The Cost of Constantly Upgrading
Technology is constantly evolving and improving. New products become obsolete in a year or less as the latest, best version is released with great media hype. Carrying around the newest gadget may make you the center of attention, but what’s the cost of staying on top of the technology? How much would you save if your current gadget was good enough? What if you held on to your electronics for their entire life span?
According to a study conducted in 2011, Americans change phones every 21.7 months. Reasons for the change vary: most phones have a one-year warranty, and many won’t last for long after that. Others succumb to loss or accidental water damage. The need for a new phone is often the gateway to desiring the newest phone. Many tech-savvy consumers simply want the latest and greatest because the old phone seems suddenly, well, old. Consider the recent release of the iPhone 5, priced at $199 with a two-year contract or $649 without it. Apple released the iPhone 4 in 2010, the iPhone 3G in 2008 and the first iPhone in 2007. Perhaps you’re a Blackberry user, a fan of a brand that’s been producing electronics for those on the go since its first pager in 1996. Samsung, Motorola, Pantech, Sony, whatever your preferred brand, the smartphone market offers as many choices as a supermarket aisle. The double-edged sword of rapidly improving technology is other big-ticket items like televisions or home appliances, once purchased, are expected to last years with minimal maintenance costs. The excitement of the newest technology comes at a price steeper than many realize.
The first iPod is the sliced bread of the music player industry, revolutionary and game-changing. Suppose you purchased the very first iPod in October, 2001 for $400. Suppose you loved the new design released in July, 2002, and bought the second generation iPod with 20 GB of memory for $499. If you continued to upgrade with every new generation in the original style – which came to be known as “classic” with the 6th generation to distinguish from the Nano- choosing the smallest memory option, you would be spending about $300 with each new release. After purchasing the 6th gen in 2007 and keeping it for two years, suppose you bought the 5th generation iPod Nano with 16GB for $179. When you add the costs and factor in inflation over time, you spent about $2609 on iPods alone. Include the cost of music to populate your device, replacing headphones periodically and extras like stands, spare chargers and external speakers, and you really have to face the music about your iPod habit.
The average American reads 11 books per year. For those who would like to carry all their books with them, the e-reader market has options with a variety of features and capabilities, from the $99 Nook Simple Touch to its competitor, the $159 Kindle Fire to the Nook HD+ for $269. E-readers save the environment by saving paper and cutting production costs. Another major factor in purchasing is the convenience of downloading a book wherever Wi-Fi is available. But will it really mean cost savings for consumers? Kindle versions typically cost $5-10 apiece, although prices can range from the many free versions available for download to e-textbooks costing hundreds of dollars. Driving to the library for books is old-fashioned and inconvenient, and who wants to carry around the weight of an actual book? However, a library card is still free, and secondhand book stores abound, often locally owned, which offer used books for dirt cheap.
E-readers also have the advantage of automatic wireless delivery of your newspaper and magazine subscriptions. However, the Kindle’s New York Times subscription received mixed reviews. The monthly cost of six-day subscription is $14 compared to $35 for the tangible paper version, but many users complained of missing content and poor graphics. The Kindle version is not free for print subscribers as many had hoped. College students see hope for reduced textbook prices in Kindle versions as well as saving them back pain by lightening the backpack load. However, electronic versions over paper don’t always mean savings. If you don’t believe, check out Amazon’s highest priced e-books.
The bottom line on upgrading: the lure of new and improved is strong, but it can be a costly habit. Patient customers have the advantage: the price of the previous generation drops when the newest one is released. However, on the Android market, half of all Android phones drop in price by a third after a month. The secondary market is another great tool; those who snap up the latest technology want to shift its older counterpart, often in like new condition. The iPhone 4 that seems outdated to tech-savvy consumers is still well ahead of those still using their original 2005 Motorola Razr – we know you’re out there! “Latest and greatest” is all in your perception and preferences. You’re free to upgrade as often or infrequently as possible, but first consider the financial implications of doing so.