Why does the idea of productivity have to change?
Because key economic drivers like the USA have already spent way ahead into the future, because of China’s desire to keep more of the value of what it produces, and because of the current inefficiencies of environmentally GOOD technologies our understanding of efficiency and productivity has to change.
A good example of this, which we rabbited on about down here, is the $7 incubator. Regular western incubators for infants cost $20,000. One can be built for $7 – $20 that does about 95% of the same things.
The big question is can low, low prices create more demand? Actually the chances are that new pricing models built around radically reduced prices will do exactly this. A new future = real productivity gains, really lower prices, and continuing value relationships between the firm, its suppliers and the customer.
We contrast this with Chris Anderson’s idea of Free. We think Anderson is missing the point. Free might be in the process of being reinvented as a selling technique, but nearly free is going to be a commercial imperative for design and the business model. The $100 computer and the $2500 car are good examples. As we have trended towards the $100 laptop the opportunity to give laptops away with a Net subscription has emerged as a booster for this category.
This got surprisingly little attention in August but there are reasons to dig deeper:
“Israel’s government on Monday endorsed the ambitious plan of a private entrepreneur to install the world’s first electric car network here by 2011, with half a million recharging stations to crisscross the tiny nation.”
What it didn’t say is that Shai Agassi, the man behind the plan, sees the future in subscription-based car sales.
Agassi’s Electric Vehicles will be trivial cost unless you drive a whole lot. At around $600 a month to subscribe they come in at the cost of what many people lay out on petrol a month. You can find out more about the company here.
The point is people are thinking about radical price reductions and transformative pricing models. Coming soon!
