Consumers Buy Less Tech Stuff, Keep It Longer

Hugh Pickens writes writes "The NY Times reports that there are indications that a sea change is taking place in consumer behavior as a result of the great recession: Americans are buying less tech stuff and making it last longer (reg. may be required). Although in many cases the difference is mere months, economists and consumers say the approach may outlast a full recovery and the return of easy credit, because of the strong impression the downturn has made on consumers. For example Patti Hauseman stuck with her five-year-old Apple computer until it started making odd whirring noises and occasionally malfunctioning before she bought a new computer for Christmas — actually, a refurbished one. 'A week later, the old one died. We timed it pretty well,' says Hauseman, adding that it was not so much that she could not afford new things, but that the last few years of economic turmoil had left her feeling that she could be stealing from her future by throwing away goods that still had value. Consumers are holding onto new cars for a record 63.9 months, up 4.5 months from a year ago and 14 percent since the end of 2008, according one research firm. Industry analysts also report that people on average are waiting 18 months to upgrade their cellphones, up from every 16 months just a few years ago. 'We're not going back to a time of our grandmothers' tales of what they kept and how they used things so carefully,' says Nancy F. Koehn, a professor at the Harvard Business School and a historian of consumer behavior. 'But we'll see a consistent inching or trudging towards that.'"

Comments

Re:Good News, Bad News

[intellitech]

The bad news is that the tech industry has to compete more with itself which means its scrambling over a smaller total of dollars available.

I think the industries need a wake-up call, to some extent. I find it remarkable how they expect people to keep buying and buying.

Just because technology gets older does not always make it obsolete, although electronic manufacturers try very hard to make it so.

Wirth's law

[tepples]

The bad news is that the tech industry has to compete more with itself which means its scrambling over a smaller total of dollars available.

The good news is that as the installed base of five-year-old PCs and netbooks increases, publishers of commercial software may finally realize that the common practice of increasing published system requirements rather than the efficiency of algorithms, commonly called Wirth's law, is costing them customers.

I would rather buy a quality product...

[stox]

and keep it for years than have the latest and greatest every year. Sadly, it is getting tougher and tougher to find those quality products,

Consumers making tech stuff last longer?

[fatp]

The summary said " Americans are buying less tech stuff and making it last longer"?

No worry, manufacturer are making everything last shorter

This is just what happends in bad times

[a_n_d_e_r_s]

When people have less money they keep their items for a longer period. They have functional items and don't have the money and there is less peer pressure to buy the latest since for many the money is tight. They dont waste their money by buying new items they don't need.

This more or less always happen when the economy are bad.

Re:This is just what happends in bad times

[Billly Gates]

The problem during this one is it was so severe that many who are making money are still not spending.

For example I have $3,000 sitting in my bank right now. I need a new phone but refuse to pay more than $140. Even at $140 I will have bad anxiety for purchasing it.

For those reading this it does not make any sense. But I was broke, and jobless for years. I am just used to eating top ramen and living broke. My brain is wired to think any spending is bad and dangerous. I may just keep my useless free phone that barely works out of guilt. $100 is a ton of money!

These mindsets are created during depressions more than recessions. This one has qualities of both. Most of the new jobs are minimum wage. Fear is still there as businesses love restructuring and financially engineering jobs that can be done with less and less skills via cheaper workers. The rest go to India.

The question is how do you change the mindset? Without that we are in trouble. However, a good savings rate more help the economy more long term so I do not know.

Re:This is just what happends in bad times

[TheRaven64]

My brain is wired to think any spending is bad and dangerous. I may just keep my useless free phone that barely works out of guilt. $100 is a ton of money!

I'm trying hard, but I can't see why you think there's anything wrong with this attitude. My current phone is from 2006. I paid £50 for it (a little under $100, at the time), and the only reason why I bought it instead of a cheaper one was that it supported WiFi and SIP, so I could make cheaper calls from home. Over the first year of owning it, I saved more than I paid for it by making calls via SIP instead of the mobile network. The only reason I'm thinking of replacing it is that the battery life is now pretty shocking (about a day on standby, two if you're very lucky). My quality of life wouldn't be improved by a new phone, so I don't buy one.

This sort of attitude is why I was able to afford to buy a house in the middle of a recession (and lower my cost of living a lot, since my mortgage payments are now a third of what I was paying in rent), and why I seem to spend far less time stressed about money than my contemporaries.

One good thing about the crisis

[cybergabi]

The environment will be happy.

A warning shot for the industry.

[zerofoo]

I don't see this as a return to frugality - I see this as a warning shot for the industry.

Innovation in the electronics and technology industry is stagnating. What really separates a high-def TV, smart phone, or computer from one of 5 years ago?

Consumers seem to think not much.

As much as I love my new Verizon iPhone - it's not really leaps and bounds better than my old 3GS I gave to my wife. My company switched to Verizon, so I was forced to "upgrade". If I was paying for it, I wouldn't have made the switch.

I think TV manufacturers saw this trend coming a couple of years ago, so they scrambled to put 3D in to every TV they could hoping it would spur another round of upgrades - and most of the world said meh...

The low-hanging fruit is gone - the tech world will need to really think creatively to create the next round of stuff that people find useful.

-ted

Realism

[camcorder]

Welcome to the normal way of living America!

You have to keep buying

[Colin Smith]

"I find it remarkable how they expect people to keep buying and buying."

But that's exactly what people do till they are trillions and trillions and trillions in debt.

Companies owe the banks lots of money, it has to be paid back or the thugs come rounds and break some legs.

You have to keep buying. There must be Growth!

 

Re:You have to keep buying

[dargaud]

You have to keep buying. There must be Growth!

"Growth for the sake of growth is the ideology of the cancer cell."
It astounds me that the entire economic system of most of the word is based on a concept that can only be sustained for a short period. Then what ? Why aren't there economists working on alternate systems to this constant growth ?

And back on the subject here at hand, part of the reason for the decrease in computer purchases is that they are becoming 'good enough'. Processors haven't raised their MHz noticeably in the last 5 years. Hard disks were at 2Tb 3 years ago, and there are only two models at 3Tb on the market now. You can't do much more with a tower PC now than 5 years ago. Laptops don't have much more battery life now than 3 years ago. Sometimes you have disruptive tech like the EeePC, but that stabilised too. As for the phones, I have a 18 months old HTC and the later models aren't much better. But it's much better than all the generations that came before, so it was worth upgrading before, not now.

It not so much the sign of a recession as of a mature market.

Re:You have to keep buying

[EdIII]

True, the banks are partially to blame. In my opinion, nobody should be allowed to buy a house without 20% down. Sure, there are financial wizards who can come up with crazy alternatives and be just fine. But the mess we are in is because too many of those fancy loans were handed out to people who probably never passed algebra 1.

Off topic, but I have to say that %20 down was not the problem. Not even remotely.

The problem FIRST started when they allowed mortgages to become security instruments. 50-60 years ago you had note burning parties. There was an episode of M*A*S*H where the Colonel (this was 1952) burned the mortgage note with the rest of gang. This was standard.

When a mortgage is sold from one financial institution to another it is critically important that there was a solid process by which the note itself (physically) was transferred. The details were recorded. The home owner could always demand to see the note and to whom they were paying. When the loan was fully paid back, part of the process was receiving that physical note back. The act of burning it was not just symbolic. It meant there was nobody in possession of the note to make a claim against you.

With the securitization of loans it created an environment where financial institutions needed to move faster and faster. They became more loose with the proper transfer of the note itself, and the most evil of instruments (because of use), the deed of trust was used more and more. It was customary to record on the note itself the payments and total amount owed. That obviously could not work at a speed suited for Wall Street.

With the laws, bought and paid for by Wall Street and the financial institutions, the ignorant public was more and more buying into the bullshit of deeds of trust and mortgage insurance. About as crazy as agreeing to arbitration with the credit institutions when they get to choose the arbitrating panel and have used to get "summary judgments" on thousands of people. It's tragic how many people show up to the bank to find their money gone when they never even had due process.

The thing that has never come out in the news is the massive, massive, massive fraud that has occurred with the banks. The vast majority of the time they cannot even *FIND* the physical note anymore, and more than one bank thinks they own the note. But why should that slow them down? They use the deed of trust to perform a non-judicial foreclosure. Which means they don't need to prove they own the note. Just that they are part of that trust arrangement.

This has been going on for YEARS. People have just been lucky that they had the money to pay their loans, and that the real estate boom kept property values going up. This allowed so many many people to get newer terrible loans that gave them money out of their equity. Why worry about tomorrow? Property values kept going up and that variable interest rate was not going to change in like *forever*.

What fucked us all up the poopchute was when those greedy bastards were not content to be transferring around the "normal" loans as fast as possible with a reasonable rate of return, and wanted the higher rate of return security pools instead.

They created a monster that needed ever more bad loans fed into it on a daily basis. It was fucking insane.

So the problem was not the down payment. It was getting a young couple into a home with a loan that started out at something like $1000-1500 per month. They could not think themselves out of a wet cardboard box (Algebra 1 would have helped) and could only understand their initial monthly payment. Between the two of them they both made $3500-$5000 if they were lucky. These stupid bastards were the same people on welfare or unemployment at the time, but could seemingly afford two Escalades.

The look of shock on their poor little faces when 2-3 years down the line that $1500 a month payment jumps to $1750. That *was* just the first 3 months! 12 months late