Musings on long-term software support and economic incentives

Although I still read a lot, during my college sophomore years my reading habits shifted from novels to more academic works. Indeed, reading dry textbooks and economic papers for classes often kept me from reading anything else substantial. Nowadays, I tend to binge read novels: I won't touch a book for months on end, and suddenly, I'll read 10 novels back to back¹.

At the start of a novel binge, I always follow the same ritual: I take out my e-reader from its storage box, marvel at the fact the battery is still pretty full, turn on the WiFi and check if there are OS updates. And I have to admit, Kobo Inc. (now Rakuten Kobo) has done a stellar job of keeping my e-reader up to date. I've owned this model (a Kobo Aura 1^st generation) for 7 years now and I'm still running the latest version of Kobo's Linux-based OS.

Having recently had trouble updating my Nexus 5 (also manufactured 7 years ago) to Android 10², I asked myself:

Why is my e-reader still getting regular OS updates, while Google stopped issuing security patches for my smartphone four years ago?

To try to answer this, let us turn to economic incentives theory.

Although not the be-all and end-all some think it is³, incentives theory is not a bad tool to analyse this particular problem. Executives at Google most likely followed a very business-centric logic when they decided to drop support for the Nexus 5. Likewise, Rakuten Kobo's decision to continue updating older devices certainly had very little to do with ethics or loyalty to their user base.

So, what are the incentives that keep Kobo updating devices and why are they different than smartphone manufacturers'?

A portrait of the current long-term software support offerings for smartphones and e-readers

Before delving deeper in economic theory, let's talk data. I'll be focusing on 2 brands of e-readers, Amazon's Kindle and Rakuten's Kobo. Although the e-reader market is highly segmented and differs a lot based on geography, Amazon was in 2015 the clear worldwide leader with 53% of the worldwide e-reader sales, followed by Rakuten Kobo at 13%⁴.

On the smartphone side, I'll be differentiating between Apple's iPhones and Android devices, taking Google as the barometer for that ecosystem. As mentioned below, Google is sadly the leader in long-term Android software support.

Rakuten Kobo

According to their website and to this Wikipedia table, the only e-readers Kobo has deprecated are the original Kobo eReader and the Kobo WiFi N289, both released in 2010. This makes their oldest still supported device the Kobo Touch, released in 2011. In my book, that's a pretty good track record. Long-term software support does not seem to be advertised or to be a clear selling point in their marketing.

Amazon

According to their website, Amazon has dropped support for all 8 devices produced before the Kindle Paperwhite 2^nd generation, first sold in 2013. To put things in perspective, the first Kindle came out in 2007, 3 years before Kobo started selling devices. Like Rakuten Kobo, Amazon does not make promises of long-term software support as part of their marketing.

Apple

Apple has a very clear software support policy for all their devices:

Owners of iPhone, iPad, iPod or Mac products may obtain a service and parts from Apple or Apple service providers for five years after the product is no longer sold – or longer, where required by law.

This means in the worst-case scenario of buying an iPhone model just as it is discontinued, one would get a minimum of 5 years of software support.

Android

Google's policy for their Android devices is to provide software support for 3 years after the launch date. If you buy a Pixel device just before the new one launches, you could theoretically only get 2 years of support. In 2018, Google decided OEMs would have to provide security updates for at least 2 years after launch, threatening not to license Google Apps and the Play Store if they didn't comply.

A question of cost structure

From the previous section, we can conclude that in general, e-readers seem to be supported longer than smartphones, and that Apple does a better job than Android OEMs, providing support for about twice as long.

Even Fairphone, who's entire business is to build phones designed to last and to be repaired was not able to keep the Fairphone 1 (2013) updated for more than a couple years and seems to be struggling to keep the Fairphone 2 (2015) running an up to date version of Android.

Anyone who has ever worked in IT will tell you: maintaining software over time is hard work and hard work by specialised workers is expensive. Most commercial electronic devices are sold and developed by for-profit enterprises and software support all comes down to a question of cost structure. If companies like Google or Fairphone are to be expected to provide long-term support for the devices they manufacture, they have to be able to fund their work somehow.

In a perfect world, people would be paying for the cost of said long-term support, as it would likely be cheaper then buying new devices every few years and would certainly be better for the planet. Problem is, manufacturers aren't making them pay for it.

Economists call this type of problem externalities: things that should be part of the cost of a good, but aren't for one a reason or another. A classic example of an externality is pollution. Clearly pollution is bad and leads to horrendous consequences, like climate change. Sane people agree we should drastically cut our greenhouse gas emissions, and yet, we aren't.

Neo-classical economic theory argues the way to fix externalities like pollution is to internalise these costs, in other words, to make people pay for the "real price" of the goods they buy. In the case of climate change and pollution, neo-classical economic theory is plain wrong (spoiler alert: it often is), but this is where band-aids like the carbon tax comes from.

Still, coming back to long-term software support, let's see what would happen if we were to try to internalise software maintenance costs. We can do this multiple ways.

1 - Include the price of software maintenance in the cost of the device

This is the choice Fairphone makes. This might somewhat work out for them since they are a very small company, but it cannot scale for the following reasons:

1. This strategy relies on you giving your money to an enterprise now, and trusting them to "Do the right thing" years later. As the years go by, they will eventually look at their books, see how much ongoing maintenance is costing them, drop support for the device, apologise and move on. That is to say, enterprises have a clear economic incentive to promise long-term support and not deliver. One could argue a company's reputation would suffer from this kind of behaviour. Maybe sometime it does, but most often people forget. Political promises are a great example of this.

2. Enterprises go bankrupt all the time. Even if company X promises 15 years of software support for their devices, if they cease to exist, your device will stop getting updates. The internet is full of stories of IoT devices getting bricked when the parent company goes bankrupt and their servers disappear. This is related to point number 1: to some degree, you have a disincentive to pay for long-term support in advance, as the future is uncertain and there are chances you won't get the support you paid for.

3. Selling your devices at a higher price to cover maintenance costs does not necessarily mean you will make more money overall — raising more money to fund maintenance costs being the goal here. To a certain point, smartphone models are substitute goods and prices higher than market prices will tend to drive consumers to buy cheaper ones. There is thus a disincentive to include the price of software maintenance in the cost of the device.

4. People tend to be bad at rationalising the total cost of ownership over a long period of time. Economists call this phenomenon hyperbolic discounting. In our case, it means people are far more likely to buy a 500$ phone each 3 years than a 1000$ phone each 10 years. Again, this means OEMs have a clear disincentive to include the price of long-term software maintenance in their devices.

Clearly, life is more complex than how I portrayed it: enterprises are not perfect rational agents, altruism exists, not all enterprises aim solely for profit maximisation, etc. Still, in a capitalist economy, enterprises wanting to charge for software maintenance upfront have to overcome these hurdles one way or another if they want to avoid failing.

2 - The subscription model

Another way companies can try to internalise support costs is to rely on a subscription-based revenue model. This has multiple advantages over the previous option, mainly:

1. It does not affect the initial purchase price of the device, making it easier to sell them at a competitive price.

2. It provides a stable source of income, something that is very valuable to enterprises, as it reduces overall risks. This in return creates an incentive to continue providing software support as long as people are paying.

If this model is so interesting from an economic incentives point of view, why isn't any smartphone manufacturer offering that kind of program? The answer is, they are, but not explicitly⁵.

Apple and Google can fund part of their smartphone software support via the 30% cut they take out of their respective app stores. A report from Sensor Tower shows that in 2019, Apple made an estimated US$ 16 billion from the App Store, while Google raked in US$ 9 billion from the Google Play Store. Although the Fortune 500 ranking tells us this respectively is "only" 5.6% and 6.5% of their gross annual revenue for 2019, the profit margins in this category are certainly higher than any of their other products.

This means Google and Apple have an important incentive to keep your device updated for some time: if your device works well and is updated, you are more likely to keep buying apps from their store. When software support for a device stops, there is a risk paying customers will buy a competitor device and leave their ecosystem.

This also explains why OEMs who don't own app stores tend not to provide software support for very long periods of time. Most of them only make money when you buy a new phone. Providing long-term software support thus becomes a disincentive, as it directly reduces their sale revenues.

Same goes for Kindles and Kobos: the longer your device works, the more money they make with their electronic book stores. In my opinion, it's likely Amazon and Rakuten Kobo produce quarterly cost-benefit reports to decide when to drop support for older devices, based on ongoing support costs and the recurring revenues these devices bring in.

Rakuten Kobo is also in a more precarious situation than Amazon is: considering Amazon's very important market share, if your device stops getting new updates, there is a greater chance people will replace their old Kobo with a Kindle. Again, they have an important economic incentive to keep devices running as long as they are profitable.

Can Free Software fix this?

Yes and no. Free Software certainly isn't a magic wand one can wave to make everything better, but does provide major advantages in terms of security, user freedom and sometimes costs. The last piece of the puzzle explaining why Rakuten Kobo's software support is better than Google's is technological choices.

Smartphones are incredibly complex devices and have become the main computing platform of many. Similar to the web, there is a race for features and complexity that tends to create bloat and make older devices slow and painful to use. On the other hand, e-readers are simpler devices built for a single task: display electronic books.

Control over the platform is also a key aspect of the cost structure of providing software updates. Whereas Apple controls both the software and hardware side of iPhones, Android is a sad mess of drivers and SoCs, all providing different levels of support over time⁶.

If you take a look at the platforms the Kindle and Kobo are built on, you'll quickly see they both use Freescale I.MX SoCs. These processors are well known for their excellent upstream support in the Linux kernel and their relative longevity, chips being produced for either 10 or 15 years. This in turn makes updates much easier and less expensive to provide.

So clearly, open architectures, free drivers and open hardware helps tremendously, but aren't enough on their own. One of the lessons we must learn from the (amazing) LineageOS project is how lack of funding hurts everyone.

If there is no one to do the volunteer work required to maintain a version of LOS for your device, it won't be supported. Worse, when purchasing a new device, users cannot know in advance how many years of LOS support they will get. This makes buying new devices a frustrating hit-and-miss experience. If you are lucky, you will get many years of support. Otherwise, you risk your device becoming an expensive insecure paperweight.

So how do we fix this? Anyone with a brain understands throwing away perfectly good devices each 2 years is not sustainable. Government regulations enforcing a minimum support life would be a step in the right direction, but at the end of the day, Capitalism is to blame. Like the aforementioned carbon tax, band-aid solutions can make things somewhat better, but won't fix our current economic system's underlying problems.

For now though, I'll leave fixing the problem of Capitalism to someone else.