Rethinking Ownership Of Smart Products In Right-To-Repair

Today is International Repair Day, and it’s important to celebrate.

E-waste, any discarded product with a battery or electric plug, has become the world’s fastest growing domestic waste stream, fueled by high consumption, short product life-cycles and few options for repair. The amount of global e-waste generated in 2019 (53.6 million tonnes) weighed as much as 350 cruise ships the size of Queen Mary 2, according to a recent UN report. 

To combat e-waste, there is a growing movement to be able to repair and reuse electronic devices without violating warranties, especially in the US and the European Union. The issue is gaining traction, especially during COVID-19, as hospital technicians face difficulties repairing critical medical device equipment, such as ventilators. Emily Rusch, Calpirg executive director described the situation to WIRED, “while some manufacturers provide service information, other manufacturers make it hard to access manuals, read error logs, or run diagnostic tests.” Such restrictions, especially during emergency conditions, could be life-threatening. In the US, attempted legislation at the state level to introduce right-to-repair have been stymied thus far. Earlier this year, the European Commission proposed right-to-repair measures as part of their Circular Economy Action Plan, but observers believe it will take years to implement, with approval needed from EU member states and the EU parliament.

Who Owns The Product?

At the heart of the issue is the question: Who owns the product? Many products, popularly known as “smart products,” that run software or have some digital connectivity, are increasingly blurring the lines of product ownership. Consumers assume that their smart product, based on a single purchase transaction, is theirs to keep. But, as the controversy surrounding John Deere tractors revealed when farmers discovered they could no longer repair their tractors due to software locks, manufacturers have a different perspective. With nearly 80% of companies undergoing a digital transformation, many traditional product-centric organizations are moving to service-based selling in the quest for recurring and higher-margin offerings. From the manufacturer’s perspective, it’s not a single transaction but a running service characterized by highly adaptable software e.g. through over-the-air updates or on-demand functions. The consumer is just a tenant.  

Clearly, consumers and manufacturers are on opposite sides of the spectrum. Is it a product? Is it a service? Is it a bundle?  It might be a cliché, but the first step could be to better understand what smart products are and what they consist of.

What Are Smart Products?

Although the term “smart product” has gained in popularity, in many respects there is no real consensus or clarity about what a smart product really is. A recent paper posits that a smart product is indeed a product  with a distinct material nature that has software-based digital capabilities. This distinction is important to recognize because it helps us to understand how smart products create value.

The paper outlines four types of smart products.

Digital Product: A hardware product capable of processing information and supporting basic data management. A classic example of this is a digital camera or hi-fi systems that store processes data from CDs or USB drives.

Connected Product: A product that has connectors and empowered with communication software so it can send and receive data. Amazon Dash is good example of this, where a button sends a Wi-Fi-signal to Amazon to initiate an order.

Responsive Product: A product with connectors, sensors and actuators which allows it to sense and gain awareness, as well as to react to signals and align with them. Cars equipped with sensor technologies is a good example of this.

Intelligent Product: A device that is capable of learning, anticipating and acting independently. It has the capability to reason and make its own decisions. The NEST Learning Thermostat, which learns which room climates users prefer during the day, is a real-life example.

Separate the Hardware from Software?

“This distinction between the tangible hardware and intangible software-based properties of smart products helps in understanding how smart products create value,” explains Dr. Stefan Raff, lead author of the paper. “Research has shown that relationships with customers are frequently formed on the basis of a physical device. So it will be important to understand whether feelings of ownership and value extend to the services generated by the smart products.”

Indeed, rethinking smart products at the level of individual product components and capabilities could open up the discussion about ownership in new ways. It could lead to new pricing models that move beyond a fixed product-based price, for example. And it could provide parameters for discussing what consumers “own” based on what they are paying for.  In the meantime, Raff recommends that manufacturers learn to manage these processes properly and comply with certain rules in order not to waste the enormous potential of smart products or even alienate their own customer base: “Categorical repair bans or the removal of already purchased functions during operation via over-the-air downgrading are sure ways to annoy customers and should therefore be avoided.“

Smart products are the tangible, everyday signs of how digitalization has changed and improved our lives – from smart watches and smart phones for consumers to smart agriculture and smart factories for our businesses. Manufacturers need to recognize the paradigm shift in consumers relationships that comes with smart products, and best work together, with consumers, to define the new rules of the game. Instead of prohibiting consumers from repairing their own products, maybe today’s occasion can inspire a strategic “repair” that leads to a more conscious and sustainable approach.

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