The secret to the new iPhone’s popularity
So the iPhone 5 goes on sale in just one week. Hereâ€™s an early look at what people think of the improvements over last yearâ€™s 4S model:
This cracked me the hell up.
Youâ€™ve probably heard of â€˜planned obsolescenceâ€™, where products are deliberately designed with a limited lifespan. Thereâ€™s a bit of that with the iPhone, but Appleâ€™s predominant strategy is the sister concept of â€˜perceived obsolescenceâ€™, where rapid replacement is encouraged by marketing which makes people dissatisfied with the current product.
Itâ€™s working on SmartMoney senior editor Jeremy Olshan, who wrote after Wednesdayâ€™s announcement, â€œToday, 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.â€
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. â€œTo create the demand for new automobiles,â€ wrote Harvard economist John Kenneth Galbraith in 1958, â€œwe must contrive elaborate and functionless changes each year and then subject the consumer to ruthless psychological pressures to persuade him of their importance.â€
But Apple makes GM look like amateurs at the perceived obsolescence game. Iâ€™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 â€œdrives cars into the groundâ€ before replacing them.
I donâ€™t expect this year to be any different, even though the functional distinctions between the 4S and the 5 are minor. Because itâ€™s not really about a better product, itâ€™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 donâ€™t own an iPhone.
In fact, Iâ€™ve never had an iPhone. Of any generation. Or a Droid, or a Blackberry.
I donâ€™t have a smartphone at all.
I have what I affectionately refer to as a â€˜dumbphoneâ€™, purchased in the fall of 2009. Which means yes, Iâ€™ve (gasp!) owned the exact same phone for three years.
And itâ€™s not because Iâ€™m a Luddite. On the contrary, Iâ€™m a geek from way back before geek was cool. I like technology. Iâ€™m even an Apple fan. (Exhibit A: the iMac on which Iâ€™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 â€˜hedonic adaptationâ€™ (although I didnâ€™t know the term for it yet). Once you add something to your daily life, it quickly becomes the â€˜new normalâ€™, and before long you canâ€™t imagine how youâ€™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.
Five years later, Iâ€™m still holding. I bought my current dumbphone (an LG Rumor 2) outright, on a no-contract plan. Amortized over the 35 months Iâ€™ve owned it thus far, itâ€™s cost me $3.21 a month — a number which keeps dropping as long as I keep using it.
Iâ€™ve arranged things so that I only use my cell phone at all when Iâ€™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, Iâ€™d be paying 7-10 times that amount.
Over the last three years, I figure Iâ€™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 Iâ€™d have to endure to pay for it.
Mind you, itâ€™s not always easy to resist social pressure. Even though I donâ€™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 Iâ€™m not spending (and the day job Iâ€™m not suffering), and hold firm.
If youâ€™re sitting there thinking, â€œTheyâ€™ll have to pry my iPhone out of my cold dead fingers,â€ relax. Iâ€™m not trying to convince anyone to give up their smartphone. Itâ€™s completely against human nature to go backward. Once youâ€™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, thatâ€™s called â€˜loss aversionâ€™.)
No, Iâ€™m telling the story as evidence that it is possible to hold out against the â€œruthless psychological pressuresâ€ of advertising and social conformity. Contrary to what the marketers and the media would have you believe, not everyone is doing it (whatever â€˜itâ€™ is). You just donâ€™t see the counterexamples. â€œCrazy frugal chick resists smartphone trend for five whole yearsâ€ wouldnâ€™t play anywhere except the Onion.
However, if youâ€™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. Iâ€™ve got an article coming up that will show you a way to cut your annual smartphone cost by hundreds of dollars. But youâ€™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.