The emergence of small, embedded processors is also contributing to a shift away from products and toward higher-margin services, he said. For example, cellphone providers practically give the handsets away and make most of their money on the service they offer.
“The next industry to fall will be the automotive business,” Saffo said.
For example, the Mercedes C-Class sedan has 153 microprocessors and features an optional satellite-based communication system that enables drivers to contact car companies to get map and other driving information, stock updates and help in emergencies.
“It’s not a car, it’s a computer,” Saffo said.
“Soon, they’ll be selling cars at or below cost” because they will be able to make up the difference with service fees.
Interesting… I would love to get a car below cost. I would be game for a few services I’m sure…