A Risky But Rewarding Game
Of course, this is a high-wire act. There’s a fine line between encouraging an upgrade and alienating your customer base entirely. The court of public opinion can be brutal, and the spectre of environmental concerns looms large. How long can companies justify a model that creates mountains of electronic waste? Regulators are starting to take notice, with ‘right to repair’ movements gaining traction. A company that pushes its luck too far could face significant backlash that might harm its brand and, consequently, its share price.
Yet, from an investor’s point of view, the logic is hard to ignore. In a world full of uncertainty, a business that can reliably predict its sales for the next few years is a rare and valuable thing. These companies often have incredibly strong brands and loyal customers who are willing to go along for the ride. They have built ecosystems that are difficult to leave, creating a powerful moat against competitors. It’s a controversial strategy, but one that has underpinned the success of some of the market’s biggest names, many of which are found in thematic baskets like the Planned Obsolescence.
Ultimately, as long as technology continues to advance at a blistering pace, this cycle seems likely to continue. A two year old phone genuinely might struggle with the latest AI features. This gives companies the perfect cover. The obsolescence feels natural, even necessary. It’s a cynical view, perhaps, but in the world of investing, understanding the mechanics of what makes people spend their money, again and again, is a perspective that could prove quite useful.
