small change toward a rich life

The secret to the new iPhone’s popularity

So the iPhone 5 goes on sale in just one week. Here’s an early look at what people think of the improvements over last year’s 4S model:

This cracked me the hell up.

You’ve probably heard of ‘planned obsolescence’, where products are deliberately designed with a limited lifespan. There’s a bit of that with the iPhone, but Apple’s predominant strategy is the sister concept of ‘perceived obsolescence’, where rapid replacement is encouraged by marketing which makes people dissatisfied with the current product.

It’s working on SmartMoney senior editor Jeremy Olshan, who wrote after Wednesday’s announcement, “Today, millions of seemingly rational people fished a fully functional iPhone from their pockets and contemplated hurling the device out the window. I know, because I am one of them.”

Perceived obsolescence can be traced back to General Motors, which in the 1920s conceived of the annual style change as a way to sell more cars and obtain a market advantage over Ford. “To create the demand for new automobiles,” wrote Harvard economist John Kenneth Galbraith in 1958, “we must contrive elaborate and functionless changes each year and then subject the consumer to ruthless psychological pressures to persuade him of their importance.”

line outside Apple store during iPhone launchBut Apple makes GM look like amateurs at the perceived obsolescence game. I’ve never heard of anyone swapping out their car annually, but hordes of people line up every single year for the latest and greatest iPhone. Even people like Olshan, who says he “drives cars into the ground” before replacing them.

I don’t expect this year to be any different, even though the functional distinctions between the 4S and the 5 are minor. Because it’s not really about a better product, it’s about herd behavior and social status. Gotta have the new hotness!

•   •   •

So with that in mind, let me tell you another little secret.

I don’t own an iPhone.

In fact, I’ve never had an iPhone. Of any generation. Or a Droid, or a Blackberry.

I don’t have a smartphone at all.

I have what I affectionately refer to as a ‘dumbphone’, purchased in the fall of 2009. Which means yes, I’ve (gasp!) owned the exact same phone for three years.

And it’s not because I’m a Luddite. On the contrary, I’m a geek from way back before geek was cool. I like technology. I’m even an Apple fan. (Exhibit A: the iMac on which I’m typing this right now.)

But when the first iPhone came out in 2007, I had already noticed the tendency (in myself and others) toward what behavioral economists call ‘hedonic adaptation’ (although I didn’t know the term for it yet). Once you add something to your daily life, it quickly becomes the ‘new normal’, and before long you can’t imagine how you’d live without it … even if you were doing just fine before.

iPhones — and more importantly, the data plan to support them — were bloody expensive. So I made a conscious decision to hold off on upgrading for as long as I could.

LG Rumor 2Five years later, I’m still holding. I bought my current dumbphone (an LG Rumor 2) outright, on a no-contract plan. Amortized over the 35 months I’ve owned it thus far, it’s cost me $3.21 a month — a number which keeps dropping as long as I keep using it.

I’ve arranged things so that I only use my cell phone at all when I’m out running errands or traveling; at home I use my computer for texts and a VOIP phone hookup for voice, both of which are free. Under normal circumstances, I spend a little over $7 a month on calls and texts, tax included.

So the phone and usage together cost me about $10.50 per month. If I were to get a current iPhone and upgrade it every two years, I’d be paying 7-10 times that amount.

Over the last three years, I figure I’ve saved myself between $2000 and $3500.

I suppose that for some people $1000 per year is trivial. For me, that kind of savings is a big deal. My $10/month dumbphone is one of the things keeping me out of Corporate Servitude. No amount of iPhone gee-whizzery could make up for the psychological stress that I’d have to endure to pay for it.

•   •   •

Mind you, it’s not always easy to resist social pressure. Even though I don’t ordinarily feel deprived, once in a great while I find myself in a circumstance (like FinCon last week) where both smartphones, and the assumption that everyone has a smartphone, are so pervasive that my lack makes me self-conscious.

At those times I bite my lip, think about all the money I’m not spending (and the day job I’m not suffering), and hold firm.

If you’re sitting there thinking, “They’ll have to pry my iPhone out of my cold dead fingers,” relax. I’m not trying to convince anyone to give up their smartphone. It’s completely against human nature to go backward. Once you’re accustomed to something, anything less feels like deprivation — a loss rather than a return to a former status quo — and humans really hate losing. (In behavioral economics, that’s called ‘loss aversion’.)

No, I’m telling the story as evidence that it is possible to hold out against the “ruthless psychological pressures” of advertising and social conformity. Contrary to what the marketers and the media would have you believe, not everyone is doing it (whatever ‘it’ is). You just don’t see the counterexamples. “Crazy frugal chick resists smartphone trend for five whole years” wouldn’t play anywhere except the Onion.

iPhone, iPhone 3GS, iPhone 4However, if you’ve been reflexively upgrading your phone every time Apple (or Samsung, or whomever) releases a new one, or the instant your cell plan allows it, give some thought to stepping off that bandwagon. The psychological cost of simply not upgrading is tiny. Heck, if the video above is any indication, no one will even notice which iPhone version you have.

And the long-term savings could be significant. I’ve got an article coming up that will show you a way to cut your annual smartphone cost by hundreds of dollars. But you’ll miss out on most of that savings if you insist on always having the very latest gadget.

Have you ever bucked a fashion trend or refused to follow the consumer crowd? Stand up and be counted! Leave a comment below.

(Photos by Patrick Hoesly, YGX, and reticulating.)

17 responses

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  1. Amanda says

    I have a dumbphone too, for essentially the same reason. Thanks for bolstering my resolve, which wavers every so often. My most recent encounter with the assumption that everyone has a smartphone was very funny, because it came from my stepmother, a total Luddite who doesn’t email and only has a cell for emergencies. She asked me to find out when a restaurant opened, so I called directory assistance and then called the restaurant. When I finished, she apologized for making me call–she assumed that, like my brother, I could just look up their website on my phone.

  2. Zachary Drake says

    One moderate strategy is to go along with the herd, but go more slowly: Upgrade the phone every 3 years instead of every year. This is cheaper, and also you get a bigger “bump” in capabilities when you finally do upgrade.

    With Smartphones, this doesn’t really save you a lot, because it’s the per-month costs that form the bulk of the cost. It’s a better strategy for computers.

    I’m impressed with your ability to hold down your phone costs.

    • Karawynn says

      That’s exactly what I was trying to get at near the end of the article, when I suggested rethinking reflexive upgrades. The longer you can wait, the better off you’ll be. And in most cases buying one generation back instead of the new hotness can reduce the cost too. (iPhones, ironically, are sometimes an exception to this because the demand for even the used ones is so high.)

      Delaying your smartphone upgrade can save you a lot of money, if you’re doing it right. ;) Details coming in the aforementioned cost-cutting post …

      My current computer is 4.5 years old and still going reasonably strong. Again, I’m going to get as much use out of it as I possibly can.

  3. Andrew says

    Have you heard of John Siracusa? You probably have, but if not–he does a podcast called Hypercritical that focuses on products from Apple and other technology companies. In episode 6 he talks about why he doesn’t have an iPhone, pretty much same reason.

    I myself have also resisted and instead I have a third-gen iPod touch, which lets me run most of the same apps on wifi for no monthly fee. The lack of a camera is annoying, though, so I’m tempted to get one of the new iPod touches…they’re not cheap either but much cheaper than a plan.

    Really enjoy your blog!

    • Karawynn says

      Thanks, Andrew!

      No, I wasn’t familiar with Siracusa, but I looked up the podcast. (http://5by5.tv/hypercritical/6, starting at 18:45, if anyone else is also curious.) And you’re right, he and I are of almost identical minds there.

      (Aside, but WTF was the thing where the other guy said John’s wife should go off and buy an iPhone behind his back? AdviceFail.)

      I think the iPod Touch is a good alternative if you want the app capabilities, (although, as Siracusa said, the Touches are frustratingly crippled compared to the iPhones). But personally, I wasn’t wowed by it. I was thrilled when Apple came out with the iPad, because that size and form factor would be much more useful to me. I’m saving now with the general intention of buying an iPad or other tablet sometime in 2013.

  4. Adam says

    On a more international note, nearly everywhere else in the world, it’s just easier to buy a phone outright (unlocked), then dump a prepaid SIM in it. Most prepaid plans now give you voice and some nominal data.

    Whilst the data rates on prepaid SIM’s aren’t usually great, i find i don’t usually end up using all the data, unless I’m (for example) commuting alot or working in a place without internet access. It’s really great to have data available though, if say I need to kill a couple of hours on the go. Also since most phones have Wifi, I can use this too when available.

    From the financial point of view, Prepaid phone costs are pretty much capped at the capital cost of the phone, plus your actual usage costs. So you’re only going to pay for the calls and data that you make.. You’re not locked into a plan, usually for multiple years, the total cost of which is usually 2-3 times the value of the phone.
    On a Plan you’re theoretically already paying for service but it only takes a month where you need to make some international (or interstate) calls or need more than usual, for you to start seeing a bill on top of your regular “plan” payments. I guess like credit cards, the phone plan makes it’s money when you slip up..

    If you’re travelling internationally, you’ll find unlocked phones for sale in pretty much all airports.
    For example, Throughout the middle east, unlocked phones are the norm. To the point where the shops selling only phones and other electronics outnumber the branded network “plan” stores.
    Australia and the UK have unlocked phone stores too, but predominantly these stores tend to want to sell you a phone on a plan.
    funnily enough, when you pick up your luggage on the way out of Heathrow, there is a prepaid SIM vending machine on your way out.

    • Karawynn says

      I know, it seems like everyone else in the world has it better than the U.S. when it comes to wireless providers. I hate, hate the subsidized-phone/contract system that prevails here. It’s wasteful and borderline predatory.

  5. Kimberly C says

    I recently left my dumbphone behind and picked up an Android. By “picked up” I mean that I was gifted a used Android that a friend no longer used and had never found the time to sell. Same goes for an old old iPod I use daily, another hand-me-down that found a home with me. My laptop was bought cheaply from a friend, just a simple Netbook. I tend to know a lot of techies who acquire many electronics over time but don’t get rid of unused items because they still work.

    I’m very curious to hear about your phone plan(s)! I got the cheapest plan I could find, yet still pay $30/no.

    • Karawynn says

      Hooray for hand-me-downs! And techie friends.

      $30/month for a smartphone is actually quite good, assuming you use it regularly. My ~$7.50/month doesn’t include data, just texts and voice calls a la carte. What is your provider, and what’s included?

  6. Vesna says

    Just wanted to share that I, too, don’t have an iThing, never have, and I’m seriously contemplating never buying one either. It’s just that I grew up on old-school “teenager-proof” Nokias, and if a phone can’t survive for more than five years, I’m not interested.

    Still, that’s for the former part of the equation, planned obsolescence. As for the social factor connected to the latter, I often find myself in situations where I’m the only person in a group (e.g., at a coffee table) with a non-smartphone; usually I intercept any possible remarks with a few jokes about my tiny little phone, and people tend to react pretty well. I guess most people are still able to recognize everyone’s right to choose differently from the flock, and I see more and more people each day who are gradually becoming aware of the marketing tricks being played on them all of the time – especially lately, with the new iPhones.

    • Karawynn says

      It’s great to see so many people not reflexively buying the new hotness.

      No one has ever made a snide remark about my phone; my self-consciousness on the matter, when it crops up, may be completely internally-generated. :}

  7. Cindy says

    I have a dumbphone too!!! Now I don´t feel so alone in this iWorld!! Great post Karawynn…

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