Wednesday Morning Rant [Joe Mannix]

There has been recent news out of the automobile industry about manufacturers charging subscription fees to access physical features on cars. BMW has been grabbing the headlines with their plans to put heated seats and steering wheels behind a paywall in some markets, but they are by no means the first. Mercedes has already gotten in on this game, and in some ways it's even more egregious because it controls the extent of the feature. Depending on country, you can buy some Mercedes cars with either 4 degrees or 10 degrees of rear-wheel steering. The hardware is the same, but you pay more for more degrees, upfront or by subscription. Similarly, there has been an ongoing battle in agricultural equipment over software components of physical devices and lawsuits against those who break software locks to resell used or salvaged parts.

The idea of paying a subscription to access hardware you already own strikes many as outrageous. Ditto the idea that a software license means that your hardware you physically own is not hardware with which you can do whatever you want after purchasing. It reminds me of any number of SciFi stories about dystopian futures where you are nickled and dimed for everything at all times. Philip K. Dick used this theme often, as did various others. It's feeling downright predictive at this point.

While locking out the market for used or salvaged parts is easily understood and makes a nasty kind of sense, the benefit of subjecting physical, hardware-dependent features to subscription is less clear. In order to do it, the hardware has to be present. To turn on a heated seat or advanced cruise control or other features via software, the heated seats and emitters and whatnot must installed in the vehicle. This means that the manufacturer has to put that hardware in when building the car.

I'm speculating, but I suspect that by getting rid of physical trim levels and just speccing every vehicle to the max and handling the "trim level" virtually in software, manufacturing is probably simplified. Every seat gets the heater, as does every steering wheel, etc. Ordering and inventory are probably easier and more cost-effective, as is assembly. Total hardware costs probably increase, but not by a whole lot. That likely modest increase in cost then gets passed on to the customer because manufacturers aren't going to make major changes to their business models in order to make less money. The software-controlled upgrade becomes essentially pure profit.

Sounds like a good deal for the manufacturer (and maybe in the used car market downstream). For the primary customer, though, it's another story. He has to buy hardware that he can't use without subscribing - either as a one-time enablement cost or as an ongoing subscription. That idea is offensive to many, and it sets the stage for more of the same. Ownership of the physical stuff is irrelevant because it's software-locked and you can't use it how you want. You can use it the way the manufacturer wants - if the manufacturer is willing to allow it and you're willing to pay for the privilege. The stuff you "own" isn't really yours. Ownership is conditional - and therefore is not really ownership.

But that's okay. After all, we all know how the future looks: you'll own nothing and you'll be happy.

Update: Commenter 'trippy' below informs me that in the Mercedes example, the degree of movement for rear-wheel steering also depends on wheel size, which means a hardware change is required in addition to the software fee to enable it. This was not covered in the articles I read. I don't think this changes the thrust of the article as this still requires software payment over and above the hardware cost for the capability, but it is an additional point that I did not previously cover.

posted by Open Blogger at 11:00 AM

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