Last week owners of the $90 Spotify Car Thing music player received notice that their device would stop working in December. Car Thing was an attempt by the Swedish music streamer to get into hardware. Unfortunately the device, which launched officially in Feb. 2022 was only sold for five months before Spotify pulled the plug on the product and took a $31 million write down.
While Spotify didn’t really give the device much time to find its audience, owners of the Car Thing may not have realized they were now on borrowed time. And that time ran out last week when Spotify sent an email to Car Thing owners telling them that at the end of December their device would stop working. If that wasn’t clear enough, the FAQ provided by Spotify told users asking what they should do with their non-operational device, to reset it and then dispose of it “following local electronic waste guidelines.”
So if you spent $90 on a Car Thing, you will get from 17 to 22 months of use out of the product and then have to perform the minor chore of resetting the device to factory settings and then the major chore of disposing of it responsibly. No wonder so many Car Thing owners are upset. They thought they were buying a device that would last them until it physically broke down. Instead it lasted for as long as Spotfy wanted to pay the ongoing maintenance costs of keeping the product alive.
Consumer Reports calls on Spotify to take responsibility for the premature end of Car Thing. It should issue a refund for buyers of the device and create a program to recycle the device to avoid the addition of more e-waste to our landfills. We also believe the Federal Trade Commission (FTC) should take a close look at the responsibility that connected device companies have to the buyers of their products.
Why does this keep happening?
Any sort of connected product requires some constant investment in engineering talent for software and security updates, and some underlying infrastructure costs. For every Car Thing sold, Spotify had to spend a set amount each month supporting the cloud infrastructure and making sure engineers kept up with new security vulnerabilities or things like Android updates.
This isn’t some sort of surprise for companies that manufacture connected products. We’ve had connected light bulbs, ovens, thermostats and fitness trackers for over a decade. When Spotify was building Car Thing it had a clear understanding that any hardware it sold would not only cost money to manufacture and market, but also to maintain over the physical life of the product.
But consumers, used to buying generations of products that work until something physical fails, are only now becoming more aware of the potential pitfalls of buying a connected device when the company that built it doesn’t want to keep paying those maintenance costs. It’s not just consumers that have a blind spot. Regulators still haven’t figured out how to solve the problem that Car Thing’s premature end represents. The FTC has acted in the past to ensure that companies support both connected devices and digital purchases in the past. For example it investigated Google after the tech firm acquired a smart home company and planned to kill the device that acquired company made. The agency has also called out companies such as MLB Advanced Media and Microsoft for pulling server support for digital purchases.
But it’s becoming clear we need more than a few one-off actions. We need a clear standard for what consumers should expect when they buy a connected device. What kind of behavior should trigger the FTC to take action against a company for selling something under unfair or deceptive practices?
Is it a device or a service?
Are consumers buying a device, which implies that they get to use it until it breaks? Can they resell that device in good conscience? Or are they buying a service, which implies that the value of that product is tied to an ongoing relationship with a provider, and their rights are more limited? Do those rights stop if the company only sold a few thousand devices?
For most consumers, when they buy a connected product they think they’re buying a device, but from an accounting and a business perspective what these companies are really offering is a service. Services have ongoing maintenance costs that a business needs to budget for and build a sustainable business model around. They have contracts that allow for the service to terminate at the will of either the consumer or service provider. Spotify is a service provider with a monthly subscription plan. It is unlikely that it didn’t realize the obligations it was creating when it created the Car Thing.
Consumers and society as a whole have a vested interest in ensuring that companies don’t produce electronic goods that stop working entirely when the maker of that good decides they don’t want to support it. Few consumers would spend $90 on a product knowing it would work for less than two years. None of us want to deal with the e-waste such decommissioned products generate.
Not every company fails consumers
Some companies have managed the process of killing their connected products more adroitly. In April 2023, Amazon decided to stop producing and supporting its Halo fitness tracker and associated Halo products. Amazon notified users of the Halo’s demise, refunded customers who had purchased the Halo in the preceding 12 months, and offered to recycle user’s Halo devices if they wanted to send them in.
Users may have been disappointed but Amazon took steps to ensure they didn’t charge consumers for a physical device that ended up getting cut off like a service. Amazon attempted to take responsibility for mitigating some of the harms caused by turning a functioning product into a hunk of toxin-containing garbage.
Another lesson in killing a connected device doesn’t involve the death of the device at all. Earlier this month, Ecobee, the maker of the first internet connected thermostat decided to stop supporting its first-generation thermostat which was launched in 2008 and stopped being sold in 2013. Users that have the first generation product on their walls would stop getting feature updates and support, but the thermostat would still control a consumers’ HVAC system. Ecobee also said it would offer users discounts on new thermostats to interested customers.
The history of smart devices is littered with products that have stopped working and screwed over consumers, but there are best practices companies that want to kill their products can follow. I think of it as planning for the death of a connected product from the start. With this in mind, here’s how companies need to think about how they design connected devices.
Plan for death from the start
Manufacturers need to set a minimum support time frame at the beginning of each device design cycle. A manufacturer can obviously extend this support time frame should the device be a hit, but by creating a minimum support time frame, the device manufacturer can build a product and understand the ongoing costs of running a connected product for that specific time. With that information the manufacturer can ensure that if a consumer buys a connected product it will at least work for that particular time period, and by placing that information prominently on the package or in the advertising, the manufacturer sets appropriate expectations with the buyer.
The Federal Communication Commission’s (FCC) cyber label program calls for the creation and disclosure of a minimum support period. We have also called on the FTC to support such a period in our comments regarding the right to repair. We have also called on regulators to take action against companies who pull support for connected products well before the end of the reasonably expected lifespan of those products.
When it comes to the hardware design manufacturers should ensure their product has physical buttons and doesn’t rely solely on an app for basic functionality. A product should be able to be disconnected from the internet and keep critical functions operating. Otherwise it is a service, and should be sold as such.
Escrow money, not source code
Manufacturers (and their accounting firms) should consider the upfront and ongoing costs of their hardware design decisions, such as using a security service for your device that requires ongoing monthly payments, or using a service that charges you per unit. They should also plan for their ongoing cloud costs and software design decisions.
Using those estimates, the manufacturer should set aside funding to pay for a small engineering team, the cloud support for the devices that they have sold and any other ongoing costs for a period of at least a year, or however long you have promised your users if there is a disclosed support date. Those funds should be placed in an escrow account, and each quarter the manufacturer should add to it as device sales increase or cloud/employee costs increase. This should be disclosed as a liability on a firm’s balance sheet.
Users often cry out for the manufacturer to place a device’s software code in escrow, but it’s better to have money and a plan to maintain the product because the average consumer isn’t going to download that source code and keep their product running on their own.
Final thoughts for that end-of-life FAQ
Once a manufacturer has made the decision to stop supporting a product, they need to ensure they have a plan to let users delete their data from the device, extract their data from the cloud, and communicate when the manufacturer plans to delete customer data from the cloud.
If the device has already lasted longer than the promised support period, manufacturers should still give users 30 to 180 days before killing the product entirely if possible. If the manufacturer doesn’t plan to support the product after the minimum support time frame, they must proactively notify your users that the product will die at that point. The sooner the better.
If the device can function without internet connectivity, manufacturers should make a plan to provide access to replacement hardware parts if possible and provide that information to consumers. If they can, manufacturers should create a program to allow users to ship their devices back for recycling or drop them off at a participating electronics recycler.
Spotify still has a chance to make the end of Car Thing less unfair for consumers by offering refunds to people who purchased a Car Thing and by creating a program to recycle the device. And more broadly, companies that want to sell connected devices must recognize the responsibility they have to the people buying them. The FTC should step up and ensure that businesses who build connected devices market them and decommission them responsibly.
