Product service industry is all set for a change and it is going to weigh on your pocket
There is only one motivation that keeps MBA grads working, and it is to increase revenue. But revenue increment is limited to a few factors such as launching new products, increasing the profit margin, reducing the costs incurred, saving some taxes, and so on. You can see which firm opts for what kind of choice?
Industries across the globe are running to increase their revenues and you can see the number of products launched, high-priced devices, tax frauds, and low wages as their primary drivers. In this endeavour to increase the revenue, they have come up with a great new strategy, and surprisingly it does not require them to launch new products. The new model requires them to service their existing products to increase their revenues. By now, you must be wondering “How can servicing make money?” It can, if you price the items with a good margin and make products so that every time a consumable or any individual component of the device requires replacement, it can only be fitted with an original product made by the company.
The strategy was first adopted by tech giants such as Apple. They noticed that the product price cannot be increased beyond a point without decreasing customers. What they came up with is an idea that requires producing a device that has all components relating to each other. The display, processor, battery, motherboard, and every other component are authenticated before the device starts. They sold and publicized this strategy under the name of “performance optimization & device security”. What they didn’t tell the consumers is “if you buy a device and it happens to break down during use, you would need original parts and an authorized service center to repair your device.” The strategy is really good and since the consumer is forced to use an original product, would fetch money to the manufacturer.
The strategy was noticed by industries across the globe and of various domains. As a result, everyone now is focussing on the same thing. Firms are producing devices that will identify counterfeit or non-original products and stop working. Though it is good for critical operations but adds financial stress on the consumer for basic devices.
What is currently being done?
Every device is manufactured with multiple sub-components. The components are made with unique Identification numbers which the processor of the device registers before starting. It checks if the components are authentic or not. Whenever it senses a non-authenticated component, it generates a notification, stops the device, or creates a bad experience for the end-user. Eventually, people start visiting the service centers and they start paying the premium prices of the original consumables/ replaceable. It in turn creates a new stable revenue stream for the company.
Some of you might think, it was already done earlier. But earlier AI was not there. Now with the help of AI, the identification of non-original items is easy and can be done almost instantly on every device with a good processor. Companies are using this. This AI-enabled processor would not only identify the non-original item but also stop the functioning of the device.
Which Industries are doing it/ plan to do it?
Simple answer: “Everyone”. Almost all of the automobile, aviation, fueling, smoking, electronics industries, etc are trying to do it. The consumables/ replaceable are different for each industry but they are all trying to use the same technology. I have read patents in home automation, smoking, drilling, metal cutting, automotive industries that disclose the authentication of the replaceable item before starting the device, and if the authentication fails, stopping or alerting the owner to replace the component.
The question here would be “how would they identify if I use a non-original fuel, or consumable?” Think about chemical sensors, light sensors, weight & density sensors that would enable the processor to quickly read the consumable characteristics and determine whether it is original or not. Thus, you won’t be able to use a non-original flavour in electronic cigarettes, non-original fuel in an engine, a different battery in a mobile device, etc.
How is it going to affect the end-user?
The effect on the end-user is both good & bad. In terms of safety, performance enhancement, and efficiency, the step is good as it will guarantee good quality replaceable. Original equipment and consumables would also mean better performance.
But, there is another part to it and it is the financial angle. The companies would be able to charge an additional premium on their products even when a similar quality replaceable would be available in the local market with low prices.
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