“Consumer Surplus” from Personal Technology Is Soaring in the Age of Appreciation

3/25/11Follow @wroush

It used to be that purchases began depreciating in value the moment you bought them. A new car, for example, might as well come with a little Kelley Blue Book countdown under the odometer showing its declining resale price. Indeed, the idea that property depreciates is so universal that it’s built into our accounting methods and tax codes. Traditionally, there have been only a few categories of things that don’t automatically drop in value over time, such as homes (up until 2008 anyway), precious metals, and maybe fine art and other collectibles.

But in the realms touched by software and the Internet, something different is happening. These days, many of the tools that modern consumers depend on, such as computers, smartphones, and entertainment devices, actually grow more useful and more valuable over time, thanks to a) the constant stream of new applications that exploit the devices’ capabilities in innovative ways, and b) the relatively new tradition of free updates for applications or operating systems you already own. In fact, when it comes to digital technologies, we’ve entered what you might call the Age of Appreciation. You can buy a gadget like an iPhone, an Android phone, or an iPad, and then sit back and watch it get more powerful without having to spend another cent.

It’s true that hardware itself still ages, breaks, grows obsolete, or loses its luster. Lord knows that my iPad, which seemed so shiny and magical just a year ago, looks a tad antiquated in my eyes now that the iPad 2 is out. I’m definitely not arguing that we can or should stop buying new stuff.

But I do think it’s worth slowing down to acknowledge the amazing situation we’ve created for ourselves, only 70 or so years into the era of electronic computers. In the Appreciation Age, objects containing computers grow in value because their value resides mainly in the software code they run, and that code can be so easily replaced, supplemented, or upgraded.

What got me thinking about all of this was a pair of relatively routine upgrades to Apple TV, the little black box that lets you play TV shows and movies from the iTunes Store on your big-screen TV. Last November, Apple updated the firmware inside the Apple TV from version 4.0 to version 4.1. And then, just a couple of weeks ago, it upgraded again to version 4.2. We’re so accustomed to such decimal-point changes these days—and they usually happen so automatically, quickly, and painlessly—that they often pass unnoticed. But these two updates definitely came with enough goodies to catch my attention.

The biggest change was the addition last November of something Apple calls AirPlay. This feature connects different devices over a home Wi-Fi network so that, for example, a music or video file stored on a Mac or a PC can be streamed to your TV. I like this feature because it has turned my TV into the sound system for my whole apartment. I can start an album playing on iTunes on my Mac or my iPhone, tap the AirPlay button, and throw the audio over to my TV, which (thankfully) has decent speakers. I also like to buy season passes for a couple of TV series on iTunes and download the episodes to my iPad. When I’m at home, AirPlay lets me watch those shows on the big screen, where they belong.

The more recent 4.2 update came with a big bonus for sports fans: Apple added the ability to watch live, on-demand Major League Baseball and National Basketball Association games for people with … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • pipetodevnull

    I agree in principle, and here’s an “opposite end of the spectrum” anecdote: a tale of two PCs. One is the first I ever built, a 1.7GHz Pentium 4, the other a laptop I was given because the battery is lousy–it’s a 400MHz Pentium 2. Both are about 10 years old. With Ubuntu 10 on the former, and Lubuntu on the latter, I have relatively snappy and imminently useful machines. And they have a promising future. I find this wonderful.
    Nota bene: I am OS-agnostic, and run Windows 7/Vista/XP, OS X since 10.1, and many flavors of *nix–I am not grinding an axe here.

  • http://www.xconomy.com/author/wroush/ Wade Roush

    @pipetodevnull — That’s a great point. Computing devices have been generating surplus for a while now and your workhorse PCs are a great example. I just think the phenomenon is accelerating and reaching more people with the spread of connected gadgets, like smartphones and Internet set-top boxes, that are also open software platforms.

  • Steve Harig

    This sounds like Apple commercial, what a rod.

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