What is obsolescence?

The concept of obsolescence is used in the field of economics and finance, understood as the reduction of the useful life of a good consumption due to technological advancement or economic change.

This term should not be confused with depreciación, which consists of the physical deterioration of an article as a result of the passage of time. For its part, the meaning of obsolescence is linked to the appearance of products of higher quality, acceptance or lower cost.

Obsolescence is due to several reasons, and all of them with a purely economic background:

  • The impossibility of obtaining adequate spare parts, as can be the case with cars. In this sense, the lack of spare parts is due to an increase in production costs as they are short series.
  • It is also a victim of continuous advances in research and technology, since in a very short period of time, higher quality equipment can be obtained that surpasses the previous ones. This is what happens for example with mobile phones or photography equipment.
  • The appearance of substitute technologies, where the consumer must lean towards an option. One of the best examples of obsolescence may be the case of VHS video systems with the appearance of DVD.

Types of obsolescence

There are several types of obsolescence, which are mainly related to the manufacturer's strategy:

  • Planned obsolescence: at the time of manufacturing an item, the optimal period is analyzed for a product to stop working and require replacement or repair, without the customer losing confidence in the brand.
  • Perceived obsolescence: when a product with a certain aspect is manufactured, and at some point another is sold, practically the same, with some retouching in the design. An example can be some mobile phone models.
  • Speculation obsolescence: it is about putting in the mercado low-quality products with the intention of gaining a foothold in the market later with the introduction of an improved product

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