New business: Subscribe to a personal computer

Observation: Technology advances at a rate that exceeds our capacity or budget for staying relatively current with technology. So purchasing tech is as much about anticipating where the market will go in the next year as it is about assessing your current state of tech readiness. And unless it's your job to stay current on the latest trends, the odds are you're always running behind and probably making poor decisions with you capital investments in tech. Beyond that, you've got software to evaluate, keep current and personalize, and then there's security, maintenance, repairs. Your computer is a sensitive, complex environment, and if everything isn't clicking, your productivity slows to a crawl.

Solution: Instead of buying hardware and software, subscribe to a personal computer experience.

Here's what that could mean: Rather than saying, "I want a dual-core AMD processor with 4 gb of RAM and a kick-ass video card," you'd say "I want to subscribe to the experience of staying current with the latest technology and software for image and video processing."

Or maybe you're an active retiree. You don't want to become a computer expert: You just want to make sure that your computer is always capable of doing the things you need done: Designing, surfing, e-mailing, photosharing, etc. You might subscribe to an experience like  "I want to have a non-fancy computer set-up that lets me bid on eBay, e-mail my grandkids, crop photos and share them with my family and friends, all with minimal down-time and great tech support."

If I were the company that provided this service, I'd want to do the following:

• Anticipate the experiences to which people would subscribe
• Understand their motivations in choosing a particular subscription
• Create advantageous purchasing and licensing agreements with vendors (hardware and software)
• Design an intuitive, knock-down functional Web presence
• Build a great customer service and multi-tiered support structure
• Franchise house-call tech support services anywhere I offer my subscriptions
• Create an R&D structure that fits easily into a business management process so that we get a great balance between cost and user experience
• Manage your subscription levels so that your clients are not only satisfied with what they're getting for their money, but getting something better than what they could do if they devoted their own time to the tasks you perform.

Hence: The client who subscribes to the experience of having a basic computer set-up will pay less than the client who subscribes to the experience of having a high-end, early adopter experience. But someone with a basic subscription could always upgrade that subscription.

And that's the key: If I go out and buy a computer for $1,000 today and it doesn't do a good job of running the $500 software I need to use, I can't sell my $1,000 computer for anything near what I paid for it. I'm not upgrading: I'm starting over, and I'm taking a big loss (11/16 update: This also applies to buying a computer that is suddenly made obsolete by a new advancement in OS or processing standard).

In this business model, instead of researching components and software and making purchases, I tell the company what I want to do and experience. My first computer arrives with everything I want already installed. I boot up, transfer some old files, and I'm set. If I decide to upgrade to a better experience in six months, I pay the difference in subscription and a week or so later a technician shows up with a new computer, transfers my files, installs the new software and I'm set.

But get this point: the technician takes the old computer. It's probably still functional, probably still useful to someone. The service provider owns this stuff, repurposes it, scraps boxes for parts, recycles them.

Meanwhile, the company has people who are always keeping up with the latest advances. When it becomes clear that the next wave of imaging programs or the newest games are going to require more RAM than was true the previous year, the company will decide to send out RAM upgrades to certain subscription levels. These will either show up in the mail or be installed by technicians. What you get will be determined by what you paid for -- a retiree who doesn't want to play World of Warcraft or run Photoshop won't be getting the latest video card upgrades.

A mid-level subscription might get you a new computer every two to three years. A top level subscription might give you updates and replacements, including systemwide swap-outs, multiple times in a single year. A retiree might keep the same computer for five years, but with regular visits from a technician who upgrades RAM, updates software, deals with ISPs, keeps network connections humming.

And here's what got me thinking about this: in the past few weeks, Janet has lost days of productive time dealing with various computer problems. Adobe upgrade bugs. System security bugs. Making decisions about what to try, trying fixes that don't work. Trying to communicate and negotiate with big companies that are failing to deliver on their promises.

We'd be better off if we were subscribed to a company that dealt with these problems for us.

Does the consumer own the software, the hardware? Yes and no. So long as you're subscribed, the owner is probably the company, not the client. But you'd set up the agreement so that anyone can cash out of the subscription program with a reasonable buyout fee that transfers full ownership of all the client's existing equipment and software.  From there out, you'd be on your own.

Subscribers to media are really subscribing to an experience: being informed, being hip, being entertained, being sexually aroused, having a winning fantasy team, etc. Why not see other things as experiences, also? Most people don't buy computers and software because they want computers and software. They want experiences that require those tools.

Not only would a company do a better job of this, but you wouldn't have to concentrate on marketing components.  You just focus on helping people find the experience that suits their highly personalized needs, and then you figure out how to deliver that experience in a way that satisfies the customer while providing profits to investors and good wages to your employees.

Find that balance and you're golden.

How much would you pay, per month, per year, to get exactly the computer experience that you want?

Comments

[Pam]

I'd love it at home. I pretty much have this situation at work: the IT guys outside my door hear me scream, they come in - tell me to go take a short walk down to the water - and when I get back, well, everything is happily and mysteriously 'better'. If I could have that situation at home (which for the right price I suppose I could, even now) - I'd be thrilled. I'd love to get a call saying 'Pam, it's time for you to exchange your computer, we'll be out there and we need two hours to transfer all of your files and get things moved in (and out)'. Heaven. I've come to accept that I don't care anything about computers other than that they work well, fast, and do what I need them to do - I've stopped even caring about the lingo.

[Pam]

Oh, how much would I pay. It's worth more to me than the cost of cable television.

[Daniel]

Hmm.

So, if cable is about $40 a month and you figure that your ISP is about $30 a month... well, I just wonder.

The numbers I'm looking at:

CAPITAL INVESTMENTS

$1,500 (computer and monitor, one-time charge)
$2,000 (software that I need)
$500 (scanner/printer)
TOTAL: $4,000

Monthly cost, based on a four-year replacement cycle: $83

ANNUAL CHARGES
$500 (maintenance, external drives, consumables, etc.)
$400 (DSL ISP)
$75 (security subscription)
TOTAL: $975 per year

Monthly cost: $82

So: If you figure $165 a month for computing... It would certainly be worth it to me to spend $150 a month to have all of this taken care of for me. And if you gave me the promise that instead of upgrading my basic system and software once every four years, I'd have several upgrades within that cycle, I might be willing to pay $200 a month -- particularly if I can write off it off as a business expense and it makes me more productive.

Now: If the company could negotiate better prices (bulk-buying components, software, DSL discounts), then there's the profit. And maybe you have some built-in options, so that once you exceed x-number of hours tech support or service hours, you pay an hourly rate.

Now, obviously, I've got needs that exceed most users. But I can easily imagine that you could have a basic-needs subscription that would cost far less.

I know a retiree -- smart guy, too -- who can use a computer just fine, but he's not getting everything out of it because computers require so much attention and involvement. He needs to have some things set up and started for him, and once those things are rolling, he'll be golden. But in six months things will change, and in a year he'll be behind the curve, and in two years he'll be struggling.

You could set him up with a solid desktop and a bargain monitor, plus some basic productivity software, for less than $1000. Throw in pedestrian DSL and decent security, and his monthly cost comes out to about $50.

So I'm figuring: Give him a minimal upfront cost, charge him $60 a month, put a decent but discounted computer in his house, make sure he has a human being to talk to and give him a visit once a year.

How is that not a good deal for everybody?

[Billy The Blogging Poet]

This is a fantastic idea! That is, as long as they don't outsource the tech support. Where do I sign up?

[Daniel]

And one of the ways that you keep your tech support costs down is that instead of wasting a lot of time on a stubborn problem, you swap out the user's computer for another one in good working order, migrate files and programs and send the screwed up box back up your supply chain to the upper level support group.

This is the way we repaired M-1A1s. If I couldn't fix it and the motor pool mechanic couldn't fix it, we'd pull the component, replace it, and send the bad component back back to a unit where they just fixed that particular problem. Then the repaired part re-entered the supply stream.

And the sweet thing about the tech support? You could franchise the front-end support, so you'd be creating local jobs. Could you still outsource some types of calls to Bangalore? Sure, I suppose you could. But you couldn't do this business as I've described without having local technicians.

[Tim]

I think Phone/Cable ISPs are best positioned to do this already. For example: NVC's Computer Lease Program.

[Billy The Blogging Poet]

I know Time Warner doesn't offer it.

Also, this could be just the thing to make the best use of open source. A system like this could be built on penguins and the software cost would be zero which would keep a service like this far below what many computer users are already paying.

[Daniel]

If you were in the leasing business you could morph into this model pretty easily, but what I've imagined definitely shouldn't be confused with a beefed-up leasing program. The big shift is the notion of subscribing to an experience, rather than leasing or buying assets that you then have to manage.

And Billy is absolutely right: If you offered an open source option, your costs could be extremely low. The reason I don't switch to Ubuntu? Because it would take too much time out of my life to manage the transition, there's a steep learning curve, and then there's the risk that I'm not up to managing a penguin world. But if I'm subscribing to the experience of having all the capabilities, and the company is managing the software, and there's always the option to upgrade my subscription to a Windows-based experience, why NOT try the open source OS? There's practically no risk involved that way.

Great idea, Billy.

[Daniel]

Plus: If you're configuring the computers you send out and buying components in bulk, then your prices will be good, the limited components and software list will reduce your support costs (and improve your support performance), and finally: You'll configure the boxes to allow for logical upgrades that fit into your program. No shipping 1 GB boxes that have no RAM expansion slots and two 512 cards. Not cost effective if you're the one managing the memory upgrades.

[hue]

I believe PeoplePC has tried that model, where you get a PC and an ISP and they upgrade your computer when needed for a monthly fee. It didn't work out. This was a few years ago when most people still had dial up.

I believe IBM or Dell would have tried this computer-experience model if they think they could make it profitable. You are either a manufacturer (hardware or software) or a service provider. Bundling is good in theory, but never good in practice when you are the company. As Tim said, Baby Bells and cable companies are in the best position to do this, but they don't. They are bloated now and the service part is too expensive for them. They have a hard enough time servicing their basic stuff. You wait all day now for the cable guy, can you imagine waiting for the computer guy to show up?

[Tim]

Hi Billy! Long time no see.

No, T-W doesn't offer it. What I envision is the computer and support will be "bundled" in the near future the same way that the hardwired phone had been (and now wireless phone has been).

This will become more likely as home networks become more common. Unless bundling falls out of favor, offering a selection of computer/TV/integrated-media-center (not too far off) seems a likely progression for service providers.

It will also be interesting to watch how wireless broadband, fiber-in-the-home and fiber-to-the-home develops in the next decade and how that will drive demand from service providers.

TV, phone, Web, wireless - telecoms want to bundle it all for you

A survey released in August by CFI Group USA, a firm that researches customer satisfaction for various industries, found that 53 percent of respondents bundled at least some of their telecom services. CFI also projected that 20 percent of consumers who don't bundle now will within a year.

Bundling has benefits that the telecom companies like to tout: the convenience of a single bill, one payment a month for as many as four services; the ease of contacting one company to handle questions or problems; the ability, in some cases, for the home's various systems to communicate with one another; and, most of all, the cost savings.

"Bundling is what customers want," Mitchell said. "The more you bundle, the more attractive it becomes" in terms of price and features.