A few minutes ago, I saw a news video of people getting trampled in the rush to buy the new Play Station 3.
Supposedly, some of them were risking getting stomped because they could sell these units on Ebay for $3000+. Good luck to them. (And I hope they don’t discover that the market for $3000 PS3s is much smaller than they think.) My concern is with the people who are willing to pay $3,000 now for something you can get for $500 in a few weeks .
That’s their choice, and they have a right to it. But don't tell me it makes any kind of financial sense.
We’ve become a society of technology junkies and in a lot of cases that’s costing us not only money, but time and frustration as well. We’re constantly being told we must upgrade, upsize, add on, buy the newest, fanciest gizmos on the market, the one with “all the bells and whistles.”
And so people who basically just want to send e-mail text and pictures buy computers that can handle everything short of space shuttle launches. Folks who’ll never print a life-size version of their snapshots spend much more than they need to buy ultra-high resolution cameras. People who want to try home cooking pay big bucks for food processors, bread makers, blenders, deep fryers, and even cook-it-three-different-ways ovens that sit gathering dust because it takes a engineering degree to figure out how to use them. People who just want to keep in touch get cell phones so complex that trying to get them to work is an invitation to a traffic accident.
What’s even worse is jumping in and buying brand-new technology that fades away or is quickly replaced by something better. Remember the Sony Beta video recorder? (Those of you under 30 will be clueless.) It was the first available VCR, with a cost around $1,000. But everyone was excited about it. You could tape programs off your TV! Wow! Many, many people rushed out and bought a Beta VCR.
I was excited too, until I did some research for an article on this new technology and realized that the Beta cassette taped only an hour and a half’s worth of video. To me, that made no sense. What most people want to tape are movies, and movies involve a two-hour time block. What were you supposed to do, stop doing what kept you from watching the movie in real time to change tapes?
Luckily, someone thought more about what people really need and modified the technology to create the VHS format. (Panasonic? I can’t remember. So long ago.) Two-hour tapes appeared, then cassettes with four and six hour taping options. Because these tapes could hold a whole movie, they could also be rented for a few bucks a pop, which created an even greater market for both tapes and machine. The VHS format became the standard. And those who spent a thousand bucks for Beta? They found themselves out in the cold.
Then there was the laser disc, a precurser to the CD. My engineer, gadget-crazy father bought one of these. This machine also cost about $1,000; the discs themselves were the size of the old LP records and held one prerecorded, two-hour movie.
I asked Dad how much each disc cost. Around $70. “It’s not going to work.” I told him. “Who’s going to pay $70 to see a movie?”
Dad, being a techno-enthusiast, thought lots of people would. “The picture quality is great,” said my Dad. “And unlike tape, it ‘ll never stretch or break or wrinkle!” I disagreed.
$70 really is far too much to pay for a movie you’ll watch once or twice. The one-movie laser disc fell flat. It would be decades before the music CD, priced at a reasonable $15 or so, would show up. (People will pay relatively more for music, because they’ll listen to it again and again.) Now movie DVDs cost what music CDs once did.....or less.
To be sucessful in the long term, technology has to provide something that people really need. It has to solve a problem that’s never been solved, or at least, do something more easily, quickly and cheaply than current technology. When it doesn’t, buying it's often a losing bet.
Take the Segway Human Transporter. You’ve probably seen this on TV; a two-wheeled climb-aboard, almost magically self-balancing machine that moves forward, backwards and wheels around in response to a mere tilt of its rider's body. The technology is wonderful, yet the Segway has hardly become the wide-spread personal transport system it’s inventor hoped for. Why?
Think about what it actually does. Using a very small footprint, it moves a single human being at relatively slow speed....and it costs around $5,000.
You can get essentially the same use from a $100 battery-powered motor scooter. So why buy the Segway for 50 times the price?
I am sure that the technology developed for the Segway will be adapted for other uses. Or the Segway itself will be modified to provide enough added value to make it sucessful. But buying one now may not be the best financial move...no matter how “cool” the technology is.
Which is why you might want to wait a bit before buying anything brand-new and untried, no matter how heavily it’s hyped. A new model car? Wait six months and let them work the bugs out. That exciting new software? Wait six months and let them work the bugs out—and, as often happens, drop the price significantly.
As for the attractive, but possibly way-too-complicated gadgets we see hyped continously, I’m not going to tell you to skip them all. But I will offer a few suggestions.....in Part II of “Bells and Whistles.”
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