OK, this one bugs me. When I purchase a widget, I exchange 'consideration' (a fancy term for money) for the widget. I take the widget home and I expect to have full use of the widget. The vendor used raw materials, for which he exchanged his own consideration. He converts the raw materials into the widget and I pay for the raw materials as well as the effort he expended in transforming the raw materials into the widget. OK, so I also probably pay some amount extra for his 'genius' in inventing the widget, and some additional consideration so he can take a holiday on a tropical island in February.
I like bouncy things. I purchase a widget that bounces. I take it home and am delighted for endless hours by its bounciness. One day, I read the fine print on the back of the owner's manual. I discover if I call 1-800-MORE-BOUNCE, I can upgrade my widget so it will bounce higher and straighter. OK, I call. They ask for my credit card number, and after an exchange of additional consideration, I believe I am about to be shipped additional components to install into my widget to enhance its performance. Instead, right there, while I'm on the line, they tell me to turn the widget over, push a small button, opening a little trap door, exposing a row of switches. I am told to move the second switch from the right to the center position, close the door, push and hold the button for 3 seconds. After the reset sequence is complete, my widget now behaves like a completely different and new product.
What did I purchase? I already owned the widget in its entirety. Obviously the capability is not worth anything to the vendor. He had already given it to me. The resources required to deliver the complete product to me is no different whether the enhanced behavior is turned on or not. So, what am I really paying for? I am simply paying more to use the complete capabilities that already exist in the widget. So, if I never use the additional capability, the vendor has invested in raw materials and effort that is totally and entirely wasted. Or, suppose each time I want to use the widget in this new mode I must pay an additional fee for 10 more minutes of enhanced behavior.
Here's what bugs me. When I rent something, the device is used by others when I'm not using it. There's a speculative nature to the rental business, to be sure. With the proper planning, a device, or collection of devices can be kept in constant use with one nearly always available whenever anyone wants one. Now, what savvy entrepreneur would consider purchasing, say, a tractor, and give it to a construction firm and say "just keep it, and pay me only when you use it?" It sits idle 90% of the time and the construction firm pays $75 a month. Not smart, you'd say...
But, if the tractor didn't cost anything significant, and there were as many of them as needed, and they could be spread them all around town to every construction firm, AND the vendor had complete control over the only supply of tractors in town, he'd really have some deal going, now, wouldn't he? Some people would accuse him of running a monopoly. Others would a complain of price gouging.
OK, so what if the tractor is sold for a fair price. Included is a front loading bucket and a back hoe. Now we'd normally expect these items to cost a lot extra, but you only pay when you use them. Again, obviously these items have little intrinsic value to the vendor. The same resources and effort were expended to manufacture the product whether the features are used or not. These resources are exclusively and entirely at my disposal, but I must pay to take advantage of them.
IBM has a new deal going. You buy the server with extra CPU capacity already built in. You only pay when you use the additional capacity. Sorry. If those extra CPU's are such low value commodities that they can be installed and distributed on the chance that I might use them someday, then I'm being gouged for the processors that I purchased and am already using full time. If it's in my possession, then let me use it. And charge me a fair market value for the product in the first place. Then I'll buy all the horsepower I need right up front.
tb!
