What Is Planned Obsolescence? How Strategy Works and Example

What Is Planned Obsolescence?

Planned obsolescence describes a strategy of deliberately ensuring that the current version of a given product will become out of date or useless within a known time period. This proactive move guarantees that consumers will seek replacements in the future, thus bolstering demand.

Obsolescence can be achieved through introducing a superior replacement model, or by intentionally designing a product to cease proper function within a specific window. In either case, consumers will theoretically favor the next generational products over the old ones.

Understanding Planned Obsolescence

Several sectors are more well known for planned obsolescence than others. In fashion, it's widely accepted that nylon stockings are destined to run, thereby requiring routine replacement.

Meanwhile, in technology, the replacement cycle for personal electronic devices such as smartphones has historically been two to three years because components begin to wear down and new generations of software and operating systems grow less compatible with the aging hardware. Furthermore, software is also often designed to include new features and file types that are incompatible with old versions of the program.

Not to be outdone, computer hardware is also a candidate for planned obsolescence because computing power in microprocessors typically follows Moore's Law, which observes that the number of transistors able to fit on an integrated circuit double about every two years—and the cost of processing power halves every two years.

Finally, planned obsolescence also affects automobile manufacturers, who annually roll out new versions of their models.

Special Considerations

Consumer Reaction

Consumers often react negatively to planned obsolescence, especially if new generations of products offer insufficient improvements over the prior versions. Brands can be tarnished by artificially stoking demand through this method, ultimately driving customers away.

However, planned obsolescence doesn't always receive negative attention. Companies can engage in this activity solely as a means of controlling costs. For example, a cellphone manufacturer may decide to use parts in its phones that have a maximum lifespan of five years, instead of parts that could last 20 years.

Apple’s Planned Obsolescence

Apple Inc. has often been at the center of skeptical consumer discourse. The company announced a plan to accept direct payments from iPhone users for hardware that could be exchanged annually.

Observers noted the company's clear intent to shorten the replacement cycle, which was viewed by many as an obvious attempt to stimulate demand at the consumer's expense. Skeptics doubted Apple's ability to engineer meaningful improvements to functionality so quickly—a problem that many phone makers already faced with two- and three-year replacement cycles.

While Apple has refused to acknowledge that it engages in planned obsolescence, a Harvard University study found that some iOS upgrades have slowed down the processor speed of older iPhone models, but not for the explicit purpose of driving new iPhone sales. Apple recently settled a 2017 class-action lawsuit over the issue, agreeing to issue payouts to customers and state governments over what has been referred to as "batterygate."

Of course, while Apple is notorious for this practice, it has not been proved unequivocally. And even if it were the case, some economists argue that planned obsolescence drives technological progress. Besides, other manufacturers, such as the makers of Android phones and tablets also release new versions of their products annually.