Understanding The Marginal Utility of New Gadgets
I used to be a big sucker for new electronics. I liked to own the latest and greatest, and got excited to watch new product announcements. This time of year is especially trying, as the new iPhone and Google phones are announced. New features, new design, all the glitter!
Following the launch of a new smartphone, you’ll quickly hear the hoop-da-la about the latest and greatest features. It has a better screen! It can charge wirelessly! It’s in super high definition! But everybody fails to mention that most of the features that are packed into these new devices are also found in the previous versions.
The Marginal Utility of New
The marginal utility of a new device, or the useful gains in getting the new version of a product, are usually fairly small. From a daily use stand point, almost everything a new phone does, the previous version does as well. The marginal increase in utility is not significant. The main difference, is the cost.
When you break down how you use a piece of technology like a smartphone, you’ll quickly find that you likely have set number of use cases. Calling, texting, and using a handful of apps is typical for most people. The requirements for doing those tasks is often basic, and found on most phones that were made in the past 2-4 years. The impact of new features for most products is more about marketing, than it is about bettering your life.
When to Upgrade Your Gadgets
Don’t get me wrong – I’m not advocating that you live like a hermit in the stone age. There are real benefits to using new technologies. Our quality of life is improved when we communicate with friends, share memories, and have access to productive tools. So there is a time and place for upgrading your gadgets.
The concept of marginal utility is based on the margin, or the changes on the very edge of product development. Meaning, the changes in brand new products, over the most recent previous version. This is the place where you tend to have the least increase in benefits, at the highest level of cost.
However, if you look further down the product line, jumping from 3-4 versions back, to a newer version, you can begin to have more significant increases in utility. At this level, you are no longer working on marginal changes, but compounded improvements overtime.
The time cycle of when changes become significant is dependent on a few factors:
- The Innovation Speed of the Product
- Your Personal Use Cases
- Your Budget to Purchase Items
Products like smartphones tend to have notable changes on a 2-4 year horizon. Whereas automobiles tend to have more of a 7-10 year significant change cycle. Examining how you use your products, as well as doing research can help you determine when you are going to upgrade.