iPhone

The bleeding-edge gadget binge will lead to an economic hangover

TR member dcolbert thinks that our current bleeding-edge gadget binge will eventually leave us with an epic economic hangover. What do you think? Does the consumer public need a gadget intervention?

The banking/financial industry and the real estate market have taken a lot of abuse for being at the root of the economic instability in the United States. There's no doubt, when you look at the housing bubble, you can see that billions of dollars in equity simply evaporated over the last decade. But a thought occurred to me when I read a recent article on Gizmodo about the danger of buying Apple products. Instead of accusing the financial, banking, or real estate industries for our current economic morass, I think we should blame Steve Jobs.

Let me elaborate. All my life, growing up, gear-heads and geeks knew one thing was a constant truism. "Never buy bleeding-edge technology." The only people who ever had the latest and greatest PCs on their desks were inevitably the most technology clueless individuals in an organization. In fact, some pointy-haired bosses had more power on their desk than the entire department under them, and they were using all those cycles just to create PowerPoint slide shows and Excel spreadsheets.

The real nerds were still maximizing their 286/ATs when the 386 came out and nursing their 386DX40 along when the 486 was the hottest ticket in town. It was a point of pride to try and get that new game to run on the last generation processor, even though the bare minimum recommendation was the "SX" version of the newest model.

True gadget geeks knew that the premium for bleeding edge was simply not worth the very few things that could actually leverage the increased performance. They also knew that bleeding edge could quickly become expensive paperweights, like RAM-BUS memory during the P4 era.

Crowds wait for iPad at the Apple Store in San Francisco. (Credit: James Martin/CNET)

Really, the Cult of Apple has thrown this conventional wisdom out the window. I realized this when I thought about how long I wanted to pick up a Mac Mini - and when I actually did. I had been using an old G4 800 Mhz Quick Silver for quite awhile. When Google announced that Chrome for Mac would be Intel only, I knew my G4 was near the end of its run.

There was a huge premium on the Mac Mini for what any mini or micro-atx PC could deliver for far less cash. So, I watched and I waited. Eventually, Micro Center - the Midwest's version of Fry's - had a deal on new, last generation, Intel Architecture Mac Minis. It wasn't until the Mini was "obsolete" by Mac standards that it made any economic sense for me to buy it.

Somewhere around that time, the world went nuts. I've been thinking about this, and when I was younger, the gadgets of the status-conscious were pagers and cell phones. With the arrival of pay-as-you go plans at WalMart, a regular cell phone became about as prestigious as driving a rust-eaten late model domestic automobile. And for awhile, among the corporate elite, Palm Pilots and PDAs had a certain "C-Level Status Symbol" quality. But in general, there has been a vacuum in the easily-flashed status-symbol gadget for the idle rich.

The rise of the smartphone - and especially the iPhone - revolutionized this space. Now, clearly, the iPhone has lost almost all of the exclusive cachet it once enjoyed. But along the way, the luster of the iPhone rubbed off on almost anything with that bitten fruit logo. People are not content to have just any version of an Apple product. They wait in anticipation roughly every 18 months to find out how the latest and greatest Apple product makes their formerly top-tier Apple product about as interesting as soggy cardboard.

Every article I've read on why you shouldn't buy an Apple product right now has had a singular focus, "If you buy now, something new will come out soon, and you'll regret not having that." The soon-to-be-released iPad 2 will have an A5 processor, a built-in gyroscope, plus front and back-facing cameras. Furthermore, the value of the original iPad has decreased by $100. Doctors, lawyers, and other successful professionals across the world will shudder to imagine pulling out a last generation Apple device in front of clients or friends.

Line for iPad at London's Westfield shopping centre. (Photo credit: Karen Friar)

I can't think of any other time in the history of the "PC revolution" when so many people were so eager to be on the rapidly depreciating breaking edge of the technology wave. The amount of personal equity that must have disappeared in the last few years on technology might just make the housing bubble's burst look trivial.

Buying a bleeding-edge Apple product like a MacBook Air is roughly the same as buying a less expensive but equally capable device from Acer, then taking a few hundred dollar bills and lighting yourself a Swisher Sweet using the cash as a match. There are tons of people doing this, and they're doing it over and over again, every time something new comes out that they must have.

When netbooks were the must-have gadget, I waited until I was able to trade an old IBM Server and an iPaq PDA for a $199 Eee PC 701. The value proposition just didn't make sense to me. But since then, I've been caught up in the same hysteria as the rest of the world. When the iPad came out, I caught the tablet bug and couldn't wait. I have mixed emotions, because I've gotten good mileage out of the iPad, but it was a lot of money and the depreciation, if I sold it today, would be a significant percentage of the original price.

Apple enjoyed an entire year of being the only show in town, but I think that Android tablets will help make the tablet PC more of a commodity and less of a status symbol. $800 for a Xoom or $500 for a Galaxy isn't going to work, and I'm not interested in subsidized pricing through required wireless contracts either. Inexpensive Android tablets mean that almost anybody can have a relatively "iPad-like" experience - well, except for the gaping hole in their bank account.

Line for the iPad wraps around the Apple Store in Shanghai, China. (Photo credit: Apple)

I just can't figure out how we got to this point. I've grown cynical about the collective intelligence of the consumer public. I won't be shocked if there are lines wrapping around the Apple store when the iPad 2 hits the streets, even though many of those people will have barely put any wear on their original iPad.

My comments about lost equity are only party sarcastic. I really think that we're on a gadget binge that's eventually going to leave us with an epic economic hangover. I wonder how many people are destroying their future personal equity to keep up with the latest and greatest gadgets today. Maybe what we need is a gadget intervention - just put the Atrix down, step away from the Xoom, and put the Kinect out of your mind.

Let me know what you think in the forums. Am I right? Have we completely lost touch with reasonable upgrade cycles, or is our gadget addiction mostly harmless in the long run?

About

Donovan Colbert has over 16 years of experience in the IT Industry. He's worked in help-desk, enterprise software support, systems administration and engineering, IT management, and is a regular contributor for TechRepublic. Currently, his profession...

50 comments
myangeldust
myangeldust

If folks want to buy the latest and soon-to-be-not-so-greatest gadget it's fine. It helps circulate currency and probably keeps beer out of the hands of texting iTeens. The real problem is that the devices are not made to be easily recycled. That's the real issue - trash. My contributions to the landfill: a $1300 '94 CD burner, Iomega Zip drive, handheld serial OCR scanner, a Sony Mini-Disc recorder and Hi-8 camcorder... and so on. What's a Mini-Disc? Uh, for a ROTF laugh check out the prices on the Apple Store's refurbished section. It's funny/sad.

sainikbiswas
sainikbiswas

Well this problem is not faced only by Apple products, but every other tech products. But I think the root of all this problems is becuase of the software. Ultimately it is because we want the lastest applications that is why we upgrade. Hardware manufacturers just use this to sell the crappy hardware

bclomptwihm
bclomptwihm

This is just part of the normal cylces of history. There's one that runs every 80 years or so and another really big one that runs every 500 years or so. Massive innovation, market saturation and economic bubbles, then a big financial crash. This is a meeting of the 80 and 500 year cycles so after all this spectacular innovation the crash over the next few years will also be spectacular. Look at the 80 year cycles. This 80 (and 500) year cycle is fed by electronics of all types - cell phones, computers, TV Satellites. 80 years ago the massive game changing innovation was the automobile. 160 years ago it was the train and westward expansion. 500 years ago the huge game changers were big ships with tall masts, gunpowder based weapons, and the printing press. Wonder what will be the big thing 500 years from now?

VytautasB
VytautasB

This is addictive behavior and shows that something is lacking or incomplete in the lives of the users of these devices. One can only speculate on the effect this behaviour has on people relationships.

ScarF
ScarF

Out of numerous other examples, just one: the internal storage capacity. You may decide from three models: 16, 32 and 64 GB. 16 GB is ridiculously small for storing multimedia, but it's the cheapest. 64 GB is not much either, and more expensive. Plus - the "beauty" of iPad's design - the internal storage cannot be upgraded. And, the portability factor goes down the drain since one needs to carry a lot of ???dongles" for connecting the toy to USB or using a SD card reader. Other examples of the short-term mentality design: no USB port, no SD card reader, the user cannot replace the battery, no Flash compatibility, the closed iTunes environment. Plus, a short-term minded consumer doesn't really care about how deep his debt is. I know numerous guys - with their cards to the upper limit - paying monthly interests only. So, Donovan, you are correct in what you say, but Apple is relying its market strategy on short-term-minded-Borg-like individuals. And, before the dotcoms or real estate or big finances or alangreespan or oil companies or stevejobs to be guilty of the present economic nightmares it is "THEY" - who are ready to buy anything overpriced and underused. They, the ostriches swallowing any shiny garbage.

jhinkle
jhinkle

I see this as a two part problem 1) People are attracted to the latest and greatest shiny toy. They don't realize that they're barely using the technology they have. To them it's a matter of being able to accomplish a little faster on a slightly bigger screen. Try and tell most people this and they'll think you're just being "a hater" (which apparently makes them famous?). 2) Technology has matured to a point where you really can squeeze good life out of your equipment without getting left behind. The companies that manufacture the equipment don't like this idea, so they continue to kick out product cycles for new equipment when there is nothing wrong with the current lineup. I understand that companies need to make money, but I think they could find better ways to cash in on what's in existence over making something slightly better and making support of old equipment so hard you have to upgrade.

wizard57m-cnet
wizard57m-cnet

those darned data connect plans! The actual cost of the gadget is not that much... but the voice/data/messaging plans represent at least a 2 year drain on your finances. Plus the carriers are wanting more, as in higher prices and/or caps on the amount of data users are allotted. Makes a person wonder what we're coming to...as I write this from an old Dell Dimension 2400 I rebuilt, hehe! But hey, it's "newer" than my Pentium 166 I fire up at times!

Jaqui
Jaqui

cause I have yet to buy any of these "must have" gadgets. :D I don't even have an mp3 player, never mind the "ipod" of any version. and as far as these so called smart phones, well the I in ipad, ipod, imac, iphone stands for IDIOT. since only an IDIOT would want that many distractions from what they are doing. [ work, DRIVING etc. ] I love watching people spend themselves into bankruptcy though, laughing to myself at the idiocy of a "credit society" and how they are going to screw their loved ones over royally because of their debt load. I fully expect that death with not end debts soon enough, that your heirs will be forced to assume your debts. after all, the financial industry can't afford to lose what they lend to us, or the won't be able to afford to lend it to the government. Guarantee that the government will make sure financial laws require we pay the debts off, even after death when the financial industry pulls that card out and puts it on the table.

dogknees
dogknees

How is this not the responsibility of each individual consumer? Yes, there may be (probably is) a downside. Just like any other consequence of any other action people take, it's the individual accepts responsibility for their actions. If they make dumb choices, then bad things will happen. Not only to them, but to others. Just because most people never even consider the outcomes resulting from their actions doesn't remove their personal responsibility for those results. Blaming the vendor is just trying to escape your own accountability. The way you spend your money affects others and you cannot escape your personal liability for those outcomes.

AutoXr
AutoXr

This doesn't seem different than any other pop culture item on the market today; something that creates a buying frenzy by the [usually] uninformed consumer to attain a level of perceived status. Think about the shiny new sports car, clothes du jour, pop music, wacky Christmas gifts, etc.

tbostwick
tbostwick

I'm sometimes impressed, but moreoften confused by articles like this that Tech Republic puts out. Is this article stating the Apple IS bleeding edge technology? and everything else is not (Droid, Windows, M$, Linux, Intel, AMD, ATI, etc..) Hold up - wait, are we only talking Apple and iPhone, or can we add iPod, or iPad to the discussion too? There's a simple way to approach what Apple is doing and who cares whether or not it's proprietary. You're either on the side that is a "user/consumer" of Apple - whether it be iPod, iPhone, iPad - or if you're lucky enough, all three devices. You don't care what the operating system is or worry about loading some "New driver" when you hook you're shiny new DSLR into the machine, or fret and stew over whether to buy ESET A/V or Norton 360, then have to move onto AntiSpyware. You can plug a camera, printer, scanner, card, dvr or anything else into the Mac and it simply works - and you've already moved onto showing and sharing that data with whom you like. The machine will last you forever and it'll provide you with a bluescreen or blackscreen or whatever - and WOW and other games play quite nicely on them BTW> The other side: you're a "non-consumer" of anything Apple, particularly PC or laptops they produce. You're on your 2nd or 3rd HP laptop in the last 5 years that you bought at BestBuy and Newegg- and you've already gone through THREE entirely new operating system chagess that dynamically made you shift how, where and what cost you do things on a PC. Some of you may have (myself included) left the "pre-built" world of PC's and have built your own monster, perhaps even modded it out a bit. You still have occasional issues with 64-bit applications and trouble when Windows decides to throw a curveball (regular patches) your way on random Tuesdays. Good thing that also pairs with the downtime you see on WOW - you only lose one day during the week. This discussion is much like the automotive reviews of Consumers Reports - and those of pundits will always tout the newest, latest and greatest feature (OnStar) and you point to your shining examples : Chevy (Dell) , Buick (HP) Cadillac (Alienware) or Chrysler/Ford(Sony/Acer/etc...) models - but when stacked up against the foreign models (Apple) there is no comparison. That BMW whacks away without missing a step and never stops running. I guess we can ignore all the GREAT things people who actually use an Apple for, really say about them. They work out of the box, are as intuitive as hell (as close to Unix as we'll get) and are fun to use. SO WHAT if it's proprietary (elbow to Gates and M$) - it runs and oh, support - rocks anything out of the water when it comes to calling someone to get you out of a jam. In the everyday world of computing -there is nothing a PC can do better than an APPLE - out of the box, except for cost - which is easily made up for not having to put A/V, AntiSpy, software firewall and a bevy of other "essentials" to help keep your PC clean. I'll buy and continue to buy Apple because it makes sense, works out of the box, and is "quality" from top to bottom (design to use)- which is something our US consumer market seems to have long forgotten before we moved to China.

unconditionalliving
unconditionalliving

I've been commenting for months here and on other sites that I felt people had lost focus of any sort of decision making logic in the way they were purchasing both smart phones and tablets. And the "news sites" haven't helped much, all but failing to cover cost effective alternatives that I've consistently found out about in places like the bus ride home. I do and always have loved tech toys, going back into their early days. But what we've been seeing lately is a kind of addiction, where folks spend money hoping to feel better, denying anything that might suggest that there are better ways to get a better bang for a lot less bucks. I'm glad to see this point of view finally arising from the tech sites themselves and not just those of us leaving comments.

Dknopp
Dknopp

Spending ~2500.00 ( macbook air, iphone, ipad ) every 3 to 5 years is not going to drag down anyones equity/savings. And I am sorry but every geek I know bought a new 286, 386, 486 the year it came out. The "wait for technology to burn in" really applies more to software then hardware

senigma
senigma

I agree with the premise but the behavior is not going to change. As far as Apple goes, and don't think that Apple can sustain their position forever. They have been brilliant at marketing however their perceived value is only a new technology/design/innovation away from relegating them to being just another player. Another factor is that consumers are fickle. There is already a growing discontent with the unrelenting control that Apple maintains on it's products and it does and will affect consumer choice. All that said, if it wasn't Apple, then it would be someone/something, some other "Oooh bright, shiney!" toy that would be grabbing the public imagination.

etalbert
etalbert

Your basic premise is right on, but gadgets are in the hundreds of dollars, not hundred thousand of dollars. Doubt the gadget craze can have the same impact on our economic struggles as a nation.

richord
richord

Come on. Apple at the heart of the demise of American culture. and civilization? Most of what we buy is novelties so whats wrong with an IPhone, IPad, Mini Mac,Ipatch etc. The economic morass was caused by collective stupidity and greed. The "collective intelligence of the consumer public" wouldn't fill a thimble. My IPad keeps me entertained. Without it I would have to seriously think about the stupidity of crowds and worry about how much money Wall Street is raking in while people are unemployed. What will we spend our money on; mortgages? Leave us with our collective stupidity since its the only thing left! Also, the products themselves are commodities but so are the consumers. We are nothing more than a bunch of bits of data that Apple, Amazon, Facebook, Twitter and Google can exploit, selling us things we dont need. But thats progress and the American way.

DSG7
DSG7

I don't mind about people indulging in what can amount to wasting their money on tech that will rapidly depreciate in value; its not my money, therefore I have no right to determine how it is spent. What worries me more is how the consumer mentality is invading corporate IT, and the negative effect on consistent, company-wide, unit purchasing/leasing/upgrading/replacement strategies, which are designed to reduce IT support and management headaches and optimise costs and allocation of unit resources where required over a period of time. Where I work, management access their emails on a gaming rig and have their employees working with nursed-back-to-health machines; there are 8 types of computer and 3 types of smartphone (there are between 20-25 computers across the business and 8 smartphone users); purchases are done on a "need a new PC? pop along to the shops" basis - regardless of whether something in-house could suffice, or be upgraded to a similar spec for the fraction of the cost. When the consumer mentality gets into the workplace, it ain't pretty, and one decision for a "gadget" is less imposing than one decision for a "business tool", since a "gadget", to me, is something to toy with, not make a living with, so shouldn't be subject to the same thought process.

geraldken
geraldken

I have an IPhone & an iPad, but I didn't pay for them and wouldn't have paid for them. Like yourself I continue to be mystified and somewhat dismayed by our current "keeping up with the Joneses" gadget fetish. I love my iPad, but the idea of buying a new one when my current one isn't even four months old is absolutely ludicrous.

DadsPad
DadsPad

You'v finally woken up!! :)

daboochmeister
daboochmeister

This is going to sound holier-than-thou, and I don't mean it to ... but at times, I really wonder at the cost to society at large (globally) of such excess. I know it's not as simple as "don't buy expensive", because there are 2nd and 3rd order effects economically ... but sometimes, reading these forums, part of me wants to just scream at some people, to just live with what you have and send some of the $$ not spent to feed some dying kids somewhere. I say that fully acknowledging it's a slippery slope ... could I give more? Yes. Do we really really need FIOS? Well, i need internet connectivity, but could get by without the TV part. So ultimately, it IS a personal balance of some sort ... but i just feel like so many come up with excuses why they need the next/newest/gadgetiest, without any balanced consideration of others. Oh well, I probably came off as holier than thou. Sorry, if so.

trsnell
trsnell

My concern is with the demands on my helpdesk staff to support the overwhelming influx of personally-owned gadgets into our business environment - iPhones, IPads, Android devices. We're a BES shop and "officially" only support company-owned BBs, but by simply giving out email connect information, we've created this dependence of staff for support of their "unsanctioned" devices. Try to be nice - that and 1.25 will get you a cup of Tim Horton's coffee. We've snubbed the iPad, for now...

dcolbert
dcolbert

That history outlines whatever is going to happen now. I invoke it all the time in looking at how the current mobile OS platforms will shake down over the next 10 to 20 years. We're in the 8 bit era of personal devices/mobile platforms, maybe starting to transition into the 16 bit era.... (although maybe not. What we're getting really seems more or less - more of the same, just better - not revolutionary more powerful yet). If you look at history, then Android seems like this era's DOS to me. It runs on all kinds of machines (including the iOS ones and cheap, no-brand Chinese imports). But there are flaws with that analogy. It is similar, but not exactly the same. Your analogy seems even less applicable. Not completely dismissable. In fact, I think it is a very interesting and appropriate observation. But things have changed this time. The speed of innovation, the volume of distribution and consumption, even the accessibility of cost. Ford made the automobile available to almost EVERYONE. I get that. But the automobile was never so inexpensive that you bought one for *every* member of the family, including the pre-teens. There are probably cycles of innovation and consumer adoption that do apply - but there is also an evolution of the entire process, a refinement, a constant growth of the sophistication and methods driving the entire show. Observing history is certainly important. Eventually those tall-masted ships armed with gunpowder based canons caused tremendous political and financial upheavel that changed the face of the Earth. Great empires rose and fell, new ones took their place, entire economies changed, and the world spiraled into two world wars that unleashed forces on the planet the likes of which had never been seen before. What hurricanes of change might the butterfly wings of the artificial gadget lifecycle model set off in our own lifetimes? That is what I'm worried about. There are deep personal concerns at the root of this blog. They're not articulated directly, but they're right there under the surface.

dcolbert
dcolbert

I'm not. Read the article again. I'm illustrating what the companies are doing, and I'm saying I think it is indicitive of an appalling lack of corporate ethics. But I'm *blaming* the collective consumer. In the article, and in every response. We're too blame. It wouldn't work if we were smart enough to see through it and put our foot down and say, "we won't fall for this". I agree completely. Although a lot of the features you note are missing from Apple products are about exerting a *different* kind of control over consumers. At the very least, it becomes a chicken-or-the-egg argument. Does Apple not include SD and USB because it gives them more device over how the device is *used* and what can be *done* on it by the consumer, or do they do it to encourage artificial life cycles, or maybe a little bit of both? It is a win/win for Apple and a lose/lose for the consumer in any case, for sure. Apple's batteries are amazing things. I bought an iPod Classic 80GB when it was the top of the line iPod that had just released, 5 years ago, maybe 6? Last summer I "lost" it in my convertible. I thought it had been stolen. I looked and looked for it. I didn't find it until I was cleaning the convertible for winter storage. The battery was still at 70 percent after probably 6 weeks in standby mode on a 4.5 year old device. I'm not worried about the device not having a "user replacable" battery in that use case. I've recently accused my iPad of having far less standby time since the iPad 2 was announced. It was erie how the decrease in standby time coincided with the release announcement. Last night, I found that when I turned it on YouTube was open to a Starfy video. I suspect my daughter is the culprit in the decreased battery life on "standby" on my iPad, now. Her iPod touch introduced her to this past-time, and then she realized YouTube looks so much better on the 10" screen of Daddy's iPad. *sigh*... In any case, with my daughter streaming video every time my back is turned, when I turn my iPad on it is still always between 15 and 35% of capacity... which translates into hours of run-time. You only need user replacable batteries on devices with lousy batteries.

dcolbert
dcolbert

I just recently gave 20 old PII and earlier machines that had been wasting away in my basement to a recycling company. :) The data plan was implicit. Subscription services are absolutely part of the problem. $130 for a cable package with a premium channel or two, including high speed internet and maybe VoIP phone service. $120 a month or more for the typical family Cell phone bill with smart phones and a data plan. A gadget with a 3G wireless contract... your tablet or a MiFi. Add another $40-$60 to your monthly cell bill. Subscription services so that you can enjoy all that broadband goodness... Amazon Prime or NetFlix and others... All of this bleeding out of your income as monthly, reoccuring expenses along with the actual necessities. The thing that blows me away is that I've got pretty good income and my wife's is even better, and we still occasionally struggle with all the demands that modern society places on keeping current with the Jonses. The fact that everyone else seems to be playing the same gadget craze game is what frightens me. I can't help but think of the parable of the grasshopper and the ant throughout this discussion. Whole lot of people following the example of the grasshopper, out there.

dcolbert
dcolbert

And she was arguing that she wasn't really part of this problem - and that she was going to stay with her current phone even after her "New Every Two" is available. She made some points, but she missed the larger point. She is holding herself out as a Luddite who hasn't caught this gadget crazed wave - but she has had a RAZR, a Blackberry Pearl, and a Droid. If that is what the gadget history looks like of a person who *isn't* part of the gadget hysteria, I think my point is proven. On the other hand, she pointed out that the Droid 2 doesn't leave her "wanting". She isn't seeing anything on the upgrade horizon that makes her go, "I wish my phone could do THAT". On the other hand, the lack of an easy upgrade path that moves settings and apps is a huge liability to upgrading from her perspective. She said, "I just spent the last 6 months getting this phone customized to just where I want it. Getting a new one means starting all over. I think I'll just sit tight".

dcolbert
dcolbert

Is an HP DV8003US. PATA drives, not SATA. Intel Centrino Duo, GeForce 7600 GPU, 17" multimedia laptop PC. It is a trooper. I bought it at least a year before I moved from California. I've yet to find myself thinking it is time to upgrade it. It must be 5 years old now. This idea that Apple products are somehow "superior" when they're made from the exact same components is always amusing to me. Your Mac... is a PC. As far as thinking this article was about APPLE devices - You completely missed the point.

dcolbert
dcolbert

I agree - but I don't think it USED to be this way. Honestly, if I can trace it back to a genesis, it seems like the New Every Two Cell Phone plan is what really set this mentality in motion. When I bought my first Cell Phone, it was $800... and I figured I'd have it for at least 5 years. It seems like now we've gotten to a place where we buy an $800 tablet PC and hope to get 11 months of use out of it before we buy the next one. Maybe I'm just getting old and grumpy.

dcolbert
dcolbert

Exaggeration and hyperbole are my gig - so, bear with me (you should see the hijynxs that ensue when I direct these gifts toward the Linux community!) But there are only so many people buying $500,000 plus houses - and that is where the GREAT equity loss in America occurred in the real-estate bubble - at that point and above. Trust me, I saw a number with 5 zeros behind it disappear from my personal wealth over the last decade, and the same thing happened to a LOT of people I know. Lots of people are trying to *get* to that first number with five zeros after it in their own personal economic goals. Keep in mind, if you got in BEFORE the bubble, then sure, you could have lost hundreds of thousands on PAPER, but you never really had it and never really lost it. The people who are hurt the worst are the ones who got into houses between say, $400k and $1.2 Million at the height of the bubble, and now those houses are worth hundreds of thousands LESS than what they paid. Above that level and you've got two things... super-affluent homes didn't get hurt as bad, and the super affluent are generally paying CASH... it isn't a mortgage hanging over their head after the bubble crashed that represents ALL of their wealth. People that level, and there wasn't that far to fall. You might be $50,000 upside down on your mortgage, but that sure beats being $300,000 upside down when you could buy 3 houses JUST LIKE YOURS for that kind of money, today. So the whole housing thing, kinda hard to qualify. Where the housing bubble hit, it hit with graphic intensity. But how much of the market was EVER for $400k McMansions even at the height of the bubble? I don't know, to be honest... And not everyone was buying homes. But gadgets are death by a million cuts. Little, tiny, seemingly affordable chunks of your personal wealth siphoned off here and there, every two years or so, times... *EVERYONE*. Your mom has a smart-phone. Your Sunday School Teacher has a smart-phone. Every 9 year old kid in her class pulls out an iPod Touch, or any of 3 generations of Nintendo handheld when it is "Free Play Time". And in 18 months, they'll all be upgrading to the NEXT batch of must-have gadgets and generally throwing the LAST generation in a desk drawer or the basement. I assure you there are suburbs all over America that have iOS devices going all the way back to the 1st Gen iPod collecting dust in teenaged girl's rooms - as they head off to college with their Verizon iPhone in hand. I mentioned last summer that I got into a conversation at a Country General Store with the guy behind the counter about the Droid 2. I pointed out the irony that in the past, in rural country stores, the locals always regarded my "gadget culture" with suspicion. Now they know as much as I do about the devices. It has truly become ubiquitous. I wonder if I might be surprised to find out I am NOT exaggerating, that this isn't just my typical hyperbole. When you add it all up, the billions of dollars spent on plastic objects that end up sitting worthless in desk-drawers by EVERYONE - could it represent more lost potential equity than the wealth that dissolved when the housing bubble burst? I dunno. Wired keeps running stories about how owning things is for the birds, and how this younger generation is going to get-over by renting for life and never owning anything. Owning things that appreciate or retain their value or purpose isn't for the birds, it is part of building a future. It seems to me the generation between about 15-30 right now is spending all their money on diversions. Lots of 20-somethings in dead-end jobs with 42" TVs in the living room of their apartment, with a PS3, Xbox and Wii hooked up to it, a surround sound system, and an iPod Touch and PSP on the coffee table. Lots of *expensive* gadgets that are going to be worthless in 5 years. And they're doing it as a cycle - wash-rinse-repeat. It seems like a BAD fiscal policy for the long run.

Neon Samurai
Neon Samurai

It may balance out. With a house, it's hundred's of thousands of dollars but far fiewer buying homes. With a gadget, it's hundred's of dollars but you them being baught in the thousands not tens or hundreds. I'm really not sure how it actually balances out but it doesn't seem nearly as far off from each other.

Neon Samurai
Neon Samurai

That bit was golden and perfectly exlpains an ongoing situation among the public; needing things that help them avoid thinking; blinky light gadgets, dumbed down television, simplified news. whatever it takes to eliviate the horrid trials and tribulations of an indavidual thinking for themselves or thinking about things deeper than last night's episode of American Idol. (now.. where did I set down my TV-B-Gone?)

dcolbert
dcolbert

I saw Anthony Bourdain on TV last night in Haiti. They were at a street vendor's roadside restaurant. Business was very slow because of the earth-quake. Meanwhile, tons of young men were hanging out, staring, not at the cameras and TV stars, but at the food. Anthony talked to his producer, and they told the vendor that they would buy out her entire kitchen's supply, to feed the kids. It turned into a riot. Not the good, Ozzy Osbourne kind of riot. I saw it coming as *soon* as he began to suggest the idea on the show. My wife called me a cynical bastard. Then the riot broke out. People are rotten. In most of the places where kids are dying, it is local corruption, greed and indifference that causes the problem. Life is a roll of the dice. You can get born into a place with abundant natural resources and material wealth, or you can get born into a place that is a cesspool and a backwater. My real point, though, is there are unintended consequences when you try to upset the natural order of things by giving into your "liberal guilt". It very rarely turns out as happy as you had hoped it would. I'm not advocating indifference, I'm just saying suggestions like these sound great on the surface, but they might not work out as wonderful as you had envisioned. A bigger concern that I frequently consider is the amount of waste involved in the artificial life-cycle that is developing around consumer electronics. In the 70s and through the 90s, it was a relatively niche market, and the upgrade cycles were for real. It started off relatively slow. You probably got a few good years out of that first Atari 400, 800 or Apple IIe. But everything shifted into overdrive with the 16 bit era, and before your Amiga even got off the ground, the first Pentium 120Mhz machines were rolling into homes. Another blink of the eye and we were past 1Ghz. But shortly after that, we started to hit the wall. Now, granted, today's i5 or i7 is hardly comparable to the first P3 1Ghz. But at the same time, things haven't changed *that* tremendously since that era. It hasn't been as revolutionary. Arguably, we created mountains and mountains of electronic waste through that period, and there is all kind of manufacturer lip-service to how green they've become - but the fact is that back then new things came out because they were pushing the limits - because they really COULD offer new features that weren't feasible 18 months earlier. That isn't the case now. The iPad 1 and 2 are great examples of that. Apple's "roll a half-baked product, then upgrade it in 18 months" playbook is about planned obsolescence and artificial life-cycles. I've touched on this before with Cell-phones that constantly shift shape and I/O bus interfaces - not to deliver superior performance, but to ensure that consumers have to throw out everything and start over every New Every Two cycle. And there is this global hysteria where consumers are complicit with the manufacturers and vendors in this Mad Tea Party of consumerism. If you want to worry about something - I'd worry about that... We're creating mountains of electronic waste because Apple leaves out cameras that they easily could have included, then sells us the same product again 18 months later - when the original product still pretty much does everything short of taking pictures that the new one does. We're enabling Apple to behave this way. Apple is a stupid corporation. It can't do anything but continue to behave this way as long as the market demands it. I'm not exactly Mr. Green. I've frequently been accused of being a "Denier" by Global Climate Change advocates (I like to think of myself as a healthy skeptic). But the idea of how quickly technology truly makes itself obsolete has always bothered me. The idea of us artificially making it happen on an even more rapid scale bothers me tremendously more.

jdayman
jdayman

I'll probably sound even more holier-than-thou. Oh well... In my opinion this eternal quest to own the "new shiny thing" is taking a huge toll on workers, especially those in emerging countries like China and India. Corporations have discovered that products can be produced cheaply in countries where labour laws are "relaxed". Check out some of the news coverage on companies like Foxconn. (http://mashable.com/2010/05/28/salaries-foxconn/) They do assembly for Apple, HP, Dell among other tech clients. Their factories in China feature highrise dormitories for the workers, complete with suicide nets outside the windows. Workers are now required to sign a contract that states they will not attempt suicide. Of course this has a ripple effect on workers in first world countries as well. We used to build stuff here, people had productive jobs and there was a thriving middle class. In my opinion this is not sustainable. I hope that people will learn to pause and consider some of the consequences when thinking about a purchase.

jhinkle
jhinkle

I've been dealing with the same problem you're having. I've actually had to go back to people who use personal equipment, remove their email account and VPN access and tell them no more. Now we only support company purchased equipment. In the off chance that someone does use their personal laptops or smart phones I'll give the problem a once over, fix it if it's actually something simple (not one of these, can I borrow a minute of your time, then spending 2 hrs on it deals), then tell them they need to get it fixed. There's only so many times you can hear the phrase "My kid was playing with it, and now it doesn't work right" before you have to draw the line. If anyone asks for email information then tell them no. If they need a reason then tell them that you can not control the security of their device, if they don't like it they need the company to purchase them company owned and controlled equipment. It's just one of those things people need to understand. They, as the end user, are the cause of more problems on networks than anything else. We can not be responsible for their ignorance and the last thing any admin needs is the headache of dealing with someones infected equipment, which is out of your control, continually coming into the network.

ScarF
ScarF

I understand from your article that you don't talk about Apple specifically, but Apple is the de facto gadget company now. They direct this trend and push the market for these toys. They re-invented the purchase of expensive "nothing" by people who don't really need them, or have no real use for them. Apple is generic in these days of gadget-fever. Please, don't misunderstand. I love gadgets, but the ones I make with my own hands or the ones which give me real advantages and usability. Of course, I may never be able to build my own tablet PC, but I love building automation devices and robots. Anyway, I don???t feel the need of a tablet PC yet. Regarding the battery replacement, I am not talking about replacing the batteries like in a flashlight, but being able to replace the rechargeable battery when it becomes dead ??? like for a normal cell phone. And, only to see the real value of an iPad, the following quote is from Apple's support site: "If your iPad requires service due to the battery???s diminished ability to hold an electrical charge, that is not covered by Apple's one year limited warranty, the AppleCare Protection Plan, or statutory consumer rights, Apple will replace your iPad for a service fee." Service fee = $109 CAD; $10.77 CAD for optional shipping. And, for an iPhone: ???If your iPhone requires service due to the battery???s diminished ability to hold an electrical charge that is not covered under Apple's warranty, the AppleCare Protection Plan or statutory consumer rights, Apple will service your iPhone for a service fee??? Service fee = $89 CAD; $10.77 CAD for optional shipping. Here enters the new gadgets' paradigm (as resulting from iPad???s support): gadgets as underwear.

Slayer_
Slayer_

Though mines a Pavilion, but its the same specs. The HDD has claimed in SMART that its on it sway to death for 4 years now, but just keeps chugging away, I have Mint installed on it as well and I constantly play Atlantic and dragon age on it. Its a great old laptop :).

dcolbert
dcolbert

Heh. I love that you said in a very small paragraph what I said in a 3 page rant, Neon. :) It is hard to say. It blows my mind that is a suggestion that you even have to CONSIDER... It should be a no brainer. Of course the housing collapse destroyed more personal wealth than gadget binging... right? ... RIGHT?!?

dcolbert
dcolbert

Keep my attention diverted, keep my brain occupied with the white noise of the next expensive purchase from Best Buy. Sell me something I don't need that I already know I don't like. Bring on the 3D TV. I don't want it, but if my neighbor gets it, then so must I. I'm feeling a little Tyler Durden at this point.

jdayman
jdayman

I admit that my earlier post was pretty shallow and on top of that I probably sounded like a commie! I appreciate you taking the time in these two posts to remind us that the problem is actually very complex, with many many layers. Some of it is inevitable, as you stated. I think that the unthinking Consumerism of modern western culture is at the root of it, and in my opinion that's not inevitable. It's a behavior we've learned during the past 60 years or so, and it's a behavior we can change if we really want to. I'm in my 50's, and I can tell you for sure that folks of my parents' generation had a much different idea of consumerism. They may have been the first generation to have disposable income, and some leisure time, but they weren't caught up in the panic and mania of "consuming and discarding" that is so prevelant today. If the change ever does come, it will undoubtedly cause a lot of upheaval, and might even cause some economies to collapse. Such a change would undoubtedly have unexpected and unwanted consequences. But if the change doesn't come, our present course will lead to the same kind of chaos, or worse.

dcolbert
dcolbert

Foxxconn has 1 million workers (and Intel used to be proud of having 75,000 workers *globally*)... they've produced 10 million iPhones. They've had 17 suicides. That is statistically insignificant. Working at Foxxconn is evidently better than living in Las Vegas or Seattle, and FAR safer than working at the Post Office. There is a moral issue here, that I don't think there is an answer to. China can out-compete us, because it doesn't treat workers right. That seems to be the argument. If they paid their workers what we consider a "fair market" wage and instituted the kind of labor laws we have in the West, it would cause an inflationary cycle that would wreck their economy. Lots of global turmoil would result. Isolationist policies and tariffs? International embargoes? How do "we" force China to get on board? Can we even really achieve such a goal? Every great economic power eventually collapses. Generally, the next great economic power has been rising in the wake of that which was collapsing. It is a cycle that goes back in history as far as we can see. It seems inevitable to me. It is certainly a hurricane-from-butterfly-wings kind of scenario. There is also a vicious cycle in this. If Apple goes to FoxxConn but HP does the "right" thing and continues to build their products in domestic factories - then Apple outcompetes HP. They sell more, and they make more profit doing it, which allows them to reinvest. HP is *forced* to use the same tactics to remain competitive. What do we do to prevent this? How do we create disincentives that discourage companies from engaging in this behavior? I don't think we can.

AnsuGisalas
AnsuGisalas

When they wizmos figure out how to pump huge amounts of Other People's Money into underwriting the risks (i.e. the nefarious derivatives - or their replacement)... that's when one persons bankruptcy becomes a bank-toppler.

ScarF
ScarF

And, these kind of financial deals encourage the less disciplined to spend more than what they can afford. And, that is why you may be right regarding the danger of a "gadget bubble", considering the volume of the purchases as well as the volume of the money stuck in financial deals. E.g., it is quite possible that an iPad owner to have his gadget unpaid yet, but being ready to buy the new version. In time, this accumulation of unpaid purchases may blow with the same power as the real estate bubble. And, even if at the individual level the loss may not look so dramatic, at the societal level it will be spread among all of us meaning a new recession, unemployment, loss of wealth for many, increase of national debt etc.etc.etc. Instead of the deferred purchasing plans, I personally prefer 0% interest on cash advance promotions offered from time to time by some banks on their credit cards. Right now I have some of this money in a high interest account waiting to multiply for one year before being transferred back to the creditor. But, as it is my believe, the gadget market is for short-term mentalities, unable to think or plan beyond today???s needs.

dcolbert
dcolbert

We've financed as much as $10,000 on a delayed payment/deferred interest plan with no penalty for early payoff. It takes a tremendous amount of discipline and generally a lot of liquid capital to actually pay these off in time. If you've got that kind of discipline and liquid capital, often it is just as easy to pay the cash up front for whatever it is you're going to finance. If you *can* do it, it is "free money", as long as you take the money you would have spent and put it into some sort of interest earning fund for the period of the no interest/no payment loan. At the end, you pay the loan and pocket the interest you earned during the loan period. Almost *no one* actually does this, though. That is why loan companies offer this. They have faith that you're a horrible financial manager with no self control or discipline - and most often, they're right.

dcolbert
dcolbert

I always think about the push to make everything a "subscription" service. When I was younger, it seemed like most people had limited reoccuring monthly bills. Your essential utilities, house payment, car payment, and maybe some services (like a landscaper or house-cleaner). I suppose there are some "habits" that become "monthly subscription" services - smoking for example. But through the 70s and 80s, there weren't a lot of reoccuring monthly payments going on in the typical household. In the 80s cable TV, and Cell Phones, and online services introduced the gradual concept that you might pay, month after month - for TV, plus a premium for *special* TV channels, or for access to a telecommunciation's service and community (again, often with premiums for "special" content). And for awhile the industry rolled with that. In the late 90s, we started to hear a buzz from the tech community about SAaS subscription models, suddenly radio (with premium channels for a little extra) was offering subscription services, the wireless carriers started to add all kinds of extra premium services to their subscription models (along with introducing an artificial lifecycle upgrade mentality in consumers with New Every Two type plans). Little by little, more and more reoccuring monthly costs were added to the average household budget - often with the idea of charging us repeatedly a little bit for something we would have paid a lot, ONCE, for indefinite use in the *past*. Microsoft even approached the idea of selling "subscriptions" to PCs where you could "rent" just the "power" and "apps" you needed. You wouldn't pay for the PC, but you would pay for how much *metered* resources of the PC you required, and for how long you used and for which particular apps you accessed on it. They even admitted in their patent filing, "This solution would likely cost the consumer MORE, in the long run". I understand the business drivers for desiring to adopt models like these. If you can sell a person Office *once* every 2 to 4 years for $400, regardless of if they use it a little or a lot... profits are good. But if you can charge people by VOLUME of use of the various components of Office, you'll likely get the LOWEST volume user to pay the $400 every 2 to 4 years, and the highest volume users will pay a LOT more. If I were someone in the corporate finance department figuring out how to price and charge or products, I'd like to come up with an idea like this too. But when this trend started out, I could see that eventually there was a breaking point. It isn't a sustainable model. It accellerates the adoption of a credit leveraged society - because that is what subscription based services are, credit - "We'll let you consume a metered amount, as much as you need, and you pay us at the end of a billing period". It is impossible for a family to budget metered services when the number of services grows too many or too complex. And you're right, they're suckering you in by selling you on the concept, "We'll sell you this tablet or netbook for $50. Heck, we'll GIVE it to you for free - and you just subscribe to a 2 year contract. Call me insane, but we'll even make the monthly fees *fairly* fixed (unless you go over the caps or use premium services). We're GIVING you a PC! This jedi mind trick makes consumers forget that they're signing up to pay $5.99 a month for unlimited texts, when sending and receiving texts doesn't cost the company charging them a THING. They forget that they're being charged $20 extra a month to be able to use their device as a modem or hotspot, which is effectively being CHARGED again for something you've already bought (your data plan). And we're buying into this kind of lunacy with *everything*. My cable company charges a rent sur-charge for the cable modem to connect to their broadband service. I called them and asked which cable modems I could buy to replace their cable modem. "We don't allow customer cable modems, you have to rent ours". So their price for the service that is advertised is $59 a month. They don't tell you that you need a $10 a month cable modem rental. ComCast/AT&T were even better. If you rented your cable modem, they gave you a discount. If you used your own, the discount went away, and your service ended up costing a few bucks more. It all comes together to bleed more and more money from the consumer's pockets, concentrating more wealth in corproate warchests and C level executives bank accounts - while leaving consumers spending a life-time in debt with no personal equity on their personal books at the end. And we're all signing up for this, over and over again. It wouldn't work if we were smart enough to collectively say no. Sometimes we do, or have, but far too frequently, we're like crows mesmerized by a glittering scrap of tin or glass.

ScarF
ScarF

3 or 6 months no interest, no payments 12, 24 or 36 months equal payments, no interest etc. The big boxes have them all on their store cards.

Neon Samurai
Neon Samurai

They already use various strategies to convince people to buy devices they can't afford. Heck, look at all the total cost calculations that came out ofter the first Iphone buyers started getting month end bills. 30$ plus a signature for a three year contract.. and three years.. at 45$ * 12 per is... Undercut the cost of the device so it apears affordable in the store window then bleed the customer dry through service fees.

AnsuGisalas
AnsuGisalas

That's really all it takes. Some wizmo making the other wizmos believe that the poor can pay for gadgets they can't afford, and then make a sellable product out of that. Bubble trouble.

dcolbert
dcolbert

Throw the population a celebrity melt-down, that will keep them preoccupied... Bi-winning!

Neon Samurai
Neon Samurai

The government theater director keeps the population looking at the shiny thing so they don't pay attention to bigger concerns. It's about replacing the pressing issue with something shiny; "don't go worrying your pretty head about how we're managing foreign policy; there are much more important things to worry about.. like the presedent's choice of religion or what mixer studio producted voice will win this season's Idol voyer-tition. The business theater director is all about keeping consumers chasing the next hot carrot. Screw sustainable business; we need profit bubbles every six months to keep the company. Screw if our product actually does anythign new; just repackage our last model, add a letter after the version number and shipp it. If we give the masses a moment to think for themselves they may not blindly buy in our next product cycle. Artificial market forces; when natural market forces won't support your desired business model and quarterly profit targets.

dcolbert
dcolbert

Is an Irish man in his late 70s living in Liverpool. He lived through the great global depression and the war. The guy will clip a loose thread off of his jacket sleeve, and wrap it around a matchbook and save it. He is a doctor, a psychologist - yet. When his daughter gives him grief about this kind of behavior he responds in his charming and thick Irish accent, "you never know when you may have need of just a bit of thread to mend something". The guy isn't a horder. He just doesn't *waste* things - and I'm sure in a situation where the world got *really* difficult again, he would have the most well mended clothes on the block. And he doesn't preach. If you want to waste, he'll just observe and won't comment on it. He is a very interesting guy, and like the Grasshopper and the Ant, whenever these conversations come up I think of him.