Soapbox

King Gillette is famous for his invention of the disposable-blade razor, and the associated business model, “give away the razor, sell the blades”. This strategy was widely imitated, but it seems marketers have struck an even better one: why give away the razor when you can make the chumps pay for it?

There are a number of products, some high-tech and some not where you actually pay handsomely for a device that is a doorstop without proprietary refills or service. Some examples:

• In the US, most cell phones are either hard-wired to a specific service provider (CDMA) or SIM-locked (GSM). A consumers’ group is fighting in court to ban or at least limit in time the practice, which is either outlawed or strictly regulated in most other countries.

  Sure, the carrier is subsidizing the handset, but that is offset by extra profit margins in the contract. Once the contract’s minimum term is over, there is no justification whatsoever for maintaining the SIM lock. AT&T was one of the most egregious offenders, it is not clear if their policy will change after their takeover by Cingular.

  I suspect one of the big reasons for SIM lock is so carriers can charge extortionate international roaming charges, since without SIM lock, it would be cheaper to just pop in a prepaid SIM card in the country you are visiting. Actually, roaming charges are so overpriced that it is cheaper to just buy a new phone for the prepaid card and toss it away afterwards.

  There are real externality costs to society due to distortions in consumer behavior from carrier policies. Many people throw away their old cell phones when they change service or renew a contract, as the subsidy is only applicable towards a new phone purchase, never granted as a rebate to people opting to keep their older but perfectly serviceable phone. In California alone, 44,650 cell phones are discarded each day, usually ending up in landfill, at tremendous cost to the environment.

• MP3.com founder Michael Robertson is suing Vonage for trying to extend the same despicable lock-in model to VoIP, with what he claims is deceptive advertising. Most commentators have rushed to Vonage’s defense — apparently, for many geeks the company can do no wrong, like Google. I have no such compunctions, as I have in the past received completely unsolicited spam from them, and thus as far as I am concerned, they fit in the “scum” category.

• In a great illustration of the power of cognitive dissonance, TiVo is another company with rabid and uncritical fans. Originally, TiVo PVRs would remain somewhat functional even without the TiVo service. Sure, you would have to program shows manually, but that is no worse than most VCRs. Over successive software updates, TiVo have reduced their PVRs’ autonomy until they are now effectively useless without the service.

• Inkjet printer manufacturers use all sorts of tricks to protect their racket, including putting in microchips designed to foil refilling or the use of third-party cartridges. Lexmark even tried to abuse the DMCA to prevent a competitor from selling reverse-engineered cartridge chips. All this so inkjet ink can remain the most expensive liquid, at significantly higher cost per milliliter than Chanel No. 5 or vintage Dom Perignon.

As in most cases the utility of the machine without the overpriced refills or service is nil, the fair market price for it should be zero. The Vonage/Linksys situation is a special case as the wireless router remains partially usable, albeit without VoIP features if you switch providers. But marketers will keep trying to have it both ways until consumers push back by implementing a zero-tolerance policy, akin to the “broken-window” theory of policing. Do not accept to pay for a cell phone from a carrier that refuses to unlock it after a reasonable amount of time. Refuse to purchase digital devices that require service from a specific vendor to function.

As is his wont, Microsoft CEO Steve Ballmer put his foot in his mouth when he accused iPod owners of being thieves. Actually, the journalists’ reports are not entirely accurate – while he used the iPod as an example, what he was really implying is that any music format that is not encumbered with mandatory digital rights management (DRM) restrictions induces “theft”.

Copyright infringement is certainly illegal, and should remain so, but merely repeating the mantra that copyright infringement is tantamount to theft does not make it so. This is beyond the point. Many stores have to deal with shoplifting, which is indeed theft. What if a store you were in accused you of shoplifting and performed a strip search? You would feel humiliated and enraged, certainly stop patronizing them and almost certainly sue them for false imprisonment. DRM is no different.

There is no acceptable form of digital rights management, period. And yes, that includes the iTunes Music Store’s AAC/Fairplay.

Gubernator Arnold Schwarzenegger signed on Wednesday a bill to ban the production and sale of foie gras in California in 2012. The bill was pushed by his outgoing horse-trading partner, Democratic state senator John Burton. The highly dubious rationale is that the force-feeding of ducks or geese to produce foie gras is “cruel”. I can think of many culinary preparations that would qualify, such as lobsters or crabs boiled alive. Then again, many more people eat crustaceans than foie gras, thus they are not as safe a target for a grandstanding politician who has no compunctions about trying to stuff his unwanted offspring down San Francisco voters’ throats.

I think the last thing San Francisco’s stricken economy needs is another coup de grâce to its’ restaurants, one of the few local industries that can (just barely) survive its business-hostile climate (our restaurateur mayor Gavin Newsom seems to agree). In the meantime, better to make your reservations at the French Laundry while you still can. In seven years’ time, the only place you will be able to get your fix will be from shady characters in the dark alleys of the Tenderloin, if its gentrification is not complete by then. If you think foie gras is expensive today…

London-style taxis (also known as “Hackney carriages) are becoming a common sight in San Francisco, which is apparently one of the first cities in the US to get them. It is amusing, really, when most observers in London expected them to disappear a few years ago. The antiquated look of the London taxi endears it to Londoners, but more importantly, they are very roomy for passengers, and easy to get in and out of, even when you are carrying an umbrella…

One (regular) taxi driver complained to me the London taxis are under-powered and do not go fast enough for him to zip to the other side of the city to pick a ride. Anyone who has seen taxicabs drive in this city knows this is a feature, not a bug, in the interests of public safety. Not that taxi drivers are worse than others – I have never been in another city where drivers violate red lights as casually as in San Francisco, even though I have lived in Paris and Amsterdam.

Taxis, along with docks, are one of the few domains in everyday life where byzantine nineteenth century work arrangements still prevail in defiance of the free market. Most cities arbitrarily limit the number of taxis that can ply the streets, a system that usually benefits taxi companies more than taxi drivers, who often end up in a position similar to sharecroppers. The quotas are seldom updated to reflect demand, due to lobbying by entrenched taxi companies, and cities like Paris or San Francisco often face severe taxi shortages. The French demographer Alfred Sauvy (PDF) related how ministers would fear the wrath of taxi strikers and chicken out of raising numbers.

In San Francisco, proposition K, passed in 1978, limits the number of taxi medallions to 1300. The measure was designed to let genuine taxi drivers, not companies, own the medallions, by requiring a nominal number of driving hours to retain the medallion. The lucky few who hold medallions lease them for $20,000-30,000 a year to taxi companies for when they are not driving themselves. Most actual taxi drivers do not have medallions and lease them for $100 a day or so from taxi companies (sharecroppers on plantations were not required to pay for the privilege of employment).

Of course, the people profiting from this cozy arrangement are never content – the permit holders want to drive less so they can enjoy the rent they are collecting from the coveted medallions. One attempted ploy was to reduce the driving hours requirement for disabled workers. Needless to say, had the measure been passed, overnight many permit holders would have found themselves mysteriously incapacitated. Taxi companies would like to grab medallions for themselves and cut off permit holders from the trough.

The right solution would be to abolish the medallion system altogether, or grant one to all working as opposed to rent-collecting drivers. But of course that is the one solution all vested interests are adamantly opposed to, as it would upset their apple cart. Given the abysmally dysfunctional state of San Francisco municipal politics, the situation is unlikely to improve. No amount of window-dressing with London style cabs is going to change that.

I keep noticing with dismay that many of the gadgets I consider for purchase are deliberately crippled in their US versions. It used to be only European consumers had to suffer from inflated prices and reduced functionality, usually self-inflicted due to bureaucratic EU mandates like the DV-In fiasco (most DV camcorders in Europe have digital IEEE1394/Firewire/iLink video out but not digital video in, as otherwise they would be classified as VCRs and be subject to various protectionist customs duties).

• Sony’s PEG-TH55 PDA has integrated WiFi and Bluetooth worldwide, except in the US where Bluetooth is omitted. This is incredibly annoying and rules the device out for me (unless I import one from the UK or Germany), as I have discovered from practical experience with my PEG-UX50 that WiFi access points are seldom available when you need them, and I often have to fall back to GPRS via Bluetooth. We are already saddled with the industrialized world’s worst mobile telephone operators and clunkiest phones, why add injury to insult?
• Canon’s new Digital Rebel DSLR is available in a kit with a 18-55mm lens. The lens has the smooth and fast USM ultrasonic motor in Japan, but uses the inferior AFD micro-motor in the US. Perhaps they believe US customers are too clueless to notice the difference.
• Many ultra-slim laptops available in Japan are never introduced in the US (this has created a market opportunity for parallel importers like Dynamism. Once again, the gaijin must lack the refined aesthetic sensibility to appreciate models like the Sony Vaio X505 and are probably content to lug their boat anchor laptops in their gas-guzzling SUVs. Nor is this attitude limited to Japanese companies – until recently IBM had an entire line of ultra-compact notebook computers available only in Japan.
• Epson’s Stylus Photo 2200, probably the favorite printer of professional photographers, does not include in the US the gray balancer, special software and calibration sheets used to improve the neutrality of black and white prints. Michael Reichmann puts it best when he calls this “The software that Epson North America thinks its customers are too dumb to use”.

The US is the world’s single largest market for consumer goods. Why is it treated with such disregard?

Update (2004-05-12):

Sony is relenting and will officially release the Vaio X505 in the US, albeit for the princely sum of $3000.