Six months wait before buying a smartphone will save you money
Note: this article applies to any smart phone but Galaxy S3 and S4 have been used as case studies.
“Do you think I should buy this Galaxy S4 I am hearing about?” a friend called me to enquire shortly after the launch of Samsung Galaxy S4. His reason for seeking advice was due to the fact that he had bought Galaxy S3 just a few months before S4 was launched. Second incident was a discussion I had with another friend who also owns Samsung Galaxy S3 on the insignificant value of Samsung smart phones as determined by their high rate of price depreciation.
First question, why would you rush to buy a smart phone at launch knowing so well that one or two months down the line the smart phone is likely to be 10-15% cheaper? Second question, why would you buy every Galaxy S series that come into the market knowing so well that the function differences (hardware differences are hardly noticeable) are worth less than 5% the products’ prices? The answer to the first question, I guess, is so that you can win the debate between Larry Madowo and Bob Collymore on who of the two was the first Kenyan to acquired Samsung Galaxy S4. I also think the second question’s answer has a lot to do with the answer to the first. Each year you want to be the first to own the new hyped gadget. I really do not think there is any other economic sense for someone spending 15% more on an item each year for products they hardly need other than the need to maintain a desired status in society. The price of acquiring and maintaining social status (based on new technology gadgets that you own) is very difficult to calculate. If purchase prices were to be set on the basis of social status, then I think gadgets that the very influential CEOs and personalities “feel good” about could all cost millions of shillings. Smart TV divisions seem to be getting their valuation based on social status correct.
So, if you are a smart phone consumer who wants to use current technology (reasonably current) but also mindful of how your money is spent, when should you acquire a new smart phone? I will discuss this question with insights from the incidences I had with my two friends.
If I already have a smart phone, how many new series of the same smart phone product line should I skip before I can upgrade to a new smart phone? An article I read sometime back was advising smart phone consumers under contract purchases to wait at least two years. The advice was based on the fact that most contracts are binding for two years and since major smart phone manufactures avail new products of similar lines every year, and also due to the fact that each new product launch does not have a significant leap in technology breakthrough, then two years wait is justified. Having this in mind, I told my friend that S4 did not have a remarkable change from S3 and that some reviewers actually considered S4 as S3s, so he was better off waiting for Samsung Galaxy S5.
My friend bought the advice and he is probably very anxious on when the S5 will be launched. But when S5 will finally be here, at what point in time should he buy it? At launch or when the price is 25% cheaper? According to phone price review by Kevin C Tofel of Gigaom.com, smart phone prices reduce by 41% four months after launch, on average. Considering that in Kenya Samsung Galaxy S4 price reduced by about 10% within the first four months of its launch, and up to now Galaxy S3 price has reduced by 25%, then I would highly recommend for people to buy products between 4 and 8 months after product launch. Actually the most cost effective time to buy a smart phone is one or two months after a new product in the same series has been launched. In this regard it would have been better for Galaxy S4 buyers to make their purchases two months after the launch of Galaxy S5; and those who want to upgrade from Galaxy S3 to a new Galaxy S series, instead of buying the Galaxy S4, make a point of buying Galaxy S5 four to eight months after S5 launch. Galaxy S4 buyers are better off waiting for S6 in order to upgrade; and the waiting formula would be Galaxy S(x) to wait for S( x+2) to upgrade.
Immediate point of concern for those who want to be upbeat with technology is how far behind would one be if there is need for waiting 4-8 months after product launch. Even so, wouldn’t they be so far behind if the most cost effective wait period is buying the currently hyped product two months after the launch of a new series? Yes, one would be behind, but not that far. Another friend wanted to buy Samsung Galaxy Note2, a few months after he acquired the S3 in order to keep up with technology. I told him that other than the S Pen, most of the Note2 features including mult-window, new gallery view options, block mode etc were available in S3 after the S3 upgrade from Android 4.0 to Android 4.1. The fact that previous phones acquire most of the new features has greatly benefited the S2 buyers who are enjoying most of the features in subsequent releases. For example for those who installed the leaked Android 4.2.2 on S3 are enjoying most of the features in S4. Android 4.3 is also promising to give S3 users more S4 features once it is released.
To conclude, don’t rush to buy a new smart phone immediately at release. Actually you will feel bad that your colleagues who were patient for about six or so months were able to buy the same phone, probably with better accessories and software, at a price 25% less. Also, if you have a smart phone and you want to upgrade, don’t rush, new releases are generally evolutionary rather than revolutionary so you are able to catch up with them thanks to OS upgrades.