Wednesday, January 7, 2015

Deciding You Have to Have Something

Once you decide you "have to have" product X, they have you.

I was on a discussion group the other day, and a fellow was complaining that Apple puts some sort of copyrighted code into a PROM on their motherboards, so you can't buy an Apple motherboard that isn't made by Apple.   This is called closed architecture and it is Apple's greatest strength and greatest weakness.

It is Apple's strength in that they can control the design and the quality of all parts of their machines and also make profits from each part.  It is their weakness as the market abhors monopolies, and their monopoly pricing means that Apple products cost 2-3 times as much as competing "open architecture" devices such as the PC or the Android phone.

Well, anyway, this guy thought it was unfair, as he wanted to build his own Mac, and he wanted to use 3rd party parts, and it was unfair (wah!) unfair (wah!) unfair (wah!) that Apple wouldn't let him do this.  There should be some sort of law!

I explained to him that there is a law - the law of the marketplace.   Apple chose a product strategy based on closed architecture and a closed ecosystem and while it has been profitable at times, it hasn't gained a lot of market share.   The Mac accounts for less than 10% of all computer sales - the PC accounts for the rest.   The iPhone, while talked about a lot in the media has half the market share (about 30%) of the Android, and the Android share is growing at twice the rate.

So Apple's strength is its weakness.  And in the history of Apple, there have been a lot of ups and downs.  People say Steve Jobs was a genius - which may or may not be true.   But people forget he was once fired from the company for incompetence as he nearly drove the place bankrupt with the original Mac.

So, these things even out over time.  The Karmic wheel spins.   And without a new "must have" product in the pipeline, maybe Apple's brief time in the sun is once again at a close.   Some Apple fans are worried at recent developments (or lack of them) in Apple's software, for example.

But that was not the point of this post.   The point is, this fellow decided he had to have an Apple product, and then threw a hissey fit when he couldn't get what he wanted at the price he thought was fair.  Like an infant throwing a temper tantrum, he just screamed, "Not Fair!  Not Fair!  Not Fair!" over and over again.  Those big old meanies at Apple!  They should be spanked!

It is a pattern one sees a lot.   For example, people complain about their Cable television provider.  They need cable TV they've decided, and the mean old cable company wants a lot of money for it!  Unfair! (wah!).   So they switch to satellite dish and guess what happens?  Same thing.


Once you decide you "have to have" a particular product, you give up all leverage in negotiating on price and terms.   You surrender your advantage in the marketplace, willingly.  And you have no one but yourself to blame, when it inevitably goes horribly wrong.

You do have a choice in these sort of matters.  The first choice is to not consume at all, which often is the best choice.   Beyond oxygen (which you cannot do without for more than five minutes), water (about two days) and food (maybe a month), most of what you think you "need" really is actually a "want".  Cable TV is not oxygen.   If it is, I have been holding my breath over over a decade, now.

People say they "need a place to live" but what they really want is a mini-mansion with granite countertops like they saw on Cable TeeVee.   And when mean old Mr. Bank takes it away?  Wah!  Unfair!  Mr. Mean old bank!  I'm going to hold my breath until I turn blue and protest Wall Street!  Wah!

Of course, that strategy rarely works.  Even the politicians who "cave in" to folks like this (which is a popular sport as of late) often deliver very little in the way of real relief.  Mortgage adjustments have helped only a few thousand people, nationwide, and student loan reform is talked about - again and again - but little is actually done.   And the reason this is, of course, is that the people lending you this money have more money to spend on political campaigns than you do.   So you vote for Joe Politician, because he promises to outlaw abortions for your daughter and gay marriage for your son - and in the meantime, he passes laws favoring those powers who work to entrap you in these deals.

But again, I digress.

You see you also have a second choice.   In addition to deciding not to consume at all you can also reduce consumption or try alternatives to consumption.

For example, instead of buying an ugly mini-mansion in a development that was a corn field 10 years ago, and raising your kids in a suburban hell where they will learn all the wrong sorts of things, you can buy a smaller home in a different neighborhood, that costs less to own.   Or just keep the house you have.  You have some choices in this matter.  The ugly stucco mini-mansion is not a mandate.

Funny thing, though, many people believe it is - that they are "due" a certain level of home, because their friends and co-workers have a certain level of home and that is that.  They get their normative cues from horrible places.   The problem is, their friends and co-workers are also making bad decisions.

With a smaller home, you have a smaller mortgage, which means you can save and invest more, pay off that mortgage over time, and not be financially stressed all the time.

Similarly, instead of "having to have" a Mac, you can do like 95% of the planet-wide population does, and buy a PC.   Sure, the Mac was better than the PC for things like graphics and video and audio and such.   The key word is was.  Today, PCs are just as good, if not better.  And Apple Quicktime?   No one uses that anymore - it is a bug-plagued joke.   If you decided you "have to have" an Apple, well, then you have to pay the prices they ask, end of story.  There are no discounts or sales in the closed architecture, single-source ecosystem.

And so on down the line.  When you decide you "have to have" a particular brand and make and model of car, well, the salesman has you by the balls.   When you decide that hey, you really don't give a shit what color it is, or even what brand, so long as the price is right, well, you have choices in the marketplace.

When I was younger, I continually got caught up in this "have to have" mentality.   It is typical of young people, who have nothing and want everything.   It is also typical because young people are very brand-conscious and thus "have to have" a Hollister t-shirt or "have to have" a pair of Air Jordans, or "have to have" the latest iPhone, or Toyota Scion, or whatever.

And that right there is why marketers love kids!   They latch onto brands early on - and you can sell them utter crap, so long as they think it is a "have to have" item.  How do you think Jagermeister stays in business?

As you get older, you really don't give a shit what kind of clothes you wear or what brand of sneakers, so long as they are comfortable, durable, and reasonably priced.   Designer jeans give way to Mom Jeans in short order.

And a funny thing happens - you forget why it is that you thought you "had to have" a particular product in the past, and you realize that while it wasn't necessarily a bad product, it wasn't the second coming of Christ, either.

Once you decide you "have to have" a particular product, you give up all leverage in negotiating on price and terms.   You surrender your advantage in the marketplace, willingly.  And you have no one but yourself to blame, when it inevitably goes horribly wrong.