Technology is accelerating. It took less than a decade for smartphone to go from 1% of the population to almost everyone. Television took longer. The phone even longer.
Anyone who has been in the market for a technology product knows about what I call the “shopper’s dilemma”. Should you buy the current iPhone or wait another six months for an even better iPhone?
It sounds like a form of interest. You either take $1000 to buy the current model, or hold on to your $1000 and buy a much better model in six months. However, there is no free lunch: by waiting you lose access to the current product for six months.
The shopper’s dilemma also applies more broadly.
Consider medical therapies. You could have eye surgery today for a good improvement in your eyesight, or wait in five years for much better surgery giving you great eyesight. Should you wait or should you take whatever is available today? If you are sick and badly in need of treatment, there is no choice. But sometimes you can afford to wait.
The shopper’s dilemma becomes increasingly more challenging as technology accelerates. Its effect is more and more important. The variance also increases: some progress comes suddenly while unexpected setbacks delay long-promised breakthroughs.
How do different people behave when faced with this dilemma?
- Not everyone is aware of the rate of progress. Some people are pessimistic. These people will tend to favour buying now. They are betting against the future. Somewhat ironically, this means that if you work in marketing, you should probably avoid the topic of “progress”.
- Technophiles, or people who follow closely technology, should favour delaying their acquisitions. They are betting on the future being better. I conjecture that they might be more likely to delay purchases or therapies.
It seems that I have a testable conjecture. It should be easy to test?
6 thoughts on “The shopper’s dilemma: wait for new technology or buy now?”
Whenever there is interest, there is also a “hurdle rate.” That is, how much benefit (whether material or otherwise) does an individual derive from using a device the given period of time until the next one?
Some might simply derive less benefit (real, or perceived) from owning the device the given period of time. Others would get more benefit (the pleasure of owning the latest-greatest is a form of benefit) from owning a certain technology for the same period.
In most cases I think there is a point at which (for a given technology) further development will yield marginally better improvement/experience from the user’s perspective. Just as an example, the difference in image quality of LCDs from 10 years ago compared to today isn’t as big as when compared to those from the late 90s. Ditto when comparing computers from the 90s, to those from the late 00s, to those on sale today, from the perspective of the average user (browsing, email, media consumption, and the like).
Still, I think it would be very fascinating if anyone could objectively quantify this “hurdle rate” for any device category or technology.
The newest thing is also the most expensive. If you balance cost with value, it might be best to always buy last year’s model. Furthermore, the newest thing might have flaws that haven’t yet been exposed. That’s why we have the phrase “the bleeding edge”.
That’s exactly my tactic. Buying last years technology much cheaper brings me still enough benefit for all my uses, for less money, and still the joy of a new phone every 1 or 2 years.
This effect was observed a few years ago with respect to Moore’s law and improving speed and cost of computation. Should I buy a computer to do my computation today, or wait 6 months and buy a faster computer. I recall a paper which included the word “slacking” in the title: what’s the value of the delay before starting the computation.
Option 2 is rubbish. With that perspective, no-one [tech people] would ever buy anything. It’s the same reason why a [central bank’s] target of 2% inflation is rubbish, it’s only there to take your money, legalized theft.
Luckily this [the posted conundrum] dilemma will dis-appear. We will dis-appear as we consume [and procreate] ourselves into oblivion. We consume here and pollute there and wealth extraction never ceases. The real interest is there, the interest our [your] children will pay for today’s consumerism and the Neo-liberal religion.
Some evening reading: https://www.theguardian.com/commentisfree/2019/apr/25/capitalism-economic-system-survival-earth
Such predictions a based on assuming rational behavior and may not be s worth much for something as emotionally charged as consumer behavior.
If you had a big computational task to complete by a certain deadline, cloud computing did not yet exist and Moore’s law was still on track you could actually finish sooner and save money by waiting a while before you satrt so you can buy faster hardware.
This was the case for the task of rendering the CGI-heavy Lord of the Rings movies.
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