The infusion of digital connectivity into physical products promises innovation but harbors a critical risk: the degradation of the user experience and the very concept of ownership. According to an analysis in MIT Sloan Management Review source, the phenomenon of 'enshittification'—a term popularized by Cory Doctorow to describe the decay of digital platforms—is now manifesting in the market for smart devices. As companies leverage digital control to unlock new revenue streams, they must carefully navigate the strategic pitfalls that could undermine long-term customer trust and business sustainability.
The Three-Stage Pathway and Its Application to Smart Products
Doctorow's framework for platform decay provides a lens to understand the lifecycle of many smart, connected products.
- The Lure: Attract users with compelling features and convenience, building an installed base with high switching costs.
- Example: Smart home devices offering seamless control and automated routines.
- The Exploit: Monetize the captured user base and data, often by selling to third parties or introducing fees for previously standard features.
- Example: Automakers selling driving behavior data to insurers, locking hardware features like heated seats behind paywalls.
- The Squeeze: Maximize extraction from both users and business partners once they are locked in, leading to a universally worse experience.
- Example: Restricting third-party repairs, charging for essential software updates.
The New Revenue Streams and Their Inherent Business Risks
Digital control enables lucrative subscription models and data monetization, but these come with significant strategic liabilities.
| Risk Factor | Description | Business Impact |
|---|---|---|
| Consumer Backlash | Resistance to 'feature unlock' subscriptions, perceived erosion of ownership. | Erosion of brand trust, reduced customer loyalty. |
| Regulatory Pressure | Growing 'Right to Repair' legislation, tightening data privacy laws (e.g., GDPR). | Increased compliance costs, forced business model alterations. |
| Innovation Distortion | Short-term revenue extraction overshadowing investments in genuine product innovation. | Weakening of sustainable competitive advantage. |
The table highlights that short-term financial gains may come at the expense of long-term brand equity and market position.
Strategic Imperatives for Sustainable Digital Product Leadership
To avoid the enshittification trap and build lasting value, business leaders must pivot their strategy. First, prioritize transparency and choice. Clearly communicate what data is collected and what value a subscription provides. Second, design value-centric subscription models. Move beyond simple feature locks to offer clear ongoing value, such as continuous software upgrades, premium content, or expanded services. Finally, adopt an ecosystem mindset. Consider evolving your product from a closed revenue-extraction tool into an open platform that enables third-party services and innovation, thereby driving growth for the entire market. Ultimately, the success of digitization hinges not on technical implementation alone, but on building enduring consumer trust and partnership.