The High Cost of Planned Obsolescence

Wednesday, I was walking my dogs around town and I noticed a couple of television sets abandoned in front of an apartment building.  These were nice sets that appeared to be in good working order.  They looked like they were fairly expensive five or ten years ago.  Yet, they were discarded like yesterday’s newspaper.  It got me thinking about how much money we spend on items that quickly become obsolete.

Quantum Leap vs. Latest Gadget

Abandoned TVs in San Clemente, CA

Abandoned Television Sets

I see so many old computer monitors and television sets being thrown out or given away, because the new technology is a quantum leap above what existed a few short years ago.  There is no comparison between watching a large, high-def, flat screen TV and staring into a small fuzzy glass box.  I know all about this, because I was one of the last people I know to get a new HD TV.  I keep my TVs on average of 10 years and I was holding out for the technology I wanted at a reasonable price.  After watching my new TV for only five minutes, I knew I made the right choice.  Now, I hope it lasts ten years.

What I won’t do is buy the latest gadget, just because it has a few new features or widgets.  I still have an original iPad and a five year-old laptop.  I had a Blackberry long after they had become passé.  I’m an IT Manager and I can get whatever equipment I want at work.  But, I really don’t care about the latest and greatest technology, as long as what I have does the job reliably.

Planned Obsolescence

Consumer electronics companies make a killing off of pushing the latest gadgets.  Apple, Samsung, Sony, Nintendo and many others have been using this ploy for decades.  Every new model has just enough new features to make the old model seem obsolete.  But, a couple of features have been held back, in order to promote the next model.  Another scam is the accessories.  Every new cell phone used to require a new charger and car adapter, until the government stepped in and made them standardize on the mini USB connector.  Apple is planning to change its charging connector on the iPhone 5, which will obsolete all of the existing accessories.  It adds millions to the cost of these products.  Video games are the absolute worst.

Back in the ’80s I worked for a computer printer company and I reported directly to the Product Manager.  I learned a lot about marketing consumer electronics and the art of planned obsolescence.  We shrank the product cycles from 3 years to 14 months, to entice more of our customers to upgrade.  We also reduced the lifespan of our ribbons, in order to sell more consumables.  Maybe, that’s why I’m so resistant to the latest gadget.  Or, maybe it’s just because I’m too cheap.  In either case, if more people voted with their feet, instead of their wallets, companies would provide better products and value for their customers.

The Curse of Consumerism

The biggest factor driving obsolescence is consumerism.  I know a lot of people who change their cell phones every three to six months and their cars every two or three years. It costs a lot of money to live like that and many can’t really afford it.  But, they are consumed with the latest trends and enamored with the latest technology.  It’s almost as though they get bored with their new toys as soon as they figure out how to use them.  Companies are pushing the upgrade treadmill with ads to make everyone feel embarrassed about being outdated.  Consumers keep falling for it.

One of the most important things I have done for myself financially is to drive older cars.  Sure, I would like to drive a shiny new car, like most of my friends.  But, I would never have been able to save up the money I have and buy the house I have, if I was spending that money on new cars.  I was sending my kids to private school and saving in their college funds while I was driving a Plymouth or a Dodge.  I can finally afford to drive a new car and I’ll have one within the next couple of years.  But, I am way ahead from not buying new cars when I couldn’t afford them.

The Bottom Line

The bottom line is that the less people spend on depreciating assets and the more they save and invest, the stronger their finances will become.  If you have the money to spend on cars and gadgets, then enjoy.  If you aren’t saving for your future, then you don’t have the money to spend on cars and gadgets.

“The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.”

Isaac Asimov – Science Fiction Author

Recommended Reading

Squirrelers – Penny Pinching on Basic Needs: Why?
Debt Free Adventure – Reasons to Pay Off your Car
Life and My Finances – I Refuse To Spend Money On…

This post was featured on the Carnival of Personal Finance over at Good Financial Cents.  If you aren’t familiar with the Carnival of Personal Finance, you need to check it out.  It’s the best place on the web to get your financial advice.

9 comments to The High Cost of Planned Obsolescence