The early adopter tax and you

Blair Hanley Frank

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Way back in 2007, when the iPhone was still a brand-new, fairly untested product, Apple suddenly dropped the price of the original iPhone by 200 dollars. Consumers were outraged that the phone they had previously cost 500 or 600 dollars was now going for a paltry 300 or 400 dollars. But people who followed technology and the way companies deal with new products shrugged. Apple’s price reduction was nothing new. People who buy new products soon after they come out often have to pay a premium for them. I call it the early adopter tax.

Those of us who saturate ourselves in technology have a name for the people who have to have the latest, greatest product at any given time: early adopters. When these people see a cool new gadget that they like, they’re going to go out and buy it on the day it launches or a few days thereafter. They also tend to be wealthy enough to be able to spend massive amounts of money on new gadgets.

By doing so, they reap a lot of benefits. After all, having the newest gizmo before everyone else is pretty cool. But there are also a bunch of potential issues. Most new products, while cool on the surface, often ship with bugs that can be annoying or make whatever it is not work as intended. Despite the efforts of everyone who ships a product, I’ve never seen something that’s entirely bug-free. For example: “Fallout: New Vegas” shipped with crippling problems, and people who bought it on launch day had to wait for a patch to fix the bugs that were keeping it from working. I’d bet the developers didn’t see those bugs coming.

There’s also the issue of price: a product often gets progressively cheaper, sometimes even a few months after its launch, as in the case of the iPhone. Early adopters are paying a premium for things that will get progressively cheaper as they get older. In addition to being cheaper, gadgets like smartphones, computers and tablets are constantly being revised by their manufacturers, often with new features and performance upgrades for the same price.

All of these issues add up to what some people (myself included) call the early adopter tax. It’s a shorthand way of talking about all the problems people face when they pick up a brand new product.

So, what should you as the consumer do about the early adopter tax? The short answer is: be mindful. It’s not going to go away any time soon, and there are some gadgets that I believe are truly worth paying it for. (I’m considering picking up a Nintendo 3DS on launch day.) At the same time, everyone has a finite budget. Sure, laying down a big chunk of cash for the Next Big Thing may make sense at some point, but you have to pick your battles, unless you have a massive amount of disposable income. That’s especially relevant for college students because, let’s face it, most of us are fairly short on it.

At the same time, it’s important to realize that the early adopter tax is here to stay. Early adopters play in the tech ecosystem. These are the people who, through their purchases, provide seed money for companies to continue producing new and better products. If everyone had waited to buy the iPhone, or any other gadget because something newer and better would be coming within a year, there wouldn’t have been something newer and better. Making a new widget, especially something new and revolutionary, is often a huge risk. Any company that does such a thing needs to recoup its development and manufacturing costs and gauge consumer support before moving forward with any subsequent products. Often, that means that new products are expensive, or not as technically capable as the ones that follow them.

By means of a conclusion, allow me to offer a few words of advice. If you believe in a product, and want to pick it up the day it comes out, think about the early adopter tax. If the idea of paying more for something in terms of both financial and functional costs is still outweighed by owning that product, go ahead and pick it up. Just don’t be surprised if the price drops a few months later, some key component breaks or there’s a better version of it out in six months.

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