Taking burying your competition to the next level
Photo by Marek Studzinski on Unsplash
In order to be successful long term, businesses need to innovate and evolve. This has been known for some time, and if you look at any company that has been around for a decently long time, you can see this element in practice. Almost no company functions the way it did decades ago, be it through new technology, design choice, or revenue stream. These innovations and evolutions typically allow for a new market to be reached or an old market to be re-tapped. For the customer, it means they are getting the newest version of whatever they're buying (or at least very close). For the business, it means they have access to more money and revenue from sales.
As far as a business is concerned, turning a profit is the end goal of any innovation. Period. They provide a value prospect because it's profitable.
Recently, there has been a mass pivot, especially in the tech industry, towards a single type of innovation. Though it's not really an innovation, it's more of a business model that's marketed as an innovation...
It's the As-A-Service Model
Put more bluntly and in my own words, it's the "You don't own anything anymore" model. Rentals, licensing, and temporary access are the buzzwords of the day that are being marketed as the next big things to grace the industry. I'm not going to argue that they're not popular... they very much are. I'm also not here to argue they're bad. They have benefits that come alongside them often tied to cost (especially in a trial capacity). What I am here to argue is that there is an element of risk to these models on the consumer side, especially if you're looking to get invested in them long term. I mentioned above that innovation happens only if it's profitable. So what if it's not profitable? There have been many casualties along the way that serve as a warning to anyone wanting to get in and capitalize on the "As-A-Service" train, so let's go digging around in the Service Graveyard and see what we find.
So what's the difference between a standard, traditional sales platform and the "As-A-Service" model? What is the Service Graveyard? And why is there a risk to you the buyer looking to purchase access to a service based product?
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Permission to use
It's not hard to find "As-A-Service" models once you start looking. They're pretty much anything that asks you for a monthly fee for a subscription or to continue having access to something. If you have ever heard of Netflix (and if you haven't I really don't know how that's possible), you have been introduced to an "As-A-Service" business model. It has risen to popularity and is a major factor as to why Blockbuster (a more traditional sales structure business and one that some may not recognize now) is pretty much gone.
If you buy a news service, it's likely not one newspaper at a time anymore. That's a service.
If you have a gaming subscription, that's a service (and some of the games now are services in and of themselves, go figure).
If you want to license a computer program, it's likely that you'll end up renting access for a period of time instead of outright owning it anymore. That's a service.
There are subscriptions and services for almost anything these days. There is a subscription for bacon. If it makes a profit, it exists or will likely exist in the near future.
So why the push for services? What happened to simply offering something to buy and then the person just buys it?
Recurring money
A company that sells you a service can sell you that service across a period of time. This functionally does a few things, all of which benefit the business and some of which can even benefit you...
Cost
In a traditional sales platform, you are buying something and are expected to foot the entire cost up front except for large purchases. That being said, it's easier to see that $25 a month is an easier pill to swallow versus $250 if money is tight that month.
Ongoing Income
In the same vein as cost, this is actually to the advantage of the company selling the service. They can collect the same amount of money (or more) over the course of a long period of time. Under a traditional sales platform, they get a massive income spike and then... nothing. That's it. That's not all though, because after that one year (or whatever) is up...
Ownership
You need to re-up your membership or subscription or rental again. You don't own it. You would under a traditional purchase platform though. This is a major benefit to a company because it reduces the impact of working around planned obsolescence to get your money a second time. If there's not a lot of competition, you may also see the Shell Price get busted out.
Under the Radar
Especially when used with things such as auto-renewal and auto-withdrawal, it lets a subscription stay out of your face. People get busy and we don't have time to waste fiddling with services and seeing what we have versus what we need. Under a traditional purchase, there's no impact here because you've already paid in full. With a subscription, you may end up paying for months or even years for something you stopped using. Even a few of these a month that go poof into the background of your bills can add up, and it's extremely profitable.
Before we venture on, I say once more... it only works and exists because it's profitable.
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So what if it's not profitable?
Any service that is not generating insane buckets of money for a company is doomed to join the Service Graveyard. There's something to be said for giving a service a fighting chance to survive, but after a while a company can find itself throwing good money after bad. Sunk cost fallacy can take hold if not properly monitored, so it's best to kill the idea early before too much investment is made. Here's the thing...
If a business is trying to pitch how awesome its service is, propping up a bunch of failed, cancelled, dead services is probably not the best approach.
Hence why you likely never hear about any of the services that end up in the graveyard. They are the dirty laundry of the tech industry, doomed to be forever swept under the rug or out of sight.
The tech industry is competitive. Very competitive. There's a reason that the phrase "Tech Startup" gained popularity. There's a huge risk that most of them fail, and many often do. Those that survive are almost instantly mega-successful overnight and rake in huge amounts of money. This is often done off the back of many casualties added to the Service Graveyard. If 100 services pop up to try to fill a need, only like 5 will end up surviving. Those that do know better than to showcase to potential investors that 95 other companies in their line of service went belly up.
Funny enough, it doesn't need to be small businesses either. Large companies come up with these services all the time (and they fail... all the time!). It comes from a want to have a slice of another market, but is often done without offering something that actually innovates. Most are not likely to jump ship to an inferior service because it's new, so most just fizzle and die out.
Let's see what's in the graveyard
Below is just a small list of the massive amount of entries into the Service Graveyard. I've tried to pick ones that are going to showcase just how wide of a net the "As-A-Service" banner can be cast. I've also tried to pick ones that are from companies people know exist so you can see that these services are not niche offerings. Now then, let's take a look...
Facebook Podcasts
Considering that Facebook (now Meta I guess) has seemingly committed to trying pretty much any and every avenue or business venture under the sun, it's a good place to start. Yes, from the bright minds that are trying to build the metaverse while also selling you on... Facebook Dating... (isn't that kind of almost what they started as?) comes Facebook Podcasts! Well, it already came and went. As of June 3, 2022, it was axed with less than a year of being live. Facebook stated they were looking to simplify audio services, but with all the podcast competitors out there already, they likely had issues gaining traction in an already crowded market.
Google Stadia
The search engine goliath decided to make a gaming console to compete with Nintendo, Sony, and Microsoft. It was a poor choice as they found their competition was not only deeply entrenched with millions of loyal fans on each side, they really didn't have much to offer outside of a service offering that game publishers were already pivoting towards. It launched in November of 2019 and, while it's still kind of supported, they stopped making games for it in February 2021.
EDIT: As if to prove my point, this happened only days after this article was originally published.
iTunes Ping
Apple wanted to do the social media thing but limited the scope to only be music. That's it. That was the service. It got steamrolled under other social media competition and disappeared in September 2012 after only two years of existing.
BONUS AMAZON LIGHTNING ROUND
Amazon Spark
Another two year wonder of a service, Amazon Spark was basically a shopping platform where you looked at photos of people and bought the stuff they were wearing. It was not successful and the company chose to "Pivot" away in 2019.
Amazon Destinations
This gem from the tech giant sees you... (checks notes)... booking hotels? Yeah, that was the service. You were booking a weekend getaway through Amazon. This one lasted only six months, likely due to the numerous competitors in the market.
Amazon Restaurants
It was a food delivery service. Unfortunately, it appeared there were too many cooks in the kitchen (haha, food pun!) and the market share to continue just wasn't there. This one lasted for three years though, so good on them.
There are plenty of examples and I could keep going for a long while. If you want more, here's a good place to go find a bunch. The point is, even the big guys in the sandbox will see failures in their service and contribute to the graveyard.
Photo by Andrew Winkler on Unsplash
What about you, the end user?
It's all good fun to look at the projects that didn't stand the test of time, but what are the impacts of it all? Especially now in a time where these "As-A-Service" models are becoming increasingly common and all-encompassing, what are the risks to subscribing to a service?
Let's quickly start by looking at the short term problems. Outages, disruptions in service, and bugs in the system can stretch for long periods of time and often go uncompensated. This is not you owning a product after all; you've likely signed off (or clicked "I Understand") on a list of terms and conditions (that you totally read) that waive your right to come after the service provider for outages or issues. You are basically at the mercy of when it gets fixed. Can things go wrong if you own a product? Sure! But you have other avenues of fixing it available to you because... well... it's yours.
As for the long term issues, I'll start with an easy to understand one. What if the company just decides to turn the servers off? Seriously. Look at the examples above. That's pretty much what happened. If you sink years of time and effort into something attached to a service, it goes away with that server. Any additional premium features you shell out for, gone. Any support and training you may have signed up for, useless. Other services you've integrated this one with, who knows. On top of it all, you now may find yourself needing to seek another service. You are at the mercy of the provider's profit margins.
These risks are all tied to just the administration of service, but what about your monetary investment on the actual subscription? If you give your credit card info, the service provider is going to be more than happy to offer an auto-renew option to you. As for the alert for how much the cost of renewal will increase... not as much of a priority. Again, if you buy something outright, you don't have to renew a rental on it. Yes, the onus to keep it functioning is on you, but it's yours and yours alone.
Photo by Taylor Vick on Unsplash
More to come
There will always be new ideas, and with new ideas comes new services and technologies. So to will there continue to be winners and losers in the industrial battleground. The Service Graveyard is not full, and it never will be. It's fun to look back and see what was once available, but it's also a great place to learn. Many often say they learn more from their failures than their successes, so what better place to learn.
As a person who likely engages with these services to some degree, it's important to understand the concepts behind keeping yourself protected. These services get thrown aside with varying degrees of fanfare all the time, and it can leave the users holding the short end of the stick. It's not a matter of finding the biggest fish in the pond, as even they can have problems. Focus your efforts on finding quality along with strength in numbers. Put your money where it both is earned and where it will be secure. Invest in good services, and always be aware of how those services change with time. We are headed towards a future where many things will be implemented "As-A-Service", so the best thing you can do is be prepared.
~IR
Have you had a service close shop on you? How many services do you use on a daily basis? Or maybe you just have a comment to add? Check out the Facebook, Twitter, Instagram, or LinkedIn page and let everyone know. Don't forget to follow or like the page for updates! And share this article if you feel others should give it a read!
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