My car, a Ford Taurus from 2000, with 120k miles on it, is dying. The check engine light went from a manageable steady golden hue, indicating need of expensive repair, to intermittent blinks which indicate that death is imminent.
Coincidentally, this is also the general state of the American automobile manufacturing industry.
The trade-in value is less than what it would cost to repair, so I’ve decided to buy a new car.
It’s my first time buying a new car, as all the other cars were given to me by relatives as hand-me downs. I’m running up against a familiar nemesis, however, and that is information asymmetry.
That is, the dealers know a hell of a lot more than I do about how this works. For example, I couldn’t figure out why all the local dealers were charging $15k for a car that has an MSRP of $14k. (Turns out that all the cars of that brand go through a wholesaler who adds options.) Also, it’s either an urban legend (or inapplicable with my insurance company) that red cars cost more to ensure than blue ones. But I was misinformed about it until just recently and that artificially limited my options.
Stephen Dubner and Steven Levitt wrote extensively about this in Freakonomics and I’d be happy to quote the relevant passages. I can’t, however, because I don’t trust my current car to make it all the way to Barnes & Noble and back.
What I can take comfort in is that compared to a few years ago, I am at least more informed than I once was, being able to look up MSRP, Invoice price, and average sale price on the Internet. In fact, between Edmunds.com, KBB.com, Caranddriver.com, Yahoo Autos and various auto blogs, I’m probably in a better shape, information wise, than my father when he bought his first car – and Dad was a mechanic as a teenager.
Similarly, enterprise customers who use network service providers need to have visibility into how the services are actually performing. Are they living up to SLAs? Is the service provider having performance problems that are affecting your applications? Without the transparency, there is an information asymmetry and the service provider has an advantage over the customer.
There are several different ways to address this. One, you can keep some amount of network performance monitoring in-house to validate contracted performance. Another route, which is gaining popularity with service providers that are differentiating their services and adding more granular, performance-oriented offerings, is to provide their clients with their own view of network performance.
Either way, sharing data and context between client and service provider removes the asymmetry, building trust for the client and potential new streams of revenue for the provider.
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