The Dilemma of the Consumer Product Life Cycle (Part 1)

One only needs to look at the rapid fire, innovative change between Apple’s original iPad (released April 2010) and the iPad 2 (released March 2011) to appreciate a strategic, change management and investment dilemma. If a business had embraced the iPad at its initial launch and bought, let’s say, about 1,000 iPads to support the productivity of its knowledge workers, should the business then re-buy another 1,000 of the newer, more capable devices released 11 months later? And then, presuming more innovation, another 1,000 another year later. Granted, an iPad investment is relatively small (at less than $1,000 fully configured), but as I learned a long time ago, anything multiplied by 1,000 (or even 10,000) adds up quickly.

What’s the dilemma and why is this a wrinkle on the usual investment process. Life cycles and therefore asset lives measured in 12 months or less are not uncommon – they are usually expenses (disposable) rather than capital (assets). The challenge arises from the need to perceive that the products purchased are very disposable and may not last for more than a year. For a consumer, who directs their own purchasing behavior and exercises full control over whether or not the latest and greatest technology is better for them then last year’s purchase, the decision is an individual one. How does one position this strategically within a business setting rather than in a personal setting?

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