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The Early Adopters Tax

by Ryan Guina

I got my first iPod yesterday. Oh I know, it’s only been like what, 43 years since the initial launch of the iPod? I can’t say there is one reason why I never joined the revolution… I just never felt the need to take music with me everywhere I went.

But then Apple launched the iPod Touch. At first I didn’t think anything of it. I didn’t want an iPod, so why would I want the Touch? Then my friend got one, and another friend showed me his iPhone. Suddenly, the iPod had a lot more appeal. It wasn’t just about the music anymore, it was the music, the apps, the games, the cool touch screen, etc. Still, I didn’t need one. So I decided to wait.

The Early Adopters Tax

Apple Online StoreThe iPod Touch was launched 2 years ago in two configurations — 8GB and 16GB, which were priced at $299 and $399 respectively. At the time there were few apps and little more than the promise of being a little cooler and more intuitive than the traditional iPod. But as time went on the technology improved, the price dropped, more developers created apps for the iPhone and iPod Touch, and it became a lot more appealing.

Today you can buy an iPod Touch from the Apple Store in 3 configurations: 8GB for $199, 32 GB for $299, and 64 GB for $399. Or, you can save on those prices and purchase an Apple-Certified Refurbished iPod, which is what I did. The current refurbished prices are $50 less on each model and they come with the full Apple Warranty. Mine came out of the box looking brand new. The only difference I could tell was the brown box it was shipped in vs. the standard glossy box, and I didn’t have the option of having my iPod engraved, which you can do for free if you purchase it through the Apple Store.

It was worth the wait

I’m not the kind of person who needs the latest gadgets. I don’t enjoy constant upgrading, tinkering, and tweaking, and I don’t want to buy something when it launches, only to see the performance double and the price drop by half in the first year. But I understand why some people do, and that’s cool too. Early adopters spur the industry and lead to the development of new and cheaper technology. It comes with a price though, which is often known as the early adopters tax… and it’s something I try to avoid.

Thoughts on the iPod Touch

First off, I can say this was definitely worth the wait and now I understand what all the fuss is about! The functionality is intuitive, the apps are great, and it’s just plain fun. I’ve already downloaded apps from the iTunes Store, including the Kindle Reader, Stick Wars, and a couple other games and tools. I look forward to getting a lot of use out of my iPod Touch. But of course, new technology leads to a new dilemma…. now I want an iPhone! But I’m not getting one… yet.

Why I am not getting an iPhone

I plan on skipping the iPhone for now. It’s basically an iPod touch with a built in phone, and I know it is much more convenient to carry one multi-purpose tool around instead of a phone and an iPod (especially if you don’t have available wi-fi for the iPod). But I just can’t justify getting the iPhone right now.

I currently have a great deal with the Sprint SERO plan and I have no desire to break my contract and pay early termination fees. My entire immediate family is on Sprint, so I would also lose out on free mobile to mobile minutes. Signing up for the iPhone would cost me close to $100 per month for the phone and data plan, plus early termination fees, and I would be charged for my minutes when talking to family. At this point I just can’t justify giving up my $35 per month plan for a cool phone. So I’ll wait until the iPhone moves to other carriers and then I’ll see how things shake out. I’m not closing the door on it for good. I’m just waiting until the time is right.


Published or updated February 16, 2012.
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{ 7 comments… read them below or add one }

1 No Debt Plan

Man that SERO plan sounds so awesome. Almost wish we had jumped on it… but Sprint’s coverage is dead last in our area. We’re on a secret loyalty plan with Verizon. Not a bad deal… low price + best network = win.

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2 Ryan

The SERO plan is awesome: $35 for unlimited data, texts, Sprint to Sprint, night and weekend, and 450 anytime minutes. I don’t think I will ever be able to beat that price. That said, it is no longer available, and Sprint has become much more strict when upgrading to a new phone with the plan. The plan is the Sprint Employee Referral Offer, and last year there was a generic sign up code for it. But now you have to have an employee referral to take advantage of the offer or to even upgrade your phone at a discounted price. I’ve heard a lot of people were declined an upgrade because they didn’t have an actual employee referral. My contract is up in January, so I will need to see what I can do about my plan, phone, etc. As long as I can keep the plan, I am willing to pay full price for a new phone because I will save more over the life of the service. Otherwise, I may just look for a new phone carrier altogehter… maybe an iPhone?

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3 Greg

I’ve been noticing a trend lately. Most of the people that I know with an iPhone are people that complain about not having enough money, too many bills or living from paycheck to paycheck.

hmmmmm

My cheapie phone phone works just as well, my $49 shuffle holds fewer songs at a time but I can only listen to one at a time anyway.

No doubt the iphone is cool but the monthly fee keeps a lot of people away. I believe if they could cut the monthly fees in half they would sell 4 times as many.

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4 Ryan

Greg, it’s the monthly fee that keeps me away too. I actually thought about buying an unlocked iPhone to use on the Sprint network so I can continue to use my plan, but then the price skyrockets. I’m happy with my current phone and plan, and the iPod Touch is awesome. I’m happy with it as well. As for the Touch vs. the Shuffle, there is a huge difference. If all you want to do is listen to a little music, then the Shuffle is fine. But the Touch supports music, videos, pictures, games, internet from a wi-fi spot, and more. So it depends on your needs, desires, and budget.

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5 fredct

Greg, I’m not sure about twice as many, but certainly there would be more. There’s a decent chance I would be one of them.

But let’s think about what you said… if they half the fees and their subscribers double, then their revenue in the same (0.5 * 2 = 1). But now they’re supplying twice as many phones (they take a loss on every one), serving twice as many customers, having their network used for around twice as many phone calls and twice as much data, etc. That doesn’t sound like a good business plan to me.

And it’s pretty much in line for all the cell companies – they all charge $25-$30/month for unlimited data for smart phones (blackberries, iphones, etc). There’s probably a reason for it.

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6 Jesse

I’m part of the anti-apple revolution so I am half dissappointed in you and half happy to hear you didn’t jump on the iPhone bandwagon :) I used to repair iPods and they were just built very poorly to warrant the cost.

You are on the Sprint network and they just got their first android phone, the Hero. I got the phone as a replacement for my work phone so they pay the costs but I can tell you this phone is amazing and 100x better than the iPhone.

Here is my reasoning. Apple locks down everything so basically you are limited to what they want you to have, the apps they approve, etc.

The android OS is open source, meaning anyone can modify it, make apps for it, etc. Most of the apps for the Android Market are free, there are 10,000+ right now and more coming every day. Anything I have thought I wanted from the app market, they have had an app for it so far.

The Hero has everything the iPhone has and more, and it’s on your network. You may want to check it out :) it’s amazing. I will be doing a review of PF related apps soon..

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7 Soan

It is a known fact that people who buy things at launch are the ones who suffer from the ‘early adoption tax’. This term is really impressive.
Everybody knows it but people follow their heart instead of mind in these kind of purchases.

I like the idea and I never thought about it myself too. In fact, i also bought my first car when it was just launched in the market and i got no discounts what so ever. But after six months, that same car had free music system with each purchase.

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