Steve Jobs had the company's most loyal fans cursing a blue streak for slashing $200 off the price of Apple's (NASDAQ:AAPL) iPhone a mere two months after unveiling the technological marvel. But he was absolutely right when he wrote, in an open letter to iPhone customers, that they could expect to get burned sooner or later.
As Jobs said, all technology companies slash their prices. They just usually wait longer than Apple -- long enough that the early purchasers have stopped paying attention.
Not the first time
Remember all the hype last Christmas over Sony's (NYSE:SNE) PlayStation3? Sony cut its $599 price tag down to $499 this summer. Rumors of a price cut had been circulating since April. If you had put your ear to the ground and waited patiently, going without a new console under the Christmas tree could have left you with $100 more to spend on gifts this year.
Another example: TiVo (NASDAQ:TIVO) unveiled a $299 HDTV DVR this summer, a whopping price cut from last year's original $799 model. The new box isn't as fancy, but that's probably just fine to anyone who saved $500 by waiting.
The flow of technology
As technology spreads, it gets better, faster, and cheaper. You get more for your money. Remember how much you paid for your first personal computer? You could probably buy four or five with that pile of cash now.
You get less for your money if you're an early adopter, one of the people who experiments with technology, selects the best from the new innovations, and tells their friends what to buy. If you're one of these technologically savvy few, you probably wear the "early adopter" label with pride.
Late adopters
But you may not have heard of your technological opposites -- the laggards.
One communications study that described how new innovations diffuse through society (giving us the term "early adopter") also identified the latecomers, or laggards. They tend to be suspicious of innovations, believing that their old ways work just fine, thank you very much. They have limited resources. They vacillate over decisions. They're the last to jump on the bandwagon.
If you want to save a lot of money over a lifetime, be more like the laggards.
But I want it now!
I know it's no fun to be the last one on the block with the latest gizmo. And I know it doesn't impress your friends to have a small TV, a cell phone that only makes telephone calls, and a road map instead of a GPS device.
You don't have to give up all the toys. Just wait a bit before you run out and buy them. By holding out until the technology proves itself, the market expands, and the prices drop, you can save yourself thousands of dollars over a lifetime and still enjoy all the gadgets.
But as Jobs also said in his letter to iPhone customers, you can't wait forever. Prices will keep dropping, and the gadgets will keep getting better. You'll have to buy sometime. Just remember, in the great price wars, the first buyers on the block always lose.
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