Paying The Early Adopter Tax - InformationWeek

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IoT
IoT
Infrastructure // PC & Servers
Commentary
9/6/2007
03:07 PM
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Paying The Early Adopter Tax

There are a lot of taxes that I'm (reluctantly) willing to pay. I've never been late on my income taxes. (Hear that, IRS? I'm a good citizen.) I accept that paying city and state taxes are the price of living in a large metropolitan area. But one tax I've always balked at is what is popularly known as the early adopter tax.

There are a lot of taxes that I'm (reluctantly) willing to pay. I've never been late on my income taxes. (Hear that, IRS? I'm a good citizen.) I accept that paying city and state taxes are the price of living in a large metropolitan area. But one tax I've always balked at is what is popularly known as the early adopter tax.This is the "tax" paid by all those who want/need/demand to be the first on the block to own the latest and greatest tech. You all know who you are. You're the ones who bought Betamax VCRs in the mid-1970s. You're the people who bought the first IBM personal computers in the early 1980s before any competitors showed up. And you're the folks who stood on line overnight in order to grab one of the first iPhones.

So now, here's the deal: A little over two months ago, Apple introduced the iPhone (with the kind of media coverage that most tech vendors can only dream of) in two flavors: a 4 GB version for $499 and an 8 GB version for $599. During the recent iPod announcements, the company let it be known that it was dropping the 4 GB version and lowering the price of the 8 GB version to $399.

I asked my colleague Mitch Wagner, who had been one of those who went right out to get an iPhone, whether he felt at all irked by the fact that Apple had dropped the initial price of the iPhone so quickly and precipitously. (I say "initial price" because, of course, ROI -- the month-to-month cost of owning an iPhone -- hasn't changed at all). He said no, it's just that the initial iPhone owners paid an early adopter tax (and pointed me to his eloquent defense in a recent blog entry -- including some advice to those who bought the earlier models).

Perhaps. And this isn't much different from the way many other vendors operate -- I've talked to other manufacturers in the past who admitted, quite honestly, that a product priced at, say, $800 today might cost $600 in six months. But in this case, the shakedown hit in two months instead of six.

I can understand the temptation to immediately go out and buy a device as useful and revolutionary as the iPhone. And I admire those who, like Mitch, understand that it's sometimes necessary to pay extra for the privilege. Even if the extra means a hundred more bucks and half the memory.

Me -- I'd be livid. And judging from some of the comments I'm reading on Mitch's blog, I'm not alone.

UPDATE: Apparently, Steve Jobs has also concluded his actions were a bit precipitous -- he is planning to offer a $100 store credit to his set of early adopters. Good for him. (Thanks to fellow blogger Eric Zeman for catching this.)

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