition' decision (e.g. Jacoby
et.al., 1977) which seems to describe the method of disposal, rather than
our focus on the causes of disposal.
Page 10 of 17
investment decision if this course of action generates a
preferred outcome in terms of present value.
An artefact may be superseded by a later product that
provides the same service in a better way or at a lower
cost. Though technological and economic obsolescence
are distinct, they have a great deal of overlap: economic
replacement may be due to technological improvement
generating financial advantage.
Things may after a period of use become 'worn-out'.
This seems to mean that they are beyond repair. There
may no longer be spare parts for repair. Again this is a
special case of 'beyond economic repair'. It is usually
possible to produce new spare parts for most artefacts, but
perhaps at a very high cost. It is rare for the knowledge of
how to produce something to be permanently lost, but
specialised production facilities may have been
dismantled so costs of small scale production may be
high. However, one result of the coming 'additive
manufacturing' revolution will be that single spare parts
will be obtainable at low costs.
An important factor in maintaining products is how
long spare parts are available. Manufacturers have
conflicting motivations concerning this. For reputational
reasons they may maintain availability, but stopping
availability of parts will increase industry demand for new
products (though perhaps for competitors’ products).
Some countries have legal requirements for the provision
of spare parts over time in the case of major durables, and
some manufacturers have their own guarantees of parts
availability. In the cases of cars and domestic durables,
the most common guarantee is for parts to be available for
at least 10 years from the date of sale.
Consideration of maintenance and spare parts
introduces some associated issues. In the most prominent
example of motor vehicles, this has since 1991 led to
decades of negotiations between the European
Commission, European Parliament, car manufacturers, car
component suppliers, national governments and IP
agencies. At issue is the right of manufacturers to protect
their design rights and the exhaustion of their trade mark
rights and patents, against the rights of parts
manufacturers and car owners not to be excluded from the
market or be forced to pay high prices due to monopoly
supply. Consideration of this exceedingly complex field is
far beyond the purpose of this paper: negotiations over
revisions to the Designs Directive and the Community
Designs Regulation are still in progress.
Generally, if durability is to be encouraged,
manufacturers should not be allowed to exert monopoly
power in the spare parts market, with high prices or
discontinued supply of parts. Independent providers
should be allowed to produce 'pattern' parts. 16 The
European Directive does not allow trademark owners to
prohibit third parties from using their trademarks (e.g.
naming the car for which the part is destined) when
providing spares, so long as it is clear that they are not
produced or approved by the original manufacturer.
A factor which has reduced lifetimes is the coincident
effect of rapidly falling manufacturing costs and
increasing labour costs in affluent economies. So while
the costs of manufacturing many new artefacts has been
rapidly falling over the past decades due to process
innovations and economies of scale generated by mass
markets 17 , the costs of repairing defective products has
been increasing due to the labour intensive nature of most
repair work. So it is more often cheaper to replace than to
repair.
2. Accidental disposal. Though most things can be
repaired, at a cost, some may be lost beyond economic
recovery, such as satellites and ships and aircraft.
3. Space Costs. In many countries with space
constraints and costs, some products may no longer be
able to justify their costs. In Japan, which has very high
costs of living space, many products have a rapid turnover
for this reason: large hi-fi systems gave way to small ones
and then to MP3 players.
4. System Changes. All modern products are parts of
systems, and if a system changes it may result in the
redundancy of a product: the function may no longer be
required. With the arrival of personal computing and the
internet, the fax machine lost its purpose for most users.
Just before this, it seemed likely that the fax would
supplant much of the postal service. This factor is
discussed in more detail below.
5. ‘Social Obsolescence’: fashion, cultural or social
change. In affluent societies clothing becomes a socially
determined product and constantly changing fashions
result in clothing being disposed of before substantial
physical deterioration.
The concept of 'planned obsolescent' gained
considerable notoriety in the 1960s following Packard's
influential book. He discussed the change from a society
where products wore out and were replaced to one in
which manufacturers created reasons for premature
replacement, including deliberate design of short lives,
witholding spare parts, and difficult or expensive
maintenance. The case of cars and planned obsolescence
became notorious and can be argued to have influenced
industry practice as well as creating consumer resistance.
Manufacturers introduced minor cosmetic changes to their
products in an annual model change, and through social
pressure generated by advertising caused rapid turnover in
ownership. The poor longevity of cars became a problem
for subsequent owners, but was not the concern of
manufacturers who focussed on the initial buyers of the
cars.A prominent example was the 'tail-fin' styling detail
introduced to large US cars in the late 1950s, reaching its
most extreme on the 1959 Cadillac Eldorado (Figure 4)
(Mingo, 1994).
17
Possible the most important being the diffusion of containerisation,
which has reduced the costs of transporting manufactures globally to
Parts following the original manufacturer's design and capable of
such an extent that for many products transport is a negligible cost
replacing that company's parts, but not restricted by the original
(Levinson, 2006). As Adam Smith noted, specialisation is limited by the
manufacturer's iprs.
size of the market, and we now have a global market.
Page 11 of 17
16
cost: economic theory has not given robust conclusions
about the advantages of this, usually assuming that a
consumer makes rational decisions about durability, but
possibly subject to market imperfections that can distort
the pricing and the design trade-off.
13.1 Durability with stable technology.
Cadillac Eldorado, 1959
6. Public Policy. Health and safety regulations and the
discovery of new risks such as toxic materials in products
(e.g. asbestos, leaded paint, leaded petrol) can make
existing products illegal to produce or continue in use.
Environmental policy may result in the same for some
motor vehicles. Of particular interest here is whether such
new regulations act retroactively. Overwhelming common
practice is for consumer durable goods to be judged
against regulation at the time of manufacture or sale. Only
in exceptional cases will existing artefacts be subjected to
subsequent rules, making them illegal to use. Cars must
conform to Construction and Use Regulations at the time
of manufacture, but subsequent tightening of these
regulations rarely prohibits their later use, so vintage cars
are still in use.
The case of asbestos is such an exception. After more
than a century of being described as a 'wonder material',
with excellent fireproofing, insulation, and construction
characteristics, the discovery of its carcinogenic
properties resulted in its being made illegal in most
countries apart from Canada and the USA. Mesothelioma
caused by exposure to asbestos fibres (usually from
shipbuilding and repair) became recognised as a major
problem, and since the 1980s (in the UK) has caused the
scrapping of thousands of artefacts, and costly stripping of
asbestos from buildings. In this case, the health imperative
far outweighs the private costs of disposal.
7. Demand Management. Governments may find
premature retirement of durables a valuable instrument of
demand management. The scrappage allowances for cars
in the wake of the financial crisis have been mentioned
previously. Other countries have implemented this as a
routine policy. Japan has a very rigorous car testing
regime which retires cars which are perfectly serviceable
in order to generate car sales. The resulting exports of
(right hand drive) cars to other South East Asian countries
offers them a windfall of used cars at lower prices than
would otherwise be the case.
13. Problems with the design of increased
durability
Increasing the durability of products involves avoiding
or mitigating the factors listed previously. We can
lengthen lifetimes by making products more robust, more
wear-resistant and more serviceable, but at an increased
If we consider products whose design is stable,
decisions are simplified and usually these are life-cycle
cost decisions. 'Stable' means there is a 'dominant design'
(Utterback and Abernathy, 1975) and there are predictable
advances in technology, which may mean none at all or
steady improvements. If we have constant innovative
performance improvement at a predictable rate - a forecast
technology trajectory - the decision is modified but not
fundamentally different. We would expect in these
circumstances that the optimal durability would be shorter
the faster the rate of performance improvement (Figure 3).
13.2 Modularity, interfaces and different rates of
innovation
The modular nature of most complex durable products
generates a particularly important problem, perhaps an
opportunity. There is no reason for rates of technological
advance affecting each module of a product to proceed at
the same rate. In recent years, for laptop computers the
rate of advance of display and processing technologies has
far outdistanced that in battery technology, measured in
performance improvement rates. The argument above
indicates that some components will have an optimal
replacement rate faster than other components. Essentially
this is what happens with physical deterioration of all
complex products: some parts wear out faster than others,
so they are designed to be replaced by routine
maintenance. So can we design products that will allow
the replacement of parts that should be replaced for
innovation reasons? Or alternatively, can we design a long
lived product like Wendell Holmes' 'Wonderful One Hoss
Shay', in which all the parts wear out at exactly the same
time!
The Deacon's Masterpiece;
Oliver Wendell Holmes, 1858
"Have you heard of the wonderful one-hoss shay,
That was built in such a logical way
It ran a hundred years to a day, ... "
The one-hoss shay and the satellite therefore bear a
similarity: design to a fixed lifespan for particular reasons
such as inaccessibility. But this is a special case, as
usually we are generating an optimal durability from
investigation of service flows and costs. Durability is
merely an outcome of the process, not the objective.
For most products, however, system performance is the
objective and the economic/design rule would equalise the
marginal cost (PV terms, etc...) of contribution to system
performance for each module, so an extra dollar spent on
each component would have exactly the same impact on
system performance, and moving cost between modules
Page 12 of 17
would not increase overall performance. Where system
durability is the objective rather than system performance,
the costs are distributed between modules by allocating
the marginal dollar so that all components have the same
lifetime.
The general case for most major durable artefacts is
that instead of designing them with either a performance
or a durability imperative, a compromise is to rely on
servicing and replacement parts as a way of avoiding the
high cost of making some components’ expected lifetimes
long enough to last as long as the overall service life of
the artefact. It is cheaper to replace cheap components
regularly rather than produce long-lived parts. Therefore
there is a lifetime cost imperative.
One of the important advances in manufacturing
technology and methods over the last century has been
advances in the study of component failure, especially
predicted lifetime of components. This has led to far more
reliable products, and accurate servicing schedules, such
as the requirement to replace timing belts or chains in car
engines at specified intervals. This again allows the
compromise to be effective, and costs to be minimised.
However, the trend of increasing labour costs has
limited the extent to which products can be repaired,
especially as ever cheaper complete replacements are
available.
The well-known difficulties in increasing battery
endurance for laptop computers is misleading: if the
power consumption of the other components of a laptop
can be reduced at a lower R&D cost, then the limits of
batteries should not be the focus of research if the aim is
to increase system performance. This is because if battery
technology is mature so that is it costly to increase
performance, research and production funds are better
allocated to other components with far more productive
technology trajectories. Of course, this may not be the
case if radical new battery technologies are in prospect.
Similarly, durability is best extended by looking at the
various ways that the systems may be improved, by
extending modular durability or by making modular
replacement cheap and easy.
This strategy must bear in mind the labour costs of
servicing and upgrading. As labour costs increase, then
the advantages of serviceability are reduced, but the
incentive for designing easy replacement of modules is
increased. Or, for such products, the strategy could be of a
'one-hoss shay' variety: design all components to last the
same length of time, and accept that repair is not possible
due to high labour costs.
Modularity also allows a different approach to
durability: the design of interfaces. If we can predict the
nature and speed of performance improvements to be
expected in future over a given time-span (i.e. technology
trajectories), interfaces may be designed to allow for
increased demands that may be made in the future, such
as rates of data flow in computing equipment. But here we
meet interesting problems. Standards are generally
thought to be better the more tightly they are specified,
such a measurement standards. This reduces the
possibility of components fitting badly or performing
badly. But in order that components may have greater
longevity, we should adopt a different view: specifications
should allow for subsequent improvements, or increasing
demands, so should be more flexible where this can be
specified without compromising initial performance.This
is a characteristic of many long-lived standards: they
allow for the subsequent adoption of unexpected
advances.
A fine example of this can be seen in the very long
term survival of the audio cassette in the face of
competition from later formats with far more advanced
technologies. We can also see in this case the connection
between the longevity of standards (or formats) and that
of physical products. The familiar cassette was designed
by Philips in 1963 as a low performance office dictation
format with no intention to use it as a music recording
format, which has far more exacting demands than speech
recording. However, continuous incremental improvement
of all the components making up the format enabled it to
improve its performance as a system over decades.
Improvements were made to the materials (plastics,
metallurgical properties of the recording and playback
heads and the magnetic tape materials); more accurate
components (capstan and tape drives); control systems
(quartz locked servos and motor controls); electronic
processing of the sound recordings (Dolby noise reduction
processes B, C & S), etc. Eventually the cassette became a
competitor to the existing market incumbent (vinyl discs),
and defeated competition from successive digital formats
including Digital Audio Tape (DAT), Digital Compact
Cassette and MiniDisc.
Continuous incremental improvement was incorporated
into the format and its products. But it also incorporated
discrete, unexpected changes. An example is the sensing
tabs which were on the cassette housing. The original 'Red
Book' specified that the plastic cassette case had a small
tab which could be broken off by a user in order to
prevent accidental over-recording on that tape. The
recorder/player would have a sensing probe to detect
these. A low cost metal lever would probe the cassette and
prevent recording in the absence of the tab. This produced
a very simple and cheap way of achieving a very valuable
user function.
The performance of the original iron oxide
(subsequently known as Type I) magnetic tapes improved
progressively and was incorporated in the equipment
capabilities. But new magnetic materials became available
(chromium dioxide, metal [particle] and metal
[evaporated] tapes) each having different recording and
playback characteristics and separate International
Electrotechnical Commission standards specifications
(IEC Types II & IV). This required good quality
equipment to use different recording and playback
characteristics to gain the full benefit of different Types
and so a way of detecting each individual cassette's type
was necessary. This was achieved by incorporating new
sensing tabs on the new cassette types, for Type II and
Type IV tapes. This apparently simple modification of the
original standard is deceptively important: it enabled the
format (and therefore all the artefacts associated with it,
including audio equipment and tape collections) to
incorporate new, unexpected technological innovations
Page 13 of 17
within an existing standard, and without making existing
equipment obsolete.
Similarly, other advances such as Dolby noise
reduction were incorporated into the format by different
means, sometimes automatic or sometimes userselectable. It is remarkable to note that this as a case
where new digital technologies were defeated in the
market (as dominant mass market formats and products)
by an older analogue technology, largely because of this
successful incorporation of subsequent technological
advances. Additionally, it is worth noting that many of the
causes of improvements in the cassette format were due to
digital technologies: an interesting case of the 'sailing ship
effect', where apparently exhausted products are
reinvigorated by the very technology which is expected to
make them obsolete. 18 If this is the case, formats and
therefore products can be imparted a longer lifetime.
into which the CPUs were inserted were for many years of
a standard type (Socket 5 then Socket 7) supported by the
major manufacturers (Intel and AMD). The original
intention was to allow later processors to be used in
earlier equipment, upgrading them. But this rarely
happened. The reason was that the PC system was
optimised at the design stage for all the components to
work together optimally, and upgrading one component
created incompatibilities, and did not improve
performance sufficiently to justify the high price of the
latest processor. Subsequently, socket design became a
tool of competitive advantage between Intel and AMD,
and proprietary standards became the norm.
So we get back to the original question: who would
want a 20 year old laptop? In product areas in which
modular components are highly optimised, each with
different rates of improvement, it is very difficult to
design increased longevity; better to replace at the product
level. But standards may be designed with longevity as an
explicit objective, enabling products themselves to last
longer.
14. Transitions and transitional inertia
Audio cassettes (top to bottom); original erasure prevention tabs
present; CrO2 sensing tabs; metal tape sensing tabs; metal tape with
recording tabs removed.
Therefore one strategy for creating longevity is to leave
a standard flexible enough to incorporate not just expected
incremental advances, but also to enable the incorporation
of other, unexpected advances, without making existing
products obsolete. Sony seemed to have learned from the
cassette example when they specified the subsequent
DAT standards, as the original standard specification
included sensing tabs/blanks 'for unspecified use'.
A further example from the digital era is instructive. It
is well known that processing chips have followed a
technology trajectory for many years: Moore's Law. New
generations of faster processors arrive with startling
rapidity, and this is a classic example of the durability
problem. If consumers want to take advantage of the latest
chip speeds, do they have to buy new PCs, laptops and
tablets before they 'wear out'? Such computers are
certainly modular products and it is possible to upgrade
them by replacing older components. But very few users
do this (apart from as a side effect of repairs). The sockets
18
One of the most influential areas of research in
sustainability and innovation has been the analysis of
transitions between systems (Geels, 2002). While most
environmentally conscious analysts focus on the
beneficial effects of increasing longevity due to the lower
materials use and particularly lower energy consumption,
there is an alternative view. Energy demands at a
particular time are determined by our energy consuming
durables and the use to which we put them. Major
durables are expensive and are expected to last a long
time, and owners are reluctant to replace them until they
are beyond economic repair due to the high initial cost of
replacement, even on a life-cycle analysis. Let us take the
example of domestic heating boilers in Northern Europe.
These are the largest single users of energy, for example
in the UK space and water heating contributed 24 per cent
of all energy consumption in 2013. Space heating and hot
water accounted for 82.7 per cent of domestic use of
energy in 2013 (DECC, 2015).
At a point in time the age profile of the set of boilers
may include products made more than 25 years ago, with
low efficiency of energy use and possibly deteriorating
performance from designed specifications. The paradox is
clear. If we manufactured boilers with relatively short
lives they would have been replaced with later, more
efficient units, resulting in substantial energy savings. But
we are 'locked-in' by durability to a range of what are now
considered very inefficient energy users.Unruh (2000)
makes a similar point about lock-in to generating capacity
for power stations Despite new more efficient boilers
being introduced in 1982, 30 years later (in 2012), more
than half of the total of UK domestic boilers were still of
the old type (from DECC, 2015). In 2005 it became a
legal requirement to fit only condensing boilers as new fit
This is an accurate case of what Gilfillan originally described in his
book (Gilfillan, 1935). In Chapter 4 he described how sailing ships were
able to be designed for faster sailing, because the advent of steam tugs
alleviated the requirement to be 'handy' in port. Subsequently, authors
have misinterpreted the original observation and now the sailing ship
effect refers to any rejuvenation of an apparently mature technology or
product area caused by the introduction of a new competitor.
Page 14 of 17
or replacements. 19 Figure 5 shows how slowly the new
design boilers have replaced old designs in the UK,
despite this legal requirement and also substantial
financial subsidies given to private owners (£400) to
encourage replacement.
Figure 5: Types of UK domestic boilers, 1982-2012 (by the author,
based on DECC, 2015, Table 3.17)
It seems clear that the long lifetimes of old boilers, and
the nature of replacement decisions, has been responsible
for this transitional inertia. The savings from increased
fuel efficiency do not justify the initial cost of
replacement on an investment basis, so old boilers are
used until they are no longer economically maintainable.
Many household durables are of this type. Mintel
(GMI/Mintel, 2012) reports that nearly eight out of ten
adults who have a vacuum cleaner will only buy a new
one if the old vacuum cleaner breaks down, making the
market predominantly replacement-driven. Boilers are of
the class of products for which durability is determined by
replacement decisions.
There is a remarkable paradox here, as the objective of
both environmental policy-makers and of company
advertising and marketing departments is the same, to
persuade consumers to dispose of their functioning
products and replace them with more up-to-date
examples. At present domestic boiler replacement
decisions are very different from visible fashion goods,
which results in their being replaced only when
technically and economically necessary. In the UK, rather
than offering boiler replacement subsidies, perhaps the
government should employ advertising agencies, the
experts in persuasion, to convince homeowners that new
boilers are a prestigious possession to show off to their
friends and neighbours in the same way as a new car or
iPhone denotes status and lifestyle? If boilers were
prominent on the front wall of a house, it is reasonable to
predict that they would be replaced far more often than
ones that are hidden in the depths of the house.
Additionally, many boilers are now subject to servicing
contracts, guaranteeing regular maintenance and fast
repair. Over their lifetime, the cost of this far outweighs
19
the initial cost of a boiler. It is an easy step to move to a
leasing model, where a service provision company installs
and maintains the unit – perhaps even with a fuel use
guarantee of some variety, for a regular fixed fee. In this
case more frequent replacement would be ensured as the
service provider found more efficient means of provision.
In areas undergoing innovative improvement, longevity
reduces the flexibility of an economy. Short lived
products can enable rapid system change to take place.
A final example of this. The UK government has for
more than 10 years encouraged private car buyers to buy
diesel-engined cars as they produce less CO2 than their
petrol equivalents. By the end of 2014 there were 10.7
million diesel cars in the UK, making up 36.2% of the
total, from only 7.4% in 1994 (Department for Transport,
2014). From 2012 more than half new cars registered in
the UK have diesel engines.
However, more recently, the health problems attributed
to diesel particulates and NOx emissions, and the rapid
improvements in petrol technology, have caused policy
reassessments. 20 It now seems likely that the UK will
reverse the pro-diesel policy. But how rapidly the change
will take place depends fundamentally upon how long
cars last and on how willing owners are to dispose of
them. Unless government is prepared to implement a new
scrappage scheme, the change will be slow, like that for
boilers.
15. Conclusion
The variety of perspectives on durability reported
above are persuasive that the concept of durability is
important, and that it is a significant enough characteristic
to be worthy of investigation in its own right. Several
reasons have been given for this conclusion. Durability
influences demand at product, industry and aggregate
demand levels. A growing economy is heavily dependent
upon rapid replacement of products both for
macroeconomic reasons and also to allow innovation to
take place.
Most theoretical models which incorporate real world
behaviour show that durability is important for consumer
purchase and replacement decisions, as well as for
company strategy. With development of new business
models for durable provision, in particular leasing or
service provision rather than outright purchase of
products, and the predicted rise of alternative 'sharing'
means of provision, will come new objectives for the
design, production and provision of major durables.
The durability of some types of products determines
their replacement. For other goods, replacement
determines durability. It is far easier to influence the latter
class by advertising or social pressure.
The 'blip' in the curves subsequent to the 2005 legal requirement was
probably due to a surge of owners buying or fitting old type boilers
before they were prohibited, due to a justified reputation of the new type
20
This was written in March 2015, six months before the admissions that
for unreliability in freezing weather, a design fault which was
subsequently remedied. This was encouraged by reporting of the
Volkswagen had mislead governments and consumers across the globe
problem in the popular media at the time.
with claimed emissions performance of their diesel cars.
Page 15 of 17
Design can have a new additional objective, the
explicit incorporation of provision for subsequent
upgradability, helping to prolong service lives.
Businesses can use the designed durability of products
as a strategic tool of competitive advantage, but it is
always a two-edged sword, with advantages and
disadvantages. To some extent the definition of standards
with an explicit provision for the incorporation of
subsequent technological improvements can help with
this, to the extent that innovation paths can be predictable.
The final objective of the paper is to emphasise the
dynamic importance of durability in the context of system
transitions. The intuitively reasonable preference for longlived major durables, and consumer resistance to short
lives, must be balanced against the virtues of system
flexibility. This is particularly true for environmentally
significant products.
Even from an environmental perspective, durability has
complex implications. It is clearly a field in which more
research would be valuable, for example in assessing the
flexibility of economies in transitions to more sustainable
economic systems.
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