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When product features disappear – Amazon, Apple, Tesla and the troubled future for 21st century consumers

Steve Blank, lecturer, Haas School of Business | November 21, 2013

One of the great innovations of the 21st century are products that are cloud-connected and update and improve automatically. For software, gone are the days of having to buy a new version of physical media (disks or CD’s.) For hardware it’s the magical ability to have a product get better over time as new features are automatically added.

The downside is when companies unilaterally remove features from their products without asking their customers permission and/or remove consumers’ ability to use the previous versions. Products can just as easily be downgraded as upgraded.Loser

It was a wake up call when Amazon did it with books, disappointing when Google did it with Google Maps, annoying when Apple did it to their office applications – but Tesla just did it on a $100,000 car.

It’s time to think about a 21st Century Bill of Consumer Product Rights.


Amazon – Down the Memory Hole
In July 2009 facing a copyright lawsuit Amazon remotely deleted two books users had already downloaded and paid for on their Kindles. Amazon did so without notifying the users let alone asking their permission. It was a chilling reminder that when books and content are bits instead of atoms, someone can change the content – or simply disappear a book – all without users’ permission. (The irony was the two books Amazon deleted were Animal Farm and 1984.)

Google – well, it looks better
In July 2013 Google completely redesigned Google Maps – and users discovered that on their desktop/laptop, the new product was slower than the one it replaced and features that were previously available disappeared. The new Google Maps was worse then one it replaced – except for one key thing – its User Interface and was prettier and was unified across platforms. If design was the goal, then Google succeeded. If usability and functionality was a goal, then the new version was a step backwards.

Apple – Our Code Base is More Important than Your Features
In November 2013 Apple updated its operating system and cajoled its customers to update their copies of Apple’s iWork office applications – Pages (Apple’s equivalent to Microsoft Word),  Keynote (its PowerPoint equivalent), and Numbers (an attempt to match Excel). To get users to migrate from Microsoft Office and Google Docs, Apple offered these iWorks products for free.iwork

Sounds great– who wouldn’t want the newest version of iWorks with the new OS especially at zero cost?  But that’s because you would assume the new versions would have more features. Or perhaps given its new fancy user interface, the same features? The last thing you would assume is that it had fewer features. Apple released new versions of these applications with key features missing, features that some users had previously paid for, used, and needed. (Had they bothered to talk to customers, Apple would have heard these missing features were critical.)

But the release notes for the new version of the product had no notice that these features were removed.

Their customers weren’t amused.

Apple’s explanation? “These applications were rewritten from the ground up, to be fully 64-bit and to support a unified file format between OS X and iOS 7 versions.”

Translated into English this meant that Apple engineering recoding the products ran out of time to put all the old features back into the new versions. Apple said, “… some features from iWork ’09 were not available for the initial release. We plan to reintroduce some of these features in the next few releases and will continue to add brand new features on an ongoing basis.

Did they think anyone wouldn’t notice?

Decisions like this make you wonder if anyone on the Apple executive staff actually understood that a “unified file format” is not a customer feature.

While these examples are troubling, up until now they’ve been limited to content or software products.

Tesla – Our Problems are Now Your Problems
In November 2013 Tesla, a manufacturer of ~$70,000 to $120,000 electric cars, used a software “update” to disable a hardware option customers had bought and paid for – without telling them or asking their permission.

Tesla Model SOne of Tesla features is a $2,250 “smart air suspension” option that automatically lowers the car at highway speeds for better mileage and stability. Over a period of 5 weeks, three Tesla Model S cars had caught fire after severe accidents – two of them apparently from running over road debris that may have punctured the battery pack that made up the floor pan of the car. After the car fires Tesla pushed a software release out to its users. While the release notice highlighted new features in the release, nowhere did it describe that Tesla had unilaterally disabled a key part of the smart air suspension feature customers had purchased.

Only after most of Telsa customers installed the downgrade did Tesla’s CEO admit in a blog post,  “…we have rolled out an over-the-air update to the air suspension that will result in greater ground clearance at highway speed.”

Translation – we disabled one of the features you thought you bought. (The CEO went on to say that another software update in January will give drivers back control of the feature.) The explanation of the nearly overnight removal of this feature was vague “…reducing the chances of underbody impact damage, not improving safety.” If it wasn’t about safety, why wasn’t it offered as a user-selected option? One could only guess the no notice and immediacy of the release had to do with the National Highway Safety Administration investigation of the Tesla Model S car fires.

This raises the question: when Tesla is faced with future legal or regulatory issues, what other hardware features might Tesla remove or limit in cars in another software release? Adding speed limits?  Acceleration limits? Turning off the Web browser when driving?  The list of potential downgrades to the car is endless with the precedent now set of no obligation to notify their owners or ask their permission.

In the 20th century if someone had snuck into your garage and attempted to remove a feature from your car, you’d call the police. In the 21st century it’s starting to look like the normal course of business.

What to do

While these Amazon, Google, Apple and Tesla examples may appear disconnected, taken together they are the harbinger of the future for 21st century consumers. Cloud-based updates and products have changed the landscape for consumers. The product you bought today may not be the product you own later.

Given there’s no corporate obligation that consumers permanently own their content or features, coupled with the lack of any regulatory oversight of cloud-based products, Apple’s and Tesla’s behavior tells us what other companies will do when faced with engineering constraints, litigation or regulation. In each of these cases they took the most expedient point of view; they acted as if their customers had no guaranteed rights to features they had purchased. So problem solving in the corporate board room has started with “lets change the feature set” rather than “the features we sold are inviolate so lets solve the problem elsewhere.”

There’s a new set of assumptions about who owns your product. All these companies have crafted the legal terms of use for their product to include their ability to modify or remove features. Manufacturers not only have the means to change or delete previously purchased products at will, there’s no legal barrier to stop them from doing so.

The result is that consumers in the 21st century have less protection then they did in the 20th.

What we can hope for is that smart companies will agree to a 21st Century Bill of Consumer Product Rights. What will likely have to happen first is a class-action lawsuit establishing consumers’ permanent rights to retain features they have already purchased.

Some smart startups might find a competitive advantage by offering customer-centric products with an option of “no changes” and “perpetual feature rights” guarantee.

A 21st Century Bill of Consumer Product Rights

  • For books/texts/video/music:
    • No changes to content paid for (whether on a user’s device or accessed in the cloud)
  • For software/hardware:
    • Notify users if an update downgrades or removes a feature
    • Give users the option of not installing an update
    • Provide users an ability to rollback (go back to a previous release) of the software

Lessons learned

  • The product you bought today may not be the product you have later
  • Manufacturers can downgrade your product as well as upgrade it
  • You have no legal protection

Comments to “When product features disappear – Amazon, Apple, Tesla and the troubled future for 21st century consumers

  1. I agree with your comments about Tesla. I have not accepted any product updates on my Tesla given the change to the suspension option which I purchased. And, because I cannot pick and choose which software updates I’d like to accept (as I could with other cars with in-warranty software updates), my in-car Internet browser is currently not working. Tesla told me I needed to install all the updates to get my browser back.

    Since Tesla already provides the option to install/not install an update (very time I power on the car), I’d like to suggest that A 21st Century Bill of Consumer Product Rights allow selection of updates by feature and require that all changes be described. Otherwise, the manufacturers will bundle desirable updates with updates no one wants – or better yet, changes we don’t even know about.

  2. These days the big boys are fading because they get way over-confident. When smaller firms like Pebble or Hourz are made, they are just bought out for little to none. Innovation is dead in turn diminishing product features as the big boys just wait to take over.

  3. Dr. Blank,

    I strong disagree with your analysis.

    First, I cannot even figure out your comments about Google Maps. Google Maps is a free service to consumers. If consumers do not like the changes, they can move to any number of map digital map applications. Consumers can also buy paper maps or any other number of substitutes. The consumer doesn’t have any rights because they haven’t paid anything!

    The same concept is applied to Apple, which can remove or add features as it wishes. Why would Apple take away services that its customers need? Apple is forced to make development decisions based on which features are used most. We all know that the features that were removed can be utilized on other products.

    Consumers rights are based on contract law, professor. How can you speak of anything else? Apple, Tesla, or Google are not obligated to offer services for life. Try to use one of your old disks on a new Windows operating system, does it work? If services weren’t cloud based you would run into the same problems.

    The consumer still has many options, which is where a consumer’s real “rights” are derived. Any consumer can move to competitor products that offer the services they need. We need to ensure barriers to entry are low so markets remain free and competitive. For that to happen we need less government intervention, less taxes, and mechanisms that facilitate capital formation.

    You should write posts that stand for free men and free markets, not worthless government mandated bills of rights which make it more expensive to bring products to market and give consumers less choice.

    • I am not actually in favor of the professor’s thoughts on the free services. However, when I pay huge some of money for something I was promised, I will want it to stay the same. Comparison to using an old disk on a new windows operating system is quite unfounded, seeing as you can actually use most of the old disks on a new Windows machine. Just a matter of the right driver for the equipment reading the disks, or running the driver in compatibility mode.

      Personally I do not want any more regulation but I also want the ability to retain features I paid for and not be taken away from me without my knowledge because someone did not do their due diligence. I should get a refund, I would think, unless a comparable feature is introduced through that update to balance out what I paid for.

      All the professor is saying is, the products we paid for are actually worth less not just by depreciation, but also by manufacturer intervention. Back then, if you bought a Ford Mustang, and left it in your garage, hypothetically, if it were not for rapid depreciation from lack of use, that Ford Mustang from 1969 will still be the same when started with all the original manufacturer features.

      Can’t say the same for today’s products tomorrow, and this is just the beginning. A real conversation needs to be had instead of just hiding behind free market ideology cause this is not really free when you have no choice.

  4. Your comments are not entirely fair to Tesla. The speed at which the car hunkers down is merely increased. The January release will return control of that speed to the user. This information is emailed even to soon-to-be owners like myself.

    There are already known speed limits on the various Tesla models, which determine the tire grade required by law. These are readily available prior to purchase.

    I remain a satisfied owner-to-be. In fact I look forward to a future in which more companies will be as customer-centric as Tesla.

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