Watching the evening news today the top story was a major Detroit auto manufacture had announced it was raising the price of its cars which got me to thinking as hey I just purchased a new iPad for the same money as the last one and basically got twice the value. So then why does the price of cars have to go up rather than stay the same or even go down? Also where will all of this end up as we are creating a far greater divide in Henry Ford’s original economic model of a car for the working man as the car companies are employing fewer and fewer people, thus who is going to buy the cars of the future?
One of the reasons for this waxing is I am reading the book “Clock Speed” by Charles Fine, in fact he taught part of a recent course at MIT which I attended around creating operational strategies. While the book is a bit dated (about 10 years), one aspect in reference to this price topic did sound a note with me as Professor Fine in the tome had an epiphany if you will around the supply chain as in the industrialized era, it was “pull” based with manufacturing facility drawing in materials to provide a “push” product mentality to the consuming public. However here Fine saw that as in fruit fly’s (yes, it’s a long story, read the book for the answer) that the new market was no longer centered around the factory or maybe better put, the industrial machine.
Much like Copernicus tossing the monkey wrench into the “earth centered” model, here Mr. Fine calls out that placing the factory at the center of the manufacturing solar system went out with the Rockefellers and the iron horse they rode in on. Here the consumer was king, no longer do we want just what Detroit thinks we should have, this brings me back around to the iPad and how Detroit needs to take a lesson from our friends in Cupertino before we all end up driving Geely’s up and down Woodward Boulevard.
As what our friends at Apple did is they created an ecosystem, most likely stolen, alright that was pretty harsh so we will say borrowed from the printer people who like to give us their printers so we by their ink. However this printer <-> ink model was one dimensional in nature as how much are you going to print (yes the smart phones & tablets are even killing that market too, as why print when you can mail and show). However Job’s and Company went all polymorphic on us with the iPhone & iPad as from Apple you can by, Applications, Music, Movies, TV Shows, Books, well you get the idea that there is a lot to buy in this eco-system which makes the device an annuity business for Apple.
So what about the lowly car, as I’ve written in the past the car needs to move from simply being a mode of transportation into an annuity based eco-system where the majority of the “profit” of the car is purchased after the fact via high markup ad-on’s rather then up front loading lowing the entry boundaries as to create a consumer “inclusion” economy by placing them at the center of the solar system as opposed to one of “exclusion” based upon the outdated “industrialized” model…