Deconvexifying the car, car feature markets in everything

…BMW is planning to move some features of its new cars to a subscription model, something it announced on Wednesday during a briefing for the press on the company’s digital plans.

…now the Bavarian carmaker has plans to apply that model to features like heated seats. BMW says that owners can “benefit in advance from the opportunity to try out the products for a trial period of one month, after which they can book the respective service for one or three years.” The company also says that it could allow the second owner of a BMW to activate features that the original purchaser declined.

In fact, BMW has already started implementing this idea in some markets, allowing software unlocking of features like adaptive cruise control or high-beam assist (in the United States, those options are usually standard equipment). Other features are more whimsical, like having a Hans Zimmer-designed sound package for your electric BMW or adaptive suspension for your M-car. Indeed, the company says that its forthcoming iNext will “expand the opportunities for personalization.” I’m sure y’all can’t wait.

Here is the full story, via the excellent Samir Varma.  In the standard theory of bundling, bundling enables more price discrimination, as for instance with the cable TV bundle.  But if most consumers really don’t value the add-ons at all, which perhaps is the case here, a’la carte may maximize revenue after all.

Comments

And how many minutes will be take for a hack of the software lockouts to be available on the internet. Microsoft has been doing this nonsense for years because it is cheaper to manufacture only one model and then turn off features. And just like Microsoft, a multiple of hacks exist to turn them back on.

Exactly what I was thinking. The potential for "hacked cars" to introduce malware is kinda scary.

"Heated seats"! Seriously!

A better example would be Intel, where they may make a standardized 4 core chip, and turn off 2 cores, to sell a cheaper 2 core version.

Of course, Intel also does testing and if a core or two fails, then those are the ones that get turned off. So, it's possible the chip is actually a 3 or 4 core chip, but the buyer doesn't really know.

Ok, on second thought, BMW's model is closer to Microsoft's model. Because BMW can turn on the feature in the future with the required license.

This model of making one model and turning off features has existed in medical equipment for decades. However, a hospital is not going to be willing to hack their CAT scanner just to get the added features.

But wouldn't most of the features in, say, a CAT scanner be software based? That's not the same as hardware , like heated seats.

If the manufacturer sees that you are using hacks, you could be up a creek without a paddle.

Software enforced contracts puts more of the balance of power in the hands of the manufacturer. It's a big shift from the days of "I own it, I can do what I want".

"If the manufacturer sees that you are using hacks, you could be up a creek without a paddle."

Legally, in the US the worst they could do is revoke your warranty. And generally most states still make them cover the portions of the warranty that aren't covered by the change.

I have no idea what the laws in Germany are.

If they get you to sign a contract when you purchase the car, can't they sue for violating the contract? It's BMW so they may well be able to afford to file lawsuits and expect people to settle. I guess if you purchase the car second-hand, you can try to hack it to your heart's content, though.

Sure, They can try to get you to sign some kind of binding contract.

But making the people who are about to buy your product sign a pernicious contract is going to be dicey in a competitive market like car sales.

Customer: "You want me to sign a contract! In order to Not use the features on my car unless I pay extra. ... Nevermind, I think I'll go over to the Mercedes lot."

if they're like the EUAs that come with modern software, it will be 80 pages long and not read by 98% of buyers

“Mercedes: We let you use the car you bought—all of it.”

The US invokes the common law principle that once you buy something, it's yours, and the manufacturer loses all control over it.

There was a case a few years back where a printer company sued another company that essentially hacks into their cartridges to refill them (so a user doesn't have to buy new cartridges) and the Supreme court effectively said, sorry you can't do that. I'd imagine software is similar, so long as it is packaged in a hardware tool.

Perhaps, but, if the enable code contains a copyright notice (as it probably does) then if they really wanted to enforce this they could sue you for copyright infringement?

Unless one is trying to sell the hack to others, how does copyright infringement apply? I can write in a book that I have purchased all I want and the author has no say in the matter.

Unauthorized reproduction will trigger it.

Of course tinkerers will hack it. But that is probably a rounding error in terms revenue. Most people already won't pirate an operating system or jailbreak their phone - how many will flash some custom ROM onto their car, with all the risks that entails?

I do not think hacking BMW would require flashing custom ROM. It is more like getting around the security that will have to be weak so that all the BMW dealers can handle it to turn features on. Given the situation , the security will be hardwired into the car and probably not upgradable.

that’s one way to increase the value of used cars

I wonder if they heard of the John Deere story and thought "that's for us?"

The details are different in some respects, but the customer revolt seems natural enough. "I paid for my car once already."

The company also says that it could allow the second owner of a BMW to activate features that the original purchaser declined.

Oh, great. Now it's opaque how much of a used car you are actually buying.

It's a lead balloon.

That was the first thing that jumped into my mind as well.

Read the fine print: it will likely say "BMWs may only be maintained at BMW-licensed garages...."

I have recently read about that. https://www.voanews.com/east-asia-pacific/vietnams-no-nonsense-new-president-takes-lead-china-us-affairs

Beijing's refime is known to be a totalitarian rogue regime which sponsors international terrorism.
https://www.hindustantimes.com/india-news/myanmar-calls-out-china-for-arming-terror-groups-asks-world-to-help/story-fzb8ADXt1VgS9ofZMMWdWO.html

It seems to me that prices swing back and forth over time on the pendulum between bundled and un-bundled.

Almost as if the sellers are trying to keep one step ahead of the buyers figuring out what they are actually paying for.

Cable TV; meanwhile, is infamous for it's oh-by-the-way hidden fees. The alleged bundled price is just the tip of the iceberg.

Behavioral Econ 101 and Bundling 101.

By the way, what is the trade in value when you sell the car? Will BMW recapture value from the next purchaser by charging a higher price for the feature, or, perhaps not supporting it so that you have to buy a new car?

I am surprised they did not copy a cell phone plan and incorporate a free phone with a subscription plan based on minutes of use.

If you are interested in this subject, you might want to read some Behavioral Industrial Org books, starting with Trembly, New Perspectives on Industrial Organization With Contributions from Behavioral Economics and Game Theory (Springer); for cellphone and similar plans, see Sunstein, Seduction by Contract: Law, Economics and Psychology in Consumer Markets.

To fully pimp out a subscriber's ride, BMW needs to add trunk badge letters indicating activated options. The 340i becomes the 340iX-HK-LN-JOff with Xdrive, Harmon Karmen sound, Lane Assist, and Driver Seat Genital Stimulation.

But there's no manual transmission option in this so-called Ultimate Driving Machine.

What I want to know is how much extra do you have to pay to remove the ads?

This seat warmer session is brought to you by Acme Home Heating, after viewing this brief video, press "next" to proceed to seat heating mode....

meanwhile
why does minnesota need a federal disaster declaration for
the results of "mostly peaceful protesting"1,2
somebody should ask shame cultist david brooks -author of "the humiliation this nation needs"
1newwoketimes.con
2 narrative propaganda radio

Good points, everyone. Good points. Beijing's fascist ruling clique has been unmasked. Its policies of aggression against its peaceful neighbours and territorial aggrandizemnte have been laid bare to be seen in plain sight by all. Its totalitarian leaders have been brought before the world's public opinion court and stronlgy convicted. Their orwellian totalitarian regime is now known as what it is, a criminal enterprise. The peace-loving nations of the world have learned the hard and bitter lessons or Munich and will never allow those fascist jackals to prevail over their innocent, guileless, righteous neighbours.

https://www.timesnownews.com/international/article/vietnam-slams-china-for-military-drills-in-disputed-waters-says-it-could-impact-ties-with-asean/615513

Don't we, Americans, have a moral duty to support Beijing's regime's neighbours against Chinese malicious aggression? I think so.

https://www.indiatoday.in/world/story/china-conducts-military-drills-in-south-china-sea-vietnam-protests-1696305-2020-07-02

Beijing's reactionary ruling cabal's behaviour is even worse than you think.
https://www.voanews.com/east-asia-pacific/voa-news-china/china-sends-ship-warning-vietnam-no-court-case-no-oil-drilling

https://af.reuters.com/article/worldNews/idAFKBN2431GN

I have read a lot about Beijing's ruling cabal's policies recently. It is hard to see any moral difference between Beijing's refime and Hitler's.

https://www.hindustantimes.com/india-news/myanmar-calls-out-china-for-arming-terror-groups-asks-world-to-help/story-fzb8ADXt1VgS9ofZMMWdWO.html

India is a big boy. It can take care of itself.

If China invaded North Korea, I'd have mixed feelings, but odds are it would improve living standards for Joe and Jane N. K.

The next obvious target is Taiwan, but China probably has to digest Hong Kong first.

5 sock puppets! Good job, Thiago Ribeiro.

Better, you just have to listen to an ad to turn on the heated seats. Or the A/C.

I wonder if they'll allow Ads by other car makers:

Ad starts: "If you had bought a Tesla, you wouldn't have to be listening to this add, you'd already be cruising down the road"

No, I guess BMW will not allow ads by other car manufacturers.

It also lets the manufacturer shut off the feature of the owner's social media connects with the wrong people, or fails to display indications of support for the right causes

This is a brilliant idea from BMW. Maybe they can activate a feature that prevents their cars from becoming "endless money pits" as YouTube expert mechanic Scotty Kilmer (3.3 million subscribers) calls them. They are not called "Bavarian Money Wasters" for no reason. Overpriced German luxury junk, designed to fall apart after 80,000 miles. Fools and their money...

Break My Wallet is the phrase motor heads used in my car enthusiast daze.

I was manufacturing engineer in a former life.
The auto industry is behind the curve, but this approach to product design is now common place among almost every manufacturer of complex machinery. The reasons have less to do with increasing revenues than reducing operating costs (order entry, BoM, manufacturing, supply chain, service parts, etc) and increasing the contribution margin of every unit sold.
It is much simpler to make multiple exact copies of the same machine than it is to make a single copy of a slightly different machine.
A manufacturer can then produce a single (ideally) model with all of the features that will be available, and then charge the customer for only the ones they want enabled.
This trend has been underway in virtually every corner of our economy for years and will only accelerate.

Agreed. Marginal cost the same for all models, but you price discriminate by turning on and off features with software.

An old story from Jerry Pournelle:

"Barry Longyear used a Wang dedicated word processor which he rented; he read my description of the Star Trek game I had written, and called Wang to see if his computer could run BASIC and thus play the game.

No problem, they said, and told him what it would cost, some extra fee per month – he was renting the computer. So a customer engineer came out, opened the Wang – and removed a jumper. "All done."

Barry was incensed. So were most readers who heard the story. The system had the capability, but it was disabled.

If BMW built capabilities into its cars that were not enabled unless the customer paid extra, I suspect there would be considerable unhappiness. It may just be impressions."

http://www.chaosmanorreviews.org/oa/2008/20080714_mail.php

i4S3GTAA68J3704770
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Confirmation Number WISTVR029452851

I'd think the unhappiness would revolve more around the recurring payment than using software to enable features. At least, my impression is that customers resent a one-time fee to enable something (over time they tend to forget about it, it was just part of the cost of acquiring the car) than getting hit with monthly fees.

In any case, the days when cars had numerous options added as they went down the assembly line are in the distant past and not about to return. One of the peeves with the current model is that one often must buy a bundle of features one does not want in order to get something one does want. At least this system should be more granular.

although I still think they'd do better with a one-time fee than recurring charges.

Of course, this could be extended to what's seen in more than a few sf dystopias: a refrigerator that charges each time you open its door, a microwave that was inexpensive because it will only cook certain brands of (overpriced) foods, a rental apartment that charges each time you flush, or open an entry door ...

It's taken a while, but Boeing is unlocking such features as the not crash option. Under that option, travelers avoid the 737 MAX by either staying at home or driving to their destination. Boeing consider another option, redesigning the 737 MAX to make it safe to fly, but decided it was too expensive and rejected it. It's unclear how potential customers will respond, but Boeing is confident that Americans are so stupid they will choose the 737 MAX fly option.

That is some Swiftian level sarcasm. +1

Read conclusions regarding the 737 Max crashes reached by actual pilots (like William Langewiesche) instead of j-skool idiots.

The correct analogy would be allowing travellers the choice: a 3rd world 'pilot' with a 25% discounted fare, or a western trained pilot at full price. What would you pick?

God I hate when companies pull this shit. You create a product with the ability to do x. Then let me do x!

Instead your going to spend more money in development to invent a lock for that feature that people can't easily hack ... for what? To sell a service that provides people with the tools their equipment already had!

It's not like they are selling the software to heat seats. That software is already in the vehicle. Tesla does the same thing. Hell my printer is now doing this, automatically disabling features when the ink has fallen below an arbitrary amount.

Its dumb. Let me use the software I bought.

Turning everything into a subscription is a blight. It seems we are entering the age of the sharecropper economy where nothing is owned but rented.

BMWs are already the worst choice in a used car. Very expensive to fix which is why they come on the used car market.

But what happens when they brick a $40,000 car?

Well, BMW already does that. Here's a 2008 BMW that is a no-start because of a short in the passenger door handle. And this car had a lot of expensive parts thrown it at before this was found.

https://youtu.be/B7gggowzPSE

I guess this sort of system would destroy the used car market.
This could be a thing but the fact that BMW is first out the door on this also makes me think this is just the typical dog-shit idea German companies come up with.

IBM used to do this with its processors back in the 1950s and 1960s. They leased their systems. Most people lease their cars paying a fee either to the car company or to a bank, so this isn't as outlandish as it seems. Since I tend to pay cash for my car, I'd prefer to pay the full lease value net present up front.

The downside of this approach as opposed to bundling is that bundling gets people to try new features. I rarely get to choose the features when I buy a car beyond being able to specify a minimum. Maybe this is because I buy an oddball brand, Honda, and it usually takes a bit of doing to even find a car that meets my basic specifications. My latest has all sorts of features I would never have specified: heated seats, a sunroof, fog lights, soft braking and so on. It turns out I like having heated seats. Whether this becomes a buying point next car purchase I have no idea.

Leasing cars for household use extremely rare in Australia. I would guess reasonably strong consumer protection as well as historically higher interest rates than in the US has contributed to this, but that's just me guessing.

There was a customer revolt when they tried to make Apple CarPlay, a zero marginal cost feature, a subscription. Perhaps they resent Apple’s ability to make non-garbage software and were passive-aggressively lashing out at their previously captive customers. This move is pure greed and I guess my third BMW I sold a few months ago will be my last one.

Yes, we will see if this catches on - very bad for consumers overall - but on the other hand German companies are really champions are coming up with horrible, garbage ideas when they want to try and jump on the "tech" and "services" bandwagons so it could just be that.

We bought our present car second-hand. It's rich in luxury features. The original buyer must have been rolling in money.

Investigation revealed that he was an East Anglian farmer, presumably living high off taxpayer subsidies.

Sometimes I see the virtue in sumptuary taxation. I also see the virtue in scrapping agricultural subsidies.

Honestly, if you aren’t buying a Beamer fully loaded, you should just get a Lexus. Same car, less price.

And if you don't care about the brand name and bells and whistles of a Lexus, you might as well get a Camry :-)

This might work on lease vehicles, or if the subscription was with a third party (the way Sirius/XM is), but on purchased vehicles, intentionally sabotaging a feature the customer paid for is just going to buy BMW a lot of legal trouble. It's an interesting idea, but implementation might be expensive.

Attempts to turn a commodity into a differentiated product have a long history and sometimes succeed, although often at great cost to society. If bottled water wasn't permitted to have a brand but only a label that stated "it's just freaking water!" and perhaps basic information on its purity, mineral content, etc. The world would be a better place as presumably some consumption would shift into areas that will end up providing more long term benefit to humanity.

It does seem strange that people pay for bottled water when it's often no better than what's available from the tap. But, arguably there are really two bottled water industries:

1. The pricey prestige brands (they come in glass bottles, and usually have an identified source).
2. Commodity bottled water in those cheap, crinkly plastic bottles (which is often nothing but filtered tap water).

Some of the prestige waters do taste different than tap water. They're not worth the price to me (often the taste is worse), but, De gustibus non est disputandum.

As for the commodity products, these are convenience products: at less than ten cents per half-liter bottle, people buy these just because they don't want to be bothered with filling a reusable water bottle, carrying the emptied water bottle back home, and subsequently washing the bottle. "It's just water" but for many the convenience is worth the small price.

In short, you may think the bottled water markets are stupid and wonder that people pay for what they could get for free, but I'd argue that these markets are not irrational as they're selling something of value.

At least, not irrational in the sense one might say a "cures everything!" pill marketed as a supplement is. (Yes, I know, there's usually a "not intended to treat or cure any disease" disclaimer, proudly printed in tiny light-grey mouseprint located somewhere below the huge, bold testimonials describing the miraculous cures that followed use of the product.)

2. Commodity bottle water is "Just Freaking water".

If we got rid of prestige water we would presumably be better off -- but only if we can magically have no ill effects from banning it. I admit the game may not be worth the candle.

I have never understood why the standard theory of bundling is at all considered to apply to pay TV. There is no benefit at all drawn for the vast majority of consumers who if anything will only see a channel in the context of it interrupting their search for the one they want. As such it has always seemed like something that maximises supply side revenue rather than minimises deadweight loss.

I wonder whether these arrangements actually work out for the producer. For software producers or cable providers with little competition it seems to work, but for most products the free trial creates a model that’s about like a gym membership (paying monthly for something that’s never used). That’s nice and all but at some point people get wise and just don’t accept the trial.

I'm very pro-capitalism and markets, but this strikes me as the worst of the "late stage" garbage we hear about...

If you've built the feature in, hardware-wise, locking it remotely and charging for its access is sheer unrepentant skullduggery (or at least it feels that way).

For starters the asking price better be lower, and for seconds I wouldn't buy one anyway.

Microtransactions are bad enough in video gaming (and they're still hated years later) - putting it in cars is a scourge.

Well it does show the ultimate failure of the whole system here as this would be a turn back towards a kind of feudalism. You can no longer actually own anything in a meaningful sense you just rent everything from some corporation who always maintains final say over how you use their product - and you probably windup locked in to the products from one large corporation after a while.
The companies end up making more money making life difficult and bullying their customers rather than attracting people with great products.

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