obsolescence


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Obsolescence

The circumstance in which a good or service is no longer desired, especially when a new, better good or service becomes available. For example, relatively few people use VHS tapes because DVDs are both more convenient and are higher quality. VHS tapes, then, have undergone obsolescence. Some companies deliberately render their products obsolete because it makes customers more likely to come back and buy new products. See also: Planned obsolescence.

obsolescence

  1. the tendency for products to become outmoded and to reach the end of their effective PRODUCT LIFE CYCLE. Obsolescence may be due to changes in style, fashion, materials used and the functions performed. With rapidly advancing technology and more fickle public tastes, product life cycles are tending to shorten as new, more sophisticated products supersede established products. Firms may respond by frequently updating their existing products in order to lengthen their life cycle. Alternatively, firms may deliberately follow a strategy of ‘planned obsolescence’ by bringing out a continuous stream of new products both to establish COMPETITIVE ADVANTAGE over rival suppliers, and to increase their total sales by inducing customers to replace products more frequently.

    See NEW-PRODUCT DEVELOPMENT, FASHION PRODUCT, PRODUCT STRATEGY.

  2. the reduction in the value of a FIXED ASSET because of a significant change in demand or technology which renders the asset out of date, or comparatively inefficient.

    Renting or LEASING plant, machinery and equipment avoids the risk of obsolescence, since at the end of the rental or lease period a firm may rent or lease a more modern fixed asset.

obsolescence

A loss in value of an improvement because something makes it undesirable or no longer useful,even though it might be structurally sound.

• Functional obsolescence occurs because of factors within a property, such as a poor floor plan or lack of modern amenities. A three-bedroom, one-bathroom house with a one-car garage would generally be considered as suffering from functional obsolescence.

• Economic obsolescence, also called environmental obsolescence and external obsolescence, occurs because of factors outside a property. Examples include construction of an airport near a residential area or a change in highway access leaving a retail area stranded.

References in periodicals archive ?
Building features, such as open space and movable walls, were tried (successfully in some cases) to solve the challenge of functional obsolescence by allowing the function to change without removing the building.
Legislation against obsolescence is not enough on its own; it requires a body that could assist with its implementation and enforcement.
In a traditional brick-and-mortar business that manufactures goods, valuation experts have many tools for measuring external obsolescence.
The present study looks at obsolescence from two perspectives, that of an individual perspective and also of an organizational perspective.
change means that the numbers of drivers of obsolescence are increasing, and companies have to bear that in mind.
has been plagued by unusually rapid obsolescence, resulting in opportunities to obtain reductions in property value in accordance with FMV standards.
Thus, to take the average age of a set of articles as a predictor of obsolescence might be most seriously in error for the more important articles.
To address this challenge, ISMI has launched a new Equipment Obsolescence Forum to help the industry identify and implement ways to locate and replace mission-critical parts.
All electronic and automation components will inevitably reach the EOL status, but how quickly they reach obsolescence can vary considerably.
The last issue on appeal was Guardian's argument that the tax court had erred when deducting external obsolescence from the appraised value to reach the final assessed value of the property.
For the purposes of this discussion, obsolescence is defined as the unavailability of manufactured sub-components leading to production impairment.
The V-22 Obsolescence Management Team officially stood up in June 2004.