The High-Tech Racket

Technology companies are some of the wealthiest and most successful businesses in the world.  Their executives are rich beyond all comprehension and account for much of the obscene accumulation of wealth in recent decades.

The development of computer hardware and software technologies has indeed been an amazing phenomenon and has provided significant benefit to humankind.  There have been many ingenious innovations.  But once the initial innovation is past, the ongoing business of high-tech is basically a racket, not unlike the automobile racket of the 50’s and 60’s.  The operative word is guaranteed obsolescence.  Here are some examples of how it works.

The primary software on almost all personal computers is a combination of Microsoft Windows, the operating system, and Office, the combination of office software tools that most people use – Email, Word, Excel and Powerpoint, along with a few others that very few people use.  This software runs on personal computers, made by a variety of companies such as Dell, Apple, HP, Acer and many others.

It is safe to say that a healthy percentage of the computer-using population uses their computers for the same functions today – basic office functions, Internet surfing and social media, email – as they did twenty years ago.  The word processor and spreadsheet have seen only tiny improvements in recent years and most people use the same features they used 20 or even 30 years ago.  Even the major advances in online media and streaming could be handled by much older computers and their operating systems and browsers. People could, in theory, be using the same computers and software they purchased in 1999 and have all the functionality that they need.

Instead, most of us have purchased computers every 2-4 years, paying from $400 to $1500 each time for very marginal, if any, increases in functionality.  And why have we done that?  Because the memory, storage and processing requirements for running the software have grown exponentially and require ever increasing hardware capabilities.

And why have we continued to add the software that makes our computers obsolete, which, by the way, costs quite a bit of money as well?  Because the software companies, Microsoft being the primary culprit, come out with new versions that add modest or even unwanted new features.  And once these new versions are on the market we feel compelled to purchase them in order to stay ‘current’ with the technology and to be able to interact with the world around us.

A behemoth like Microsoft is dependent on this revenue (and its obscenely high profit margins) and has, along with one other company – Apple – a monopoly on the operating system and basic software.  There are no viable competitors, thus allowing these two companies to dictate wildly extravagant pricing in relation to the effort needed to maintain and modestly upgrade this software  In recent years they have switched to a subscription service to guarantee the ongoing successful extortion of fees, even though the great majority of us uses each new version of software for exactly the same purposes and gains no benefit whatsoever from these payments.

This ecosystem of quickly obsolete hardware and software is similar to the way that General Motors and Ford conducted the automobile business in the 50’s and 60’s.  People were indoctrinated in the habit of purchasing a new car every 2 or 3 years.  That mode of automobile purchasing is still somewhat operative today, as people are easily tempted by the allure of a bright new car, but the average duration of ownership is now close to seven years and has slowly climbed over the last 70 years.

The ubiquitous smart phone is another example of the high-tech racket.  The maturity of the smart phone has now reached the point where successive generations bring very marginal additional benefit, yet the public races to purchase each new shiny version, perhaps for some prompted by the small cachet of being the early adopter, but for most simply a lemming-like response to the release of a new gadget and the endless need for more storage and power that comes with bigger photos (who needs a 10MB photo?!!), our addiction to social media and legions of apps.  At least in this market there is a reasonable level of competition.  But the guaranteed obsolescence will be more non-sensical as time goes by.

Isn’t all of this just smart business?  Doesn’t the world need this type of frenzied, unwarranted consumerism to feed the engines of commerce?  Perhaps, but one might theorize that our treasure would be better spent on other more necessary items, and that the profit from these purchases would be better spread among a vast number of smaller, modest enterprises rather than add to the bloated coffers of the software and hardware plutocrats.