Comment: Upgrade cycle madness

It is getting near that time of year when the world goes mad for the next revision of the iPhone.

That annual elation when the faithful can upgrade their awesome^H^H^H^H^H^H^H, sorry, now old and crappy iPhone 4S for the shiny new OMGOMGOMGOMG!!!  NEW iPhone 5. And your life is complete.

On the other hand, there are those (I approximate, half the Apple citizens) who are mid-way through their 24 or 18 month contracts and are torn between needing that shiny new phone and buying out their contracts to get it, or having to suck it up and wait.

A few years ago, I would have agreed that the devices were getting exponentially better and there was a clear benefit to having the latest mobile device but I believe that is no longer true. The power of the devices are reaching a point where they can do almost anything you would want them to. Quad core CPUs – in your *phone*. I think the next huge leap will be in battery life, but, I digress.

Much like PC upgrade cycles. Businesses used to religiously replace their computers every 3 years. There was always a clear benefit to this and we all loved getting new computers because they were so much faster than the one before.

But that stopped being true* about 3 years ago (*unless you are a gamer). Word processing isn’t any faster, email isn’t faster, the Web isn’t faster. Generally speaking – the computer you bought 5 years ago is still pretty damn good.

Companies are realising this also and 3 year replacement cycles became 4 year replacement cycles mostly due to budget cuts. Then 4 years became 5 years as they noticed “hey, this still works great”.  I believe the new standard PC replacement cycle will be 5 years.  I think this was already true in the average home. As an aside, this business change is what is hurting the likes of Dell and HP right now.

So, back to our shiny mobile phones. Can this continue? I don’t believe so. There will come a time – and I think for Apple it will be 2013 – when the iPhone owners realise that their phone is still bloody awesome and the iPhone 6 isn’t such a great incremental step as before, and that maybe, just maybe, they don’t need this to complete their lives.

By 2015, I believe, I hope, that we will be happy with our devices and we won’t need to keep paying the annual upgrade tax just to have the latest shiny. The shiny in our pocket will be awesome, and it will remain so for a couple of years. We should be happy with our devices for at least 2 years – maybe 3.

We had a dotcom bubble. It burst in 2001. We had a financial bubble. It burst in 2008. We are in the middle of a mobile bubble. I believe it will burst in 2015.

None of the mobile device makers want this to happen. I’m not sure the phone companies would like it either – they still want to extract their £35 or $50 per month out of you for the next 24 months.  But you, the consumer, the guy with the cash in his pocket, should care. You are paying £800 or $1200 every two years for that shiny slab of metal in your pocket. You probably wouldn’t spend that on your primary computer that could last 5 years.

Disclaimer, I use a 2.5 year old HTC Desire that is just begging to be upgraded – but I’m holding off as best I can to see what happens post iPhone 5 in the market. I aim to choose a phone that will last me 3 years.  And if there can be any encouragement, it is this. I’m only paying £10 ($16) per month for all my minutes, texts and unlimited data plan.

On Software and Game Copyright and Second Hand sales.

stockvault-video-game-controller106338

This morning I got into a little twitter spat with a local game developer Matt Johnston. Basically he is arguing against companies like GameStop because they do not provide any revenue back to the original developers of the game. As he is a game developer, he is very obviously on the side of the games companies.

Matt made a blog article and very nicely quoted me in the article – one of the tweets during the to-and-fro conversation. Well as much as 140 characters allows.

Matt makes several points, one of which is that if we allow* a second hand market, then DRM will happen; and we don’t want DRM, so we shouldn’t have a second hand market.

(* note that it is not the right of the games companies to allow or ban it in the first place).

DRM is a red herring and not at the heart of the issue. DRM may be the games companies answer to the problem it perceives – but at the end of the day, DRM only hurts those people who actually pay for the game.

I could go onto many underground sites and find the latest games “for free”. Who wins there?

I don’t as I do believe the game should be paid for. I have a large collection of both Wii originals, and a large Steam archive.

Having said that, morally, I have a real objection to the games companies thinking they can ride roughshod over consumer rights and long established principles and doctrine of first sale.

The second hand market is both legal in the physical works *and* in the digital world. And thankfully we now have case law to back this up.

Last month, in the EU, Oracle lost a case (Oracle vs UsedSoft) trying to prevent resale of licenses to its software.

The court wrote:
“A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy.”

Further, Oracle, and Matt here, opposes further distribution based on licensing terms. The court also rejected this view, thus:
‘The principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website. Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy.
‘Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.’

http://www.gamerlaw.co.uk/2012/07/legality-of-second-hand-sales-in-eu.html
http://www.bit-tech.net/news/gaming/2012/07/04/curia-digital-distribution/1

In summary, as a gaming company, you would love to make income on the second hand sales of your games, who wouldn’t.  However, morally it is wrong.

Would you like the government to charge VAT on second hand goods? No? – they already got their cut, as have you in your first sale.

Thankfully, the law agrees with me.

 

Image: http://www.stockvault.net/photo/106338/video-game-controller