Umbrella-sharing Startup Loses Nearly All of Its 300,000 Umbrellas In a Matter of Weeks (shanghaiist.com) 159
With bike-sharing companies like Mobike becoming incredibly successful in Chinese cities, a few startups have decided to mimic the concept with shareable umbrellas. The only problem: most of the umbrellas have gone missing, reports local media. From a report: Only a few weeks after starting up operations in 11 cities across China, Sharing E Umbrella announced that it had lost almost all of its 300,000 umbrellas. The Shenzhen-based company was launched with a 10 million yuan ($1.5 million) investment. The concept was similar to those that bike-sharing startups have used to (mostly) great success. Customers use an app on their smartphone to pay a 19 yuan deposit fee for an umbrella, which costs just 50 jiao for every half hour of use.
Well, collect on the deposits... (Score:5, Interesting)
You don't lose anything if you keep the deposit... Just buy new ones.. Right?
Seems like a great way to sell umbrellas to me... Here borrow this, but if you don't bring it back I'm going to charge you...
Re:Well, collect on the deposits... (Score:4, Funny)
You don't lose anything if you keep the deposit... Just buy new ones.. Right
TFA says the deposit is half the cost of the umbrella.
Sounds like they need a flashing LED handle that says "Stolen" if the umbrella isn't returned on time, otherwise there's an incentive problem.
Re:Well, collect on the deposits... (Score:5, Insightful)
Too complicated; just make the deposit twice the cost of the umbrella, and the incentive is gone.
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The deposit is twice the cost of the umbrella. It's about $3, which should cover the cost of a cheap umbrella at least four times over, considering they sell for $1 in shops even outside China.
The problem is that umbrellas are too cheap. If they make the deposit any higher people won't use the service out of fear of losing it, but at the same time it's not enough to motivate them to return the item.
Maybe they could be more like a library, with fines if you don't return it and no more books until you do.
Re:Well, collect on the deposits... (Score:5, Insightful)
Then there's no problem. Use the deposits to buy new umbrellas, and you've got yourself a nice little business selling overpriced umbrellas.
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Only if more people keep subscribing to your business than you lose umbrellas. Has the hallmarks of a Ponzi scheme.
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Not really, because you get your deposits up front. You give somebody an umbrella only after they give you enough money to replace it. You give them the deposit back only after they give you the umbrella back, but even in that case you keep the rental fee. Unlike a Ponzi scheme, you don't have any unacknowledged obligations piling up that you can't cover. Now, if you can't get people to rent your umbrellas, you have a problem, just like any business that can't sell its products has a problem. But peopl
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Everybody assumes that these umbrellas disappear while "on rent". I think it's quite safe to assume they disappear while "off rent", as otherwise there wouldn't be an issue with losing umbrellas as they would know who had the missing umbrella in their possession.
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otherwise there wouldn't be an issue with losing umbrellas as they would know who had the missing umbrella in their possession.
Good luck with chasing 300,000 particular people in China, even assuming they all gave their names, addresses, phone numbers, social security numbers etc just to hire an umbrella.
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You don't have to. Just charge the credit card provided with their registration (the same card used to charge the deposit and rental fees).
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The nature of a deposit is that it is compensation to cover loss of or damage to the product. Knowing who rented the bumbershoot is immaterial - keeping their deposit is your only recourse.
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But is it deposit payers that kept the umbrellas? Or other passers-by that just picked one up (mind: no fixed deposit locations, hang them at any convenient roadside railing)?
Re:Well, collect on the deposits... (Score:5, Interesting)
The problem is that umbrellas are too cheap. If they make the deposit any higher people won't use the service out of fear of losing it, but at the same time it's not enough to motivate them to return the item.
This hasn't stopped Redbox in the USA. Redbox doesn't even charge a deposit but they will continue to charge you for 30 days if you don't return it. After that, it's yours.
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How much is 30 days rental? I'm guessing it's more than $2.75, which is what these guys are charging.
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They really should just call it an "umbrella store". Have a "deposit" which is enough to cover the cost of the umbrella. If they return it, no problem. If they keep it, just replace it from the deposit.
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Cheap umbrellas are not likely to survive in the rental market. According to the article, each umbrella cost 60 yuan to replace - three times the deposit.
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The incentive to overpay for umbrellas while buying from your uncle?
This was just a 'short con'. I bet _everybody_ who got paid out, kicked back to the operator. I also bet they haven't paid _any_ bills to anyone not kicking back.
Rent, power, wages, all overdue. Bank in the red. Cops paid off and happy though. Investor is just 'fat of the land'.
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I'd bet that it's not so much explicit theft, but go to someone's house and you may find a closet full of unreturned umbrellas.
A bicycle is something that's easier to leave at the rack when you get to your destination. An umbrella is something you'll typically take all the way to the door. And you might expect to take with you when you leave, but oh, you forgot - it's stopped raining. Kind of like with ball-point pens, only more cumbersome.
Possibly the best solution is to simply make disposable umbrellas. A
Re:Well, collect on the deposits... (Score:5, Insightful)
Umbrellas are cheap and available anywhere, there's no problem with access or cost.
The problem they're trying to solve is that people haven't carried an umbrella with them at the necessary moment.
It would seem to me that rather than banking on people going out of their way to return a cheap item in order to receive a deposit back, less a significant fee, maybe they should be selling umbrellas an offering a small deposit return if the umbrella comes back, similar to soda cans and bottles in the 70s and 80s.
The business model is upside down for low-value goods that people might well just keep instead of walking down the street to return.
Re:Well, collect on the deposits... (Score:4, Insightful)
What do you mean by "offering a small deposit return [...], similar to soda cans and bottles in the 70s and 80s."
This is still true today.
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Depends where you live. Most states don't mandate a deposit.
And bottle deposits go way back before the 70s.
Re: Well, collect on the deposits... (Score:1)
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If you want more than market value, yes.
Aluminum is highly recyclable and the process for refining it it expensive, so it has some value, but it's still low enough that people consider the individual value of a can to be inconsequential.
Glass is even LESS desirable. The most common way to recycle it? Crush it up, and put it somewhere you can, in theory, sell it to someone else. Eventually. And it is burdensome to deal with, even more so than plastic and metal.
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Last I checked, it was just over a penny per can at most recyclers, so yeah, I can understand why someone wouldn't go out of their way and use up valuable time to save a penny. As a percentage of the cost of a can with its contents, I think its inconsequential to nearly everyone.
The only way recycling cans for money makes sense is if you are able to get someone else's cans in bulk for free.
I still recycle my cans for the nebulous idea of not creating waste, but there's not a good economic incentive presen
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Don't they have bums where you live.
Can deposits make me feel all warm inside, every time I litter.
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Beer/soda can can be cut in some simple way and used as a small burner for alcohol fuel.
This should make feel warm?
In my western european country I can recycle them by throwing into a special street trash can for non-glass recyclable shit but there's nothing to be earned.
Beers in glass bottles are a strange affair : you throw them in the glass with everything else. No deposits. Except for Belgian beers, which have a 10c deposit! and that works in a few dedicated beer shops at least. (the other thing that's
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Re:Well, collect on the deposits... (Score:4, Interesting)
Oh, wait, "startup". Maybe not...
Re:Well, collect on the deposits... (Score:4, Interesting)
More likely this is not an issue of people not returning an umbrella they rented, but people taking an umbrella without renting it.
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"everything on the street can now be shared."
Definitely true. So far I've shared with other people two bicycles (bolt cutters), the contents of my wallet (twice), my mobile phone (grab-and-run), and numerous umbrellas (those were mostly my fault).
Sheesh, what did they think would happen with an umbrella-sharing service?
Re: Well, collect on the deposits... (Score:1)
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According to the article, it costs 60 yuan to replace an umbrella, but the deposit is only 19 yuan. But no worries ;-) , they plan to make up for their losses in volume:
but Zhao has not yet given up hope. He reportedly plans to release another 30 million umbrellas by the end of the year.
On a related note, anyone know what 41 x 30,000,000 adds up to?
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<Barney Stinson>Have you met Greed?</Barney Stinson>
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According to the article, it costs 60 yuan to replace an umbrella, but the deposit is only 19 yuan. But no worries ;-) , they plan to make up for their losses in volume:
Google tells me that 60 yuan is $8.82. $8.82 for an umbrella, in China, when you are buying 300,000 of them? That seems to be a bit high. I'm sure I can get 300,000 umbrellas from Alibaba delivered to my home (whole neighbourhood covered by umbrellas :-) for a lot less than that.
Just checked: Yes, I can get 1000 umbrellas to my home for less than 19 Yuan each.
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Yeah.
Except this is an umbrella with a GPS-GSM-Battery combo inside it, I suppose.
Costs a little more.
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I assume much of the cost is getting the umbrella to the rental device.
even so, it seems high, considering they placed the initial 300,000 for 10 million, and they also used that money to develop and place the infrastructure,
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</s>
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You don't lose anything if you keep the deposit... Just buy new ones.. Right?
Seems like a great way to sell umbrellas to me... Here borrow this, but if you don't bring it back I'm going to charge you...
You hope the company was smart enough to charge a deposit. TFA doesn't say.
It does say that they ordered 3million more umbrellas though, so either they like giving away cheap umbrellas, or they are charging a down payment and this isn't the disaster the article makes out.
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Don't know about the article but it was right in the summary: "Customers use an app on their smartphone to pay a 19 yuan deposit fee for an umbrella, which costs just 50 jiao for every half hour of use."
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That's $2.79. Looking on Alibaba that's in the cheap range for an umbrella in China.
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Except the deposit is less than the replacement cost (19 yuan vs 60 yuan). So the indefinite half hour usage fee I guess would have to make up the difference. The internet says 1 yuan = 10 jiao, so I'm not sure if there is a typo and it should be 5 jiao per half hour or if you're paying 5 yuan (50 jiao) per half out. Worst case break even is after 2 days.
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My father once worked at a convenience store (Circle K), where people would run out of gas and ask if they could borrow a 4 gallon gas can. At the time, this made sense - they didn't have a gas can, just walked a mile or two, and needed to get gas back to their car. ... ...
Later, driving in a car with a) gas and b) a gas can, they would neglect to return it.
In the days before debit/credit cards, my father's store had a "deposit" required (in cash) of $10 for the gas can. ZERO gas cans were ever returned.
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In the days before debit/credit cards, my father's store had a "deposit" required (in cash) of $10 for the gas can. ZERO gas cans were ever returned. They also sold gas cans for $10.
Your father was a dumbass. He should have charged $12 deposit. A lot of people would have paid that thinking they'd get the money back. Later on they'd figure that it wasn't worth $2 to drive back and return it.
Result? $10 can sold for $12.
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The smart move would be to not mark a price on the gas cans, at all, and implement uber style 'surge pricing' when people actually needed one. I'd base it on the estimated cost of the customer's shoes...
On the other hand, only 'out of gas' will be buying a gas can at the convenience store. Just mark them $30-$50, depending on neighborhood, no returns if used, 'it's a hazard'.
Similarly, I'd charge someone in a very nice suit more for an umbrella if it was raining.
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also the that $10 may of been cash only and nerve got ringed up so they did not have to do any thing with sales tax.
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Maybe his father:
(1) didn't want to deal with selling a "used" gas can as new if people did return them (potential legality issues, on a practical level have to clean the can pretty well for it not smell used)
He should have kept a couple of cans just for lending. I once worked at an all-night filling station, and that's what we did.
(2) didn't want to deal with customers complaining that "a new can only costs $10"
Then tell them to buy one.
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Same in Germany, they used to give you a can for a small deposit, didn't get them back and stopped doing it altogether now. One time I ran out of gas, I ended up leaving my entire wallet there to make them believe me that I will actually return the can. Another time they didn't even accept that, so I ended up buying a 2,5L bottle of water, emptied it outside and filled it up with gas. And then they had the nerves to tell me I can't actually do that (fortunately after it was too late). Geez.
Now why I'm t
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You either know your plastics, or got lucky. Gasoline melts through a lot of plastics.
You can make neat plastic sculptures that way. Dissolve the right plastic in gasoline, sculpt it into things, let the gas evaporate out.
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I'm pretty sure you've made dumber mistakes in your life, and you seem to be stupid enough to not realize having a full tank of gas isn't always possible for everybody at every time.
But hey, you're showing a great ability there to quickly jump to conclusions without consideration at all. Or were you just looking for an opportunity to say something publicly appealing (to the /. crowd in this case) for the sake of doing so? Talk about requirements for political offices.
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That's kind.
Gas cans are way over priced at any gas station I've been to. Something about, you just walked two miles here, and you don't want to walk ten more to somewhere else.
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Currently, the deposit is 19 yuan and replacing the umbrella cost 60. If you increase the deposit to 60, you may be pricing yourself out of the market. Many of the users are quite poor. And most of them probably don't have a credit card
Yet they have the app on their cell phone.
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To be fair many of them don't have credit cards. My fiance's sister gets paid in cash and doesn't even have a bank account, but she has a mobile phone and can make payments by buying credit for her QQ account in shops and then spending it in apps. Kinda like those Play Store / App Store gift cards you can buy.
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Seems like a great way to sell umbrellas to me... Here borrow this, but if you don't bring it back I'm going to charge you...
The bit that comes after the ... is "1/3rd of the price that it costs me to replace it".
Short-term Rentals (Score:2)
Brilliant marketing to sell umbrellas (Score:2)
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They claim it costs 60 yuan ($US 8.82) to acquire an Umbrella, in China. You can get a 'Rolex' for that kind of money.
They are a bunch of big fat liars, they are buying the Umbrellas from a relative's company, the investor is a chump. This was a 'short con'.
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60 yuan is retail? Cite please...that sure isn't what I see on Alibaba...unless you include shipping, single units to the USA.
But assuming you're not 'full of shit', that proves these clowns are thieves, nobody pays anywhere close to retail when you buy 300,000.
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https://www.alibaba.com/trade/... [alibaba.com]
$1/piece in units of 1000.
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Your chances of turning this into a successful business get lower as your motivation to read TFA article increases.
If you ever get to that point you'll find out they made a 41yuan loss on every stolen umbrella.
Yuan and jiao (Score:5, Informative)
I guess everyone else knows how to convert yuan and jiao , but I didn't. Ten jiao equals one yuan, so 50 jiao equals 5 yuan. The story probably would have made more sense in uniform currency units. The idea is that if you had the umbrella for less than four hours, it was worth returning it.
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The TFA is trying to be smart by converting to jiao. The original post from South China Morning Post [scmp.com] in TFA stated the difference.
In principle, the scheme works by members of the public borrowing umbrellas – from stands located mostly at subway and bus stations – for a deposit of 19 yuan and a fee of 0.50 yuan for every 30 minutes, it said."
Is it 10 jiao is equal to 1 yuan or 100 jiao is equal to 1 yuan?
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Wikipedia says, "One jiao is equal to one-tenth of a yuan or ten fn ()."
https://en.wikipedia.org/wiki/... [wikipedia.org]
China infested with 300,000 GHOST UMBRELLAS (Score:2)
old abandoned umbrellas turn into ghosts
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Wikipedia also sez [wikipedia.org]:
old abandoned umbrellas turn into ghosts
...and then hide behind your dryer with the single socks to haunt you.
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And that is why the system failed.
a) Something that becomes essentially free if I have it for 3 hours is not worth the effort of returning.
b) What if it rains after I return it. A crappy day is often a crappy day, chances are I'll need the umbrella again.
c) Oh look I thought about it too long so it's not worth returning anymore.
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Can I stay ignorant and just get umbrella deposit -to- USD conversion ratio? Bonus points if you google what is jiao for me.
Not a terrible idea (Score:1)
But they need to tweak it. Customers buy the umbrellas on the street using their credit card. Then they can return the umbrellas to some depot (possibly unstaffed?) and get most of the charge refunded.
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Funny quote from the article (Score:5, Funny)
The SCMP reports that Zhao concluded that the safest place for an umbrella would be at the customer's home, where it would be safe and undamaged.
Yeah, apparently the customers agreed.
The moral of the story is... (Score:1)
...share only things which are too big to steal effectively.
Well... (Score:2)
At least they didn't name themselves Umbrella Corps.
oh, NOW you've gone and done it! (Score:2)
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It would have been a lot more interesting had they called themselves the Umbrella Movement, especially if they would be selling yellow umbrellas (honestly I'm not sure if it's nowadays OK again to walk around the mainland with a yellow umbrella).
Isn't that a problem of supply and demand (Score:5, Insightful)
I mean, umbrellas are one of those things where EVERYONE in a certain area needs one or NOBODY needs one. It's not like bikes where I want to go now and you want to go later.
Or, in other words, it's a bit like those time-sharing deals where, oddly, everyone wanted the house during the Summer months and nobody took care of it in Winter.
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Whoever figures out how to position a cottage in walking distance of a beach and a ski-slope will make crazy money though.
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In Dubay, they call that a cottage.
Math failure! (Score:5, Insightful)
All you need to know are two clauses from the article:
1. "Customers ... pay a 19 yuan deposit fee for an umbrella"
2. "Each lost umbrella costs the company 60 yuan to replace"
I think we can safely conclude that the business owner had a good idea, but needed to take just one more economics course.
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Exactly this. People keep talking about how it was a horrible business idea, but it doesn't sound like that to me.
It sounds like it was a good idea, but that they didn't get the pricing model right. Now there may be cases where umbrellas are damaged or stolen that you don't have control over, but most of the time the person who stole the umbrella is the person who you rented it to. In those cases it should be easy enough to make your money back, you just need to price it right. If you're charging a deposit
Actually (Score:2)
bike sharing startups ... a success? (Score:2)
Most bike sharing programs or companies in Europe or the US are publicly funded or publicly subsidized. I'm not aware of any that have made a substantial profit. In China, they have attracted lots of investments, but the financials are at best unclear. So, care to give examples of "successful bike sharing startups"?
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I knew I guy in High School who made a few bucks 'sharing' other people's bikes/car radios. But after his 'state sponsored vacation' the hourly was terrible.
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Umbrella renting schemes aren't the only sharing businesses suffering from problems with theft in China. Last month, shared-bike startup Wukong Bicycles went out of business in Chongqing after nearly all of its bikes were stolen following just six months of operation. Shortly afterward, Beijing-based 3Vbike followed suit.
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From TFA:
"With bike-sharing companies like Mobike becoming incredibly successful"
But they don't seem to be making any profit right now.
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You do realize this won't stop if you keep replying to whoever keeps (successfully) trolling you, right?
Trolling? What trolling? This is a discussion that is worth every half-cent. ;)
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I'm Creimer. I'm replying to myself in order to drum up interest in my humdrum posts.
I don't post AC. I also don't need to "drum up interest" for my comments. I got enough trolls doing that on my behalf. :P
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Can you tell us more about the backpack?
My backpack is the Kensington Contour Computer Backpack [amzn.to]. I got mine for free from Google when I worked there in 2007. After ten years of daily use, I'm ready to replace it with another one.
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Does it look like this after ten years of daily use?
The side that lays against your back is perfect after ten years. The other side had faded from black to olive green from the sun and the bottom edges are flaying out. I don't think the bottom will give out completely but you don't want find out with a $2K work laptop.