What is planned obsolescence?

Planned obsolescence is a business strategy where products are deliberately designed with a limited useful life, encouraging consumers to buy replacements or upgrades. This might involve regular software updates that older models can't support, physical components designed to wear out, or creating new versions with must-have features. While sometimes criticized, it helps companies maintain predictable sales cycles and fund ongoing innovation.

How does planned obsolescence impact investment potential?

Companies practicing planned obsolescence often enjoy more predictable, recurring revenue streams compared to those relying on one-time purchases. This business model can create steadier cash flow and potentially more stable stock performance. For investors, this might mean more consistent returns, especially when these companies maintain strong brand loyalty that keeps customers returning for the newest versions.

Are there ethical concerns with investing in planned obsolescence?

Yes, planned obsolescence raises environmental and consumer ethics questions that some investors consider important. Critics point to electronic waste, resource consumption, and forcing consumers into unnecessary spending. However, others view it as funding innovation and enabling more affordable initial prices. For investors who prioritize sustainability, it's worth researching which companies balance planned obsolescence with recycling programs, repair options, or more eco-friendly practices.

What industries commonly practice planned obsolescence?

Planned obsolescence is most visible in consumer technology (smartphones, computers), video gaming (consoles, annual game releases), fashion (seasonal trends), home appliances, and publishing (textbook editions). Each industry has different approaches—tech companies might use software updates that slow older devices, while fashion brands change styles seasonally. Understanding these industry-specific strategies can help you better evaluate companies within this investment theme.

How might technological advancement affect this investment theme?

Rapid technological advancements, especially in AI and integrated software, are actually accelerating planned obsolescence cycles. As new capabilities emerge, older hardware becomes increasingly unable to support them, potentially shortening upgrade cycles and boosting sales for companies in this theme. However, this same technological progress could also enable more sustainable alternatives or shift consumer preferences toward more durable products, creating both opportunities and risks for these stocks.

15 handpicked stocks

Planned Obsolescence

These companies have mastered the art of creating products designed for replacement. Our analysts have carefully selected businesses that benefit from predictable upgrade cycles, generating reliable revenue streams as consumers continually refresh their purchases.

Han Tan | Market Analyst

Updated 1 day ago | Published at June 17