Killing the Fax

21 April 2009 at 6:52 am Lasse 5 comments

| Lasse Lien |

I’m in Spain, and I just got a fax. It’s been quite a while since I got one of those (faxes). The experience got me thinking about why the fax network still exists. The technology is clearly inferior to other technologies for any use I can think of, and has been so for quite a while now. Still you will be hard-pressed to find a business address that does not include a fax number. We seem to be in a prisoner’s dilemma situation now. The aggregate benefits are probably smaller than the aggregate costs, but nobody wants to exit first.

In general there seems to be a bias in the literature on network technologies, where a lot of attention has been devoted to bandwagon effects on the adoption side, but little has been said about the exit phase (based on a 5-minute poolside literature review). This could be because the two phases are completely symmetric, with the disincentive to exit early mirroring the disincentive to enter early. If the two phases are not fully symmetric, however, it would be nice to know more about the exit side. Since new network technologies are invading our lives at an accelerating pace (MsN, Facebook, Twitter, etc.), the problem of exit is IMHO as acute as the problem of adoption.

HT: Peter Klein (who adopts them all).

Entry filed under: - Lien -, Innovation, Management Theory, Strategic Management.

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5 Comments Add your own

1. Cliff Grammich | 21 April 2009 at 10:19 am

This is an interesting theoretical point I’m hoping to see others more qualified than I am address, but I’m not sure what the best examples would be. Regarding faxes, I’m not sure the marginal costs of maintaining the network are great or maybe even noticeable. An additional phone line may not cost much (anything?) for most businesses, and fax capabilities may come at little (or no) additional costs on other equipment a business may have to buy.

Even a small “business” that has noticeable costs for a fax line might find other worthwhile uses for it. For example, I still maintain a household fax line for two reasons. First, one of my health plan administrators insists on receiving faxed claims, and not those sent by e-mail or PDF. I’ve no idea why that is, but, with fax in hand, see no reason to fight it. Second, and more important, it gives me a second line, and number, as needed. The most frequent use I make of it may be for parties insisting on having my phone number for what I suspect are no more than telemarketing purposes. I give them the fax number and let them get the hint later.

As for Twitter, etc., what are the costs of simply abandoning it? I’m on the verge of doing so after joining a few weeks ago. Of course, I’ve no more investment in it (so far) than wondering why anybody (i.e., my nine followers) would read my Tweets. Trust me, I’m even less interesting than you might think of a guy speculating on the costs of maintaining possibly obsolete fax networks.

Not sure this is a good example, but I’ll pose another one: exiting the VHS videocassette market? What caused firms (and households) to do this? The superiority of DVDs is one obvious answer, but why abandon that market and not, say, fax networks? Greater recurring investment requirements?
2. Andre Sammartino | 21 April 2009 at 9:19 pm

Could it also be about trigger points to abandon? We kept a VHS recorder until we got a new TV and decided the VHS was taking up valuable plug space relative to other peripherals (i.e. the new Wii). Other friends abandoned their VHS when it broke down and they saw no rationale to buy a replacement.

Perhaps faxes have been retained because they are sturdy or because (as you note) you often get fax capability bundled with useuful technology at no additonal cost?
3. Cliff Grammich | 21 April 2009 at 10:09 pm

The inevitable VHS machine breakdown may indeed be key. I haven’t deliberately replaced a fax(-only) machine in more years than I can remember. By contrast, perhaps I’ve owned a half-dozen players in a quarter-century. A few of these were combination DVD/VHS players that I bought (and can no longer find) only to keep some value in the tapes I still have. Will the ability of other machines (e.g., Wii, Play Station) to play disks (and conserve plug space?) keep DVDs around longer?
4. Marcin | 22 April 2009 at 2:35 am

Actually, fax has one crucial advantage over other technologies, which seems to be the main reason that people (at least in my office) continue to use it: synchronous transmission mechanism.

This means that one knows (on the mechanical level) whether the transmission completed, or if it failed, and an acknowledgment is sent. The same cannot be said of email.
5. Lasse | 22 April 2009 at 5:50 am

In the end all that matters is that the O&M network survives….