Sunday, January 4, 2009

The Golden Screw

Quite some time ago, I read a book about the history of IBM. Back when computers were mysterious behemoths residing mainly in laboratories or corporate computer rooms rather than compact little boxes on the desks of the average person, IBM ruled the computer roost without challengers.

One of the things they used to do to keep production streamlined was make one fully functional monster machine model which they sold to all customers at different prices. Depending on the functionality the customer required and how much they were willing to pay, they disabled parts of the machine to customize it to the specifications the customer ordered. That meant there was a computer with far greater functionality sitting in offices that was intentionally hobbled so as not to do all it could do.

When the customer was ready to pay for an upgrade, an IBM technician was called in to perform the task. While the companies believed they were getting new software or hardware installations, the truth was that the tech person was actually just turning "the golden screw". That is, they enabled some functionality which was always there but turned off. This way of doing business allowed IBM to get additional revenue while investing very little in the products they'd already sold. They called this turning the golden screw because it was profitable and literally sometimes involved the turn of a screw, though it probably also at least carried the subtext of gouging the customer.

Recently, I have experienced my own firsthand encounter with a golden screw though not at the hands of IBM. My experience was at the hands of Apple. The CH bought an iPod Touch around spring of last year and has been using it for its basic functions since then. He told me that he'd have to upgrade its OS at a price in order to enable it to use other applications. While I'm accustomed to paying for OS upgrades on my computer, I pay for them in order to get the OS itself to acquire new functionality. For instance, you get an back-up utility, a better search function, faster operation, or a better interface. The OS itself is improved and it has nothing to do with running other software as the OS generally doesn't hold you back from running other programs made by other companies. It's the responsibility of Adobe, for instance, to make Photoshop run under the current OS, not for Apple to make their OS so it run Photoshop.

I have never needed to upgrade a device or computer in order to be able to run someone else's software. In the case of the iPod Touch/iPhone, one has to pay for an OS upgrade in order to get the device to run third party apps, not because some new desired functionality is coming with the device's operating system. That means that Apple is essentially turning the golden screw. The device's hardware is capable of running such apps, but it is hobbled in its ability to run other software until you buy an upgrade you don't want.

Yes, I know there was some added functionality with the new OS, but it's mainly for Apple's benefit like being able to use the AppStore and MobileMe (essentially enabling us to pay for more services by paying for an upgrade) or fixing some of the shortcomings of previous versions of their software, particularly the e-mail and web browser. In other words, we're paying to get what should have been in place from the start, rather than getting some great shiny and new stuff with a very few unexciting exceptions. The only "improvement" we wanted was to enable third party application installation.

Frankly, this strikes me as incredibly lame on Apple's part. They squeeze another 1200 yen out of us because we want to be able to read books using free software like Stanza. If we were getting some great new OS capability on the iPod Touch, that'd be one thing. If Apple were selling us Stanza, that'd be another, but they're just wheedling a little more money out of us so we can install a third party application and can offer some software polishes for some imperfectly implemented apps with the customer footing the bill. Apple used to offer OS upgrades for free, even major ones. Now, they dominate the MP3 market sufficiently to give us the golden screw just like IBM once had the mainframe market in its back pocket.


Kelly said...

I guess thats why i wait for a couple of editions of a new technology to come out before i buy it, because they are still in the "tweaking stage". I only recently got a 2nd generation ipod touch, and so thankfully it has all the software for the apps etc.

I agree it's wrong though. They seem too hasty to release a product to the public, probably to get in before the competition but convenience wise it's probably worse for the consumer.

'badmoodguy' is mike said...

The "golden screw" effect is present in quite a lot more placed that one would realize. IBM was probably the first with their System 36, but Digital's PDP series machines were similarly 'equipped' (though Digital was not as bad).

With modern Nortel Meridian PBX phone switches, the software is much the same across the board depending on the processor module. To add new features you just buy a keycode that gets entered into the software. Many, many features get enabled this way, no additional software required. The keycode is tied to your switch and everything is tracked by Nortel. Believe me, they nickel-and-dime you for every tiny feature, no matter how mundane.

We are headed into an era of subscription computing, where the processing power and general specifications are based on how much you can afford to pay. You would essentially 'rent' a computer, and to enable 'features' like more disk space or additional memory, you would pay an additional monthly cost. This, I think, would be the end result of the new whiz-bang 'cloud computing' initiative, where all you have is, essentially, a dumb terminal and all the processing is done on computers all over the internet. So, those that can afford it can have a nice, fast machine ... which would be a small percentage of people.

No, thanks. I prefer to have my own computer under my control.

That Apple charges for the software upgrade for the original Touch is ridiculous, but not unexpected. We will be seeing more of this from other manufacturers soon.

Orchid64 said...

Kelly: Like you, I often wait for the 2nd generation or at least for the initial release's bugs to be shaken out. This was a situation where the timing of the failure of my husband's old iPod (which he'd had for about 4 years) coincided with the new release of the Touch. We're not the sort who buy new stuff unless we can really justify it because of greatly enhanced functionality or failure of an old item. My husband uses his iPod all the time because I don't like to listen to music (it sometimes has bad emotional effects on me) and he loves music so it's the only way he can listen.

Mike: I must say that I think everyone will resist the model you mention tooth and nail, but I also think you are right. It's a way to make a constant revenue stream for businesses and I think they'd be doing it already if they thought it'd work. I would personally rather do without than be subjected to that and will give up the mainstream operating systems and applications rather than deal with such gouging.

Thanks to both of you for your comments!