Sunday, February 8, 2009

The Latest Technology

It almost never pays to be the "first on your block" with any new technology. Whether it be a computer, or certain kind of cell phone, a new version of Windows, a new kind of can opener, a new line of cars or anything other "new thing", if you buy it too soon, you may pay too much for a unreliable product. It is much better to drag your feet until the technology stabilizes and proves its value and the price comes down.

A case study: When digital wristwatches first came out in the early 1970s, they were awkward and ugly LED devices selling for $3000. (I remember Bill Bixby using one on the television show The Magician, which was considered chic and James Bondish at the time.) Then they dropped to $1500 a few months later, then $700, and with each price drop, the product actually got better. Today, you can buy one at the 99 cents store, and it's probably more accurate and reliable than that $3000 model was.

That's what happens with all new technology. An additional risk is that if you start investing in an untested "cutting-edge" standard, like Sony Betamax video tapes, the rest of the world may start adopting a different standard (VHS) and leave you in an evolutionary dead-end.

When it comes to electronics, cheap is good! A laptop computer for $500 does almost everything a $2000 model does. Marketers always want to sell you the more expensive one because the profit margin is higher. They can list all sorts of "enhanced features" it has that the cheaper one doesn't, but the practice benefit of those bells and whistles almost never matches the extra cost.

Technological items are essentially perishable, like milk and eggs. If you can't get enough value out them by the expiration date, then don't bother buying them.

There is often some benefit in being a Luddite: one who distrusts technology. If there is a simpler, low-tech way of doing things, you should try it. It just might work and save you a bundle.

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