Usually once you pay for something, you own it, and the transaction is complete. That's how it works with, for example, sneakers, pretzels or dog shampoo.
But in technology, you're never really finished paying. Buying Microsoft Word, or Quicken, or an iPhone may feel like a one-time transaction, but it's not. Every year you'll be offered the chance to buy a newer, updated version.
Since Word debuted in the 1980s, upgraded versions have been offered 14 times. Since Photoshop 1.0 in 1990: 20 times. If you'd bought Photoshop in 1990 and stayed current by buying each annual upgrade, you'd have paid more than $4,000 by now.
Something similar happens in the hardware world. You might have purchased that first 2007 iPhone or Samsung Galaxy phone, but you've almost certainly bought a new version by now.
Clearly, this business model works well for tech companies. But how well does it work for us? At first, you might answer, “We keep upgrading, don't we? Obviously, we're happy!”
The problem is that the tech companies have only one big tool to entice you to upgrade each year: piling on new features. More, more features. Microsoft Word was once a word processor. Today it's a database, and a Web-layout program, and a floor wax.
Eventually these companies have no choice but to add features that nobody asked for. Meanwhile bloated, overwhelming technology has a very real emotional effect on us; we feel like idiots when we can't master it.
Then, as the software becomes increasingly weighed down with features, the interface must be redesigned to accommodate them all. (Such a redesign is then, of course, marketed as a new feature.) And each time you lose a few days of productivity as you learn the new layout.
Nobody's forcing us to keep up with the upgrades. If we don't like the upgrade ritual, we can just get off the treadmill. Right?
Well, no. Sooner or later the product we currently own is no longer “supported” (the company won't help you with problems and won't update that version for newer operating systems). Microsoft, for example, has cut off mainstream support for Windows XP, Vista and even 7. It abandons each version of Office as soon as five years after its release.
In the end, your unsupported program won't run on the latest computers and operating systems. You may not even be able to open the documents created by a program's earlier version.
It's not all the industry's fault, though. We like surrounding ourselves with unnecessary features. It's the SUV syndrome: people who are nonfarmers, in nonmountainous areas, buy far more car than they need—you know, in case there's a flash flood on the drive to Whole Foods.
Back in the 1980s, Microsoft responded to complaints that Word for the Mac was too complex by offering a stripped-down program called Microsoft Write. It could open and save Word documents, but it was only a word processor. And guess what? It bombed. Nobody wants Standard; we all want Deluxe.
In other words, both the software companies and their customers struggle with the challenge of perpetual feature bloat—but neither party shows any sign of considering other arrangements. No tech company on earth, for example, would create a product just once, designed perfectly for its task, and just sell that version forever, making only compatibility tweaks as necessary. That would be unthinkable.
Adobe abandoned the upgrade model in 2013, in favor of an annual subscription plan. Longtime customers were furious at first—what incentive would Adobe now have to keep improving its programs?—but the new model was ultimately a financial coup for the company. Other developers are flirting with the same.
So far few other consumer software firms have followed suit. And why should they? When you step back and consider the way the annual upgrade cycle really works, you realize we've all been on subscription plans all along.