Hasta La Gadget!

For almost a decade and a half, mobile customers – and Americans in particular – have enjoyed a certain economic perk: phone subsidies from the major carriers. This meant you could, on sign-up, get a very expensive phone for at most a few hundred dollars and, as an incentive to hang around, upgrade that phone every few years. These subsidies seemed as God-given as freedom of speech and apple pie, but they may be on their way out.

I don’t want to stir up fake outrage at this move (and it’s not even a move, just a comment by the AT&T CEO at some conference, but in the Kremlinology of online babbling that’s as good as a contract) but it smacks of perfidy. Said Randall Stephenson:

When you’re growing the business initially, you have to do aggressive device subsidies to get people on the network. But as you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can’t afford to subsidize devices like that.

Instead of allowing you to upgrade your $500 phone for $200, AT&T is already offering cheaper plans to users who don’t upgrade, thereby lengthening the upgrade cycle of phones from the traditional 18 to 24 months. This means you will miss two iPhone versions before AT&T even considers giving you a discount, if that happens at all and it means more BYO handsets.

To be clear, we need to remember that phone subsidies are actually imaginary and that we ultimately pay for our phones in our monthly bills. Subsidies have also held back U.S. customers’ freedom of choice. Europe’s initial refusal to subsidize phones – now most carriers worldwide subsidize – led to a number of service improvements including pre-paid SIM cards, cheaper, simpler handsets, and a number of roaming benefits. There was no reason to lock a phone to a carrier if that phone is crossing borders every few days. However, the U.S. market is monolithic. We rarely roamed and we rarely looked for pre-paid deals.

If there are two things I agree with here it’s that we upgrade our phones far too often and that hardware manufacturers think we are stupid. Stephenson isn’t directly addressing us in his comments is in fact preparing the handset manufacturers. They depend on regular updates to keep making money. Samsung, HTC, LG, and Apple have to release new phones for a number of reasons, primarily to maintain the perception of forward momentum and to please shareholders.

Look at this panoply of Galaxy phones, for example, each destined to be AT&T’s next “free” phone. Just as a shark dies if it stops swimming, phone manufacturers die if they stop selling phones. Therefore phone subsidies are great for manufacturers and, if you think about the incremental differences between iPhone versions, not so great for us. There is plenty of supply and, thanks to subsidies, artificial demand.

This move by AT&T stops that endless circle. But it isn’t fair. Why should the consumer suffer with a bum phone for three years or pay hundreds of dollars on top of an already expensive rate plan? Carriers pay lip service to low prices but if you want their “best” plan you’d best be ready to pay. To force BYO handsets and slow upgrade cycles to this is simply insult added to injury.

Essentially Stephenson is saying that back when AT&T was still trying to get customers, subsidies worked. Now that it has all the customers it could want, subsidies are unfair. What’s really happening? Carriers got into bed with the manufacturers and now they want out. We pay the price.

Today’s big news, courtesy of Quartz, is about the expiration of laser sintering patents that will change the face of 3D printing in 2014. In short, the reason “good” 3D printers – namely the ones that create solid, injection-molded style pieces – aren’t cheap or readily available is that older 3D printing companies have held the laser sintering process hostage. For example, the Form One printer by Form Labs infringes on these patents even though they detail a printer that uses a laser to fuse fine powder to create an object and the Form One uses a liquid.

That’s neither here nor there, however, because these patents will soon encourage a race to bottom in 3D printer quality, mirroring just about major CE device in the past decade. The first tablets got popular and cheap – and manufacturers flooded the market. 3D TV looked like it was the next best thing so everyone made them. Heck, even small form-factor computers had their day a little less than a decade ago. Once a device is deemed popular by the market, the quality quickly falls and the supply rises precipitously.

To be clear, a good 3D printer doesn’t need to cost $5,000 and I would wager it doesn’t even need to cost $2,000. However, once 3D printers hit the $300 mark, watch out. Quality at this price point will disappear and the costs will be centered on materials, driving the cost of ABS and other materials sky high. Think about the cost of 2D printers vs. the cost of their ink and you see where we’re headed.

I want every home in America to own a 3D printer. But, more important, I want every home in America to own a good 3D printer. 3D printers do no one any good if they are wonky, poorly designed, and under-supported. The current crop, Makerbot and Form Labs included, have a real attention to detail that is missing in nearly every aspect of consumer electronics. I doubt they will stay that way when they become popular.

At this point, 3D printing is in its indie infancy – the Pixies before Surfer Rosa, if you will. Once these patents expire the world will be awash in cheap hardware designed to cash in on a fad. It is up to us, then, to be careful with what we buy.

First, I would support open source as much as possible as well as DIY for educational markets. DIY helps the little guy – the guys who sell the parts that can’t be manufactured at home. The goal of many 3D printers was to create a machine that could make itself. This needs to continue to be a focus.

Second, let’s avoid letting the big guys horn in on this market, shall we? Obviously Stratasys bought Makerbot, much to the chagrin of open source advocates, but once Dell, HP, and Vizio get in on the market, there’s no telling what kind of garbage will be peddled at your local Best Buy. 3D printing is a difficult technology that needs to be brought to the general consumer. I don’t think the huge manufacturers are the guys to do it.

3D printing will truly heat up next year. I’m excited. With a little preparation and understanding, however, we can ensure the future will be less like Palm and more like Apple.

When I was growing up, my dad taught me that potassium nitrate, sulphur, and charcoal made gunpowder. He told me that you could add iron to the mix to get a red flame and that acids wouldn’t eat through your test tube. Then he sent me into the basement to make whatever I wanted while he read the paper.

That was, arguably, a long time ago. All that’s changed. As this NY Times story notes, the days of making bombs (mine were unpacked and placed in toilet paper rolls, to be clear, so I wasn’t setting off pipe bombs) are long gone.

“Basically, you have to be able to eat everything in the science kit,” said Jim Becker, president of SmartLab Toys, who recalled learning the names of chemicals from his childhood chemistry set, which contained substances that have long since been banned from toys.

Instead, we must neuter the science our kids are learning and hope against hope that the guys at Mythbusters can keep our kids entertained enough to consider going into STEM subjects. Once we built rocket scientists by giving them an Estes engine and a paper tube. Now you can’t set off a model rocket anywhere in New York unless you own hundreds of acres of unspoiled fields (no one in New York does).

Kids don’t have a chance to play with dangerous things anymore. I try to change that when I can. I got my son the Bandit rubber band gun which we built on the night after Christmas. I took him outside in my parents large back yard to shoot a Red Ryder and go over gun safety. I would, if I could find it, dig out my old chemistry set so all three kids could know the joy of making red fire. I’m encouraging my daughter to dabble in electricity by giving her a Roominate. I want them to break stuff and learn how to put it back together.

I support the right to tinker. I want my kids and yours to build the next rockets to Mars. I want them to see the world as a series of reactions, and I want them to be able to measure those reactions in order to cure disease, crime, and hunger. We have a Makerbot at the house because I think that simply having a thing in the house, that the kids have it somewhere in their minds that they can 3D-print a green plastic skull, is important.

So here’s to the banned chemistry sets and dangerous capacitors. Here’s to the code that formats the C: drive. Here’s to the sharp-edged Lego kits that let you build a robot or moon station or monster. Next year let’s get the kids potassium nitrate, charcoal, and sulphur and teach them how to use them responsibly and intelligently. Here’s to the dangerous toys.

Image of GonKiRin the Dragon.

Remember netbooks? Exactly. Two years ago netbooks could do no wrong. They were the future, a way to get work done on the go on a laptop the size of a paperback book. In the end, manufacturers saw them as a great way to squeeze profit out of a moribund product line.

Sadly, I fear that’s where we’re headed in the tablet market.

For a long time it was a few horse race. Motorola, Apple, and Samsung were pumping out top-of-the-line tablets and selling them at a premium, because that’s what the market could support. However, with the launch of the $199 Kindle Fire, and more recently the Nexus 7, the floodgates will soon open, driving down prices, quality, and value.

Here’s the pattern: a product group becomes popular. Major players make comparatively expensive products with good QA and designs. Early adopters gobble them up, then there’s a brief period of popular adoption. Then everyone who was going to buy a tablet has a tablet. Positions are taken regarding the various advantages of each type. Flame wars are fought.

Then people stop caring.

As evidenced by the mediocre reviews of the Samsung Galaxy 10.1 and the many reports of broken Nexus 7 devices, it’s clear that the tablet segment is losing profitability. Build quality and design dedication are falling and the tablets of yesterday, the tank-like Xoom and the rough and tumble Kindle, are ceding to chintzier, cheaper devices designed to entice bargain buyers. As manufacturers realize they have to hit that magical $199 price point, the quality will fall even further as more corners are cut. This spiral will continue until OEMs start shipping barely upgraded devices for under $200.

Sure, it’s nice to have low-priced options on the market but low price without intrinsic value is bad for the consumer. Resale value, for example, is an excellent indicator of overall demand and no models in recent memory hold their value over a few months. A new Toshiba Excite costs costs $400 while a used one tops out at about $250. Similar price drops can be seen in nearly every other “value” tablet.

I don’t think we’re going to see the death of tablets the way we saw the death of netbooks. Netbooks were so wildly niche that they just couldn’t survive. Tablets, on the other hand, will be with us for a long, long time. The problem is that we’re about to see tablet stagnation and the quality and value will go down exponentially. The danger is that as profits fall, tablet makers will build cheaper and cheaper hardware while maintaining premium prices. We’re not quite there yet, but we’re getting there.

Prognoses like these are tough to take early on in a product life cycle by the tell-tale habits of entrenched products are clearly at work here. Manufacturers can either take a huge hit vs. costs – consider the rumors of a $199 Surface – or drive down costs. The tendency, of course, is just to go cheaper and cheaper until the product is irrelevant.