Not long ago, staying in Cornwall entailed giving up on most modern forms of communication. This summer, the house we have rented there for the last few years had sprouted broadband. Not very fast broadband, admittedly, but a big improvement on no broadband at all- and it’s just there, no fuss, no charge.
Back in London, my office is just across the road from the site of what was once a grand hotel, which must have had splendid views across to the west front of Westminster Abbey. The building is long gone, but the palest of shadows remains in the form of an advert from a century ago.
There is no charge for electric light, it proudly proclaims, so self-consciously positioning itself on the cutting edge of modernity – and from our enlightened perspective, unwittingly positioning itself on the edge of antiquity. The list of things we don’t expect to pay for in hotels is a long one: typically there isn’t a fresh sheets charge, or a bill for wardrobe access, any more than there is an electric light fee.1
Of course there is an exception to that approach of bundling all the elements of the service together into a single price: internet access. It isn’t just that the price is not bundled together with everything else, it is that it is expensive and unreliable thus prompting pain and rage communicated to the world as soon as network access is restored. But just as lights and baths have become part of the service instead of additions to it, it seems to safe to say that network access will go the same way – or if it doesn’t, it will be because mobile access has become dominant, not because hotels are still charging. So carrying on as they are doesn’t look like a viable strategy – or much like a strategy at all:
I appreciate that providing online access is still a significant revenue stream for many hotels, and no-one is going to voluntarily forsake it without an adequate alternative. But if a source of income is drying up before your eyes (with guests increasingly able to create their own wireless hotspots or go down the road to the competition who are giving it away for free) the imperative to come up with an alternative should surely be more urgent. If hoteliers can actually find anyone still making a living in print publishing they should perhaps ask them for a few tips while they still can.
All of this is, of course, an example of a tendency for products and services to become more integrated and commoditised.2 Years ago, I remember seeing a diagram, probably by Gartner, showing waves of IT commoditisation over time. The argument was that computer hardware had started out as highly specialised and bespoke and thus high margin, before first becoming more standardised and commoditised (and as a result with much lower margins) and then largely vanishing from sight altogether. The same cycle happened a few years later with software, as what was once bespoke increasingly became packaged. And then it happened again with the services which the software supported and with many of the businesses which operated and sold those services. Canny companies tried to ride up the stack as the only way to maintain distinctiveness and thus profits. The example often used to illustrate the process is IBM, which once used to make computers.3
All of that was long before people started talking about clouds, though the basic idea is identical: it is better to buy the service than to have to buy the technology to deliver the service, and that holds true at different levels of abstraction from the underlying technology.
We have had Software as a Service, Security as a Service, Storage as a Service (SaaS is a generically useful abbreviation). Now the shark has been jumped with Anything as a Service and Everything as a Service. But the apotheosis will come when we reach Service as a Service.
Just remember that Edwardian hoteliers were there first.
- The curious fact that hotels almost universally assume that soap and shampoo need to be provided but that everyone always travels with their own toothpaste can be left for exploration on another occasion. But for now we can note that there is neither a shampoo charge nor a toothpaste absence discount. ↩
- Airline tickets are a curious exception to this tendency, with relentless unbundling being a feature initially of low-cost airlines which has spread more widely ↩
- And perhaps the anti-example is Kodak, which failed to stop making film and chemicals, until it failed altogether. ↩