Planned obsolescence: Meaning, Criticisms & Real-World Uses

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What Is Planned Obsolescence?

Planned obsolescence is a business strategy where products are intentionally designed to have a limited lifespan, encouraging consumers to replace them frequently. This practice falls under the broader category of product life cycle management within business and economics. The goal of planned obsolescence is to drive recurring sales and maintain consistent market demand for new products. This strategy can manifest in various ways, such as products that degrade after a set period, become incompatible with newer technologies, or are difficult or expensive to repair. The aim is to accelerate the replacement cycle, thereby boosting revenue and profit margins for manufacturers.

History and Origin

The concept of planned obsolescence gained significant traction in the early 20th century. A notable historical example involves the Phoebus Cartel, an international alliance of major lightbulb manufacturers formed in 1924, including General Electric, Osram, and Philips. This cartel, established in Geneva, Switzerland, aimed to control the global incandescent lightbulb market. A primary objective of the Phoebus Cartel was to standardize and, critically, reduce the lifespan of lightbulbs. While earlier bulbs could last up to 2,500 hours, the cartel codified a standard of 1,000 hours, thereby devising the industrial strategy known as planned obsolescence.¹⁹, ²⁰ This deliberate shortening of product life was intended to increase sales by forcing consumers to purchase replacements more often.¹⁷, ¹⁸ The cartel's operations ceased with the outbreak of World War II in 1939.

Key Takeaways

Planned obsolescence is a business strategy to intentionally limit a product's lifespan to encourage repeat purchases.
It aims to ensure continuous [market demand] and increased revenue for manufacturers.
The practice can involve various tactics, including designing products that degrade, become incompatible, or are difficult to repair.
It has significant environmental impacts, contributing to increased electronic waste and resource depletion.
Regulatory efforts are emerging in various regions to address the drawbacks of planned obsolescence.

Interpreting Planned Obsolescence

Planned obsolescence is interpreted through its impact on consumer behavior and market dynamics. From a manufacturer's perspective, it can be seen as a way to ensure a steady stream of revenue and encourage innovation through continuous product upgrades. By shortening the useful life of goods, companies aim to sustain high sales volumes, which can support economies of scale in production.

Conversely, for consumers, planned obsolescence can lead to increased expenditures over time as they are compelled to replace products prematurely. It can also reduce consumer surplus, as the true value obtained from a product is diminished by its shortened lifespan. From a societal standpoint, the practice raises concerns about sustainability, resource depletion, and waste management.

Hypothetical Example

Consider a hypothetical scenario involving a brand of washing machines. "EverSpin Washers" designs its latest model, the "EverSpin 5000," with a specific electronic component that is engineered to fail reliably after approximately five years of typical use. This component is integrated into a sealed drum, making it impractical and costly to repair, effectively necessitating the replacement of the entire machine if this part breaks.

A consumer purchases an EverSpin 5000, expecting it to last for at least 10 years based on their previous washing machine experiences. After precisely five years and one month, the machine ceases to function due to the failure of the predetermined component. The repair estimate exceeds 80% of the cost of a new machine, making replacement the more "economical" choice. This forces the consumer to purchase a new washing machine, potentially another EverSpin model, demonstrating the effect of planned obsolescence on repeat purchases and driving the company's sales.

Practical Applications

Planned obsolescence manifests across various industries, particularly in consumer electronics, fashion, and home appliances. In investing, understanding this strategy is crucial for evaluating companies' long-term sustainability and their reliance on rapid product cycles versus durable goods.

For instance, smartphone manufacturers frequently release new models with incremental improvements, and older models may experience reduced software support or performance throttling over time. This encourages consumers to upgrade, boosting sales for companies like Apple, which faced a $113 million multistate settlement related to allegations of intentionally slowing down iPhones to mask battery issues and encourage new device purchases.¹³, ¹⁴, ¹⁵, ¹⁶

Similarly, in the printer industry, some devices are designed with microchips that limit the use of third-party ink cartridges or the number of prints, pushing consumers towards purchasing new models or expensive brand-specific supplies.¹² Businesses employing planned obsolescence aim to maintain a robust supply chain for new components and finished goods.

The European Union has been proactive in addressing planned obsolescence, introducing "right to repair" legislation. This directive aims to make it easier and more cost-effective for consumers to repair products instead of replacing them, by requiring manufacturers to make spare parts available at reasonable prices and prohibiting barriers to repair.⁹, ¹⁰, ¹¹ Such regulations directly counter the traditional tenets of planned obsolescence by promoting durability and repairability.

Limitations and Criticisms

Despite its perceived benefits for manufacturers in terms of consistent sales, planned obsolescence faces significant limitations and criticisms. A major concern is its substantial environmental impact. The constant manufacturing and disposal of products due to shortened lifespans contribute heavily to electronic waste (e-waste) and the depletion of natural resources.⁷, ⁸ This directly conflicts with global sustainability goals and the transition towards a circular economy, which emphasizes reducing waste and maximizing resource utilization.⁶

From a consumer perspective, planned obsolescence can lead to financial strain and dissatisfaction. Consumers are compelled to spend more money on replacements, leading to unnecessary expenditures and a perception of being exploited.⁴, ⁵

Furthermore, the practice can invite legal and regulatory scrutiny. Several jurisdictions, including France, have introduced laws allowing fines or even criminal charges against companies found guilty of deliberately shortening product lifespans.², ³ The European Economic and Social Committee (EESC) has also called for a total ban on planned obsolescence in Europe.¹ These actions highlight a growing global pushback against the negative consequences of this business model. It also impacts the ethical standing of companies, potentially deterring investors interested in ethical investing.

Planned Obsolescence vs. Technological Obsolescence

Planned obsolescence and technological obsolescence are distinct concepts, though they can sometimes intersect and lead to confusion.

Planned Obsolescence refers to the deliberate design of a product with an artificially limited useful life. The product's functionality is curtailed by the manufacturer through design choices, material selection, or software limitations, with the primary intention of compelling consumers to purchase a new version sooner than would otherwise be necessary. The product's decline is predetermined.

Technological Obsolescence, on the other hand, occurs when a product becomes outdated or less useful due to the natural progression and introduction of newer, more advanced technologies. This is a natural consequence of research and development and innovation. For example, a perfectly functional flip phone becomes technologically obsolete not because its manufacturer designed it to fail, but because smartphones with superior capabilities, such as internet access and advanced applications, emerge and render the older technology less desirable or practical. The product's decline is a result of external market and innovation factors, not an inherent design flaw.

The key difference lies in intent: planned obsolescence is an intentional strategy by the manufacturer to limit longevity, while technological obsolescence is an organic outcome of market innovation.

FAQs

Why do companies use planned obsolescence?

Companies use planned obsolescence primarily to boost sales and maintain consistent revenue streams. By ensuring that products have a finite lifespan, manufacturers encourage repeat purchases, which can lead to higher sales volume and sustained profitability. It also allows them to control the product cycle and manage inventory.

Is planned obsolescence legal?

The legality of planned obsolescence varies by jurisdiction. While it is not universally illegal, there is growing legislative action against it, particularly in Europe. Countries like France have introduced specific laws penalizing companies that deliberately shorten product lifespans, and the European Union is implementing "right to repair" initiatives to counter the practice and promote product longevity.

How does planned obsolescence impact the environment?

Planned obsolescence has significant negative environmental impacts. It leads to an increase in electronic waste, as consumers frequently discard older products. The manufacturing of new products to replace obsolete ones also consumes vast amounts of raw materials and energy, contributing to resource depletion and a larger carbon footprint.

Can consumers fight planned obsolescence?

Consumers can counter planned obsolescence by seeking out durable and repairable products, supporting companies with strong sustainability practices, and participating in the "right to repair" movement. Choosing to repair items rather than replace them, where feasible, can also reduce demand for new, potentially short-lived products. Understanding the cost of goods sold for durable products versus those with planned obsolescence can inform purchasing decisions.

What is the "right to repair" movement?

The "right to repair" movement advocates for consumer rights to repair their own products or have them repaired by independent technicians. It pushes for manufacturers to provide access to necessary tools, parts, and information for repair, countering practices that make products intentionally difficult or impossible to fix. This movement aims to extend product lifespans and reduce waste.