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"One should either write ruthlessly what one believes to be the truth, or else shut up."

Arthur Koestler 

Entries in Economics (326)

Wednesday
Feb272013

iPad

I never need to leave my chair! Hmm, that does not sound good.The iPad has become a basic part of my life. The ability to be on the Internet on the couch, in a parking lot in front of Marshalls, or driving down the street getting audible turn-by-turn navigation while driving is hard for me to overemphasize—but I will try. If I did not have it I would die. It is the only thing in my life that is working. I must buy the latest model, no matter what. 

Er, um, not so much. 

While the iPad has filled a niche I did not know even existed, the latest and greatest model is not really that much better than the last model. My transition from the iPad to the iPad 3 (technically they called it the new iPad) was not what I expected. I followed my usual iDevice procedure and skipped the iPad 2 and bought an iPad 3. The screen was better, but not that much better. On web pages it really does not matter. If I was watching a movie on my iPad, maybe the improved screen resolution is better. But I do not watch movies on my iPad. If I happen to do that, I push a button and the movie is instead played on my TV.

The iPad and the new, must have, magical iPad Mini! The original iPad actually had better Wi-fi reception than the new one—one of those couches in my house I mentioned earlier is not a good choice for iPad usage—poor signal. The old iPad in the same spot works fine. The original iPad's battery life was superior. You had to power that snazzy new screen somehow. For me from the iPad to the iPad3 battery life dropped from 9 hours (a little short of the promised 10) to 8 hours. The old iPad's battery life has now dropped to 7. This is normal as the battery ages. But that is not a problem, I just pop open the back and put in a new battery ... oh, wait, you cannot do that. None of the iPads have user accessible parts. While the stated rationale for this is to make the iPad look cool and thin (and to be fair, it is cool and thin), its real reason is to reduce the product cycle so you have to buy a new one—now with the A7 chip! 

I am not saying not to buy one. If you do, you will be surprised how much you use it. It is an essential part of modern travel. In fact I use it so much that I no longer need—no, that is not right…I never needed one—no longer want an iPhone. But while I am not saying not to buy one, I am saying not to buy the newest and latest as long as the one you have works. Do not buy into the Babylon mindset. The one who dies with the most toys does not "win." In fact there is a good chance they "lost." Since Apple products have a good life span (I booted up a "fat" Mac from the 80's a few years ago and it still worked), my next iPad will not be a 4, nor a 5. There is no need. 

On Friday I talk about my next computer. Tomorrow I have a music video, Leonard Cohen Meets the Man From Uncle. In the meantime here is some Kool Aid—Steve Jobs hype. 

  

Tuesday
Feb262013

iPhone

8mm Thin! Now in White! I remember my first iPhone, the iPhone 3. I was actually giddy with excitement that first week when I used the map app the first time. I got lost in St. Louis. The map app showed me where I was and where I needed to go. I was in geek heaven. The iPhone had really changed the way I used my phone. It was magical.

I was happy to upgrade to an iPhone 4 two years later. It offered much additional functionality. The games got better. The phone reception got a little worse, but hey, I rocked at Fieldrunners. Who wants to make phone calls anyway! (I am exaggerating here, I did notice slightly less reception, but nothing to rant about.)

As my two year contract is up, now is the time for me to get the new, thin, and awesome iPhone 5! Meh. There is actually no reason to get one apart from vanity or style. My iPhone 4 is more than adequate. Yes, it is not 8mm thin, or whatever Madison Avenue hype is for this year. I do not care.

Apple stock is falling on rumors that iPhone production is dropping. I doubt it, but you never know. My guess, based on way too many web pages and too many podcasts on all things Mac, is that instead they are gearing up for a 4.85" iPhone that they will announce in late March. The reason I think they will produce a larger screen iPhone is that they ridiculed the larger screen in the last two keynotes.

I missed Tostada Night at Arriba's this week. This looks good. Even a larger screen iPhone will not get me to buy one. In fact, I am seriously considering selling my iPhone and buying cheap phones for everyone on my plan. The $70 a month I would save would buy a lot of enchiladas.

Apple has always been willing to make great products even if they cannibalized sales of other products. The iPhone reduced sales of the iPod for example. The product that has made the iPhone obsolete for me is the subject of tomorrow's blog post, the iPad.

Monday
Feb252013

iPod Invisa

The first iPodOne area where Apple's planned obsolescence works is in the iPod market. Early on in the market there were really improvements to each edition. The addition of photos was particularly interesting, and that was my first iPod. I kept that one three years until the hard drive broke. I am still using my second iPod, the one with 160 gig hard drive. Why do I need such a large hard drive? I use over half of the space as I have 6000 songs. With the use of Apple playlists, I listen to them all in a rotation. I will add about 1000 songs this year, so I need the larger memory.  (If you are curious about the 1000 songs, I will bring them back from Russia when we go this year.) The iPod really changed the way I listen to music, and I am grateful that I no longer have to listen to ad-supported radio. I am especially glad to not have to listen to Rush Limbaugh anymore! 

There is one form of obsolescence I have no objection to. That is the form where advances in technology make the new product more compelling. But the iPod has, as near as I can tell, reached a limit beyond which the new technology will not replace the old technology in any meaningful way. Even a heavy user like me already has a lot more storage than I need. How then does obsolescence work? Here is how Wikipedia describes it:

An older iPod, too square for us hip music fans! When a product is no longer desirable because it has gone out of the popular fashion, its style is obsolete. One example is flared leg jeans; although this article of clothing may still be perfectly functional, it is no longer desirable because style trends have moved away from the flared leg cut.
Because of the "fashion cycle", stylistically obsolete products may eventually regain popularity and cease to be obsolete. A current example is "acid-wash" jeans, which were popular in the 1980s, became stylistically obsolete in the mid to late 1990s, and returned to popularity in the 2000s.

So the way that Apple does this is to periodically change the looks of the product, making it smaller and thinner. Or change the shape for no good reason. If you have a square iPod, when the current model is oblong, you are just a square yourself, and if you have a white one when your friend Connie got the special edition red one, you are not going to be asked to the prom. 

Is our worth determined by the things we own? 

Yes. 

However, this is true only if you are part of the system I call Babylon. When someone asks me to define Babylon quickly, I point out the bumper sticker, "The one who dies with the most toys wins." This is the heart of Babylon. 

This is the already obsolete iPod pequeño. So I am sorry Apple, as long as my iPod works I will not get another. It is on its last legs, so I may buy one soon, but not before the old one quits working. 

Saturday Night Live had a very funny parody that I want to put on the blog, but SNL is very picky about such things so it is not on YouTube. Instead click here to view that newest product, the iPod Invisa!  Sorry about the ad you will have to watch, but at least it is in German. 

While I am ranting against Apple marketing, if there was an iPod Invisa, I would definitely buy it. 

Tomorrow I will talk about the iPhone. 

Sunday
Feb242013

Planned Obsolescence

One of the aspects of Babylon is the planned obsolescence of its products. While this statement may be quite exaggerated, since this really hurts the brand's name and reputation, it does exist. Here is how Wikipedia describes it:

Planned obsolescence or built-in obsolescence in industrial design is a policy of planning or designing a product with a limited useful life, so it will become obsolete, that is, unfashionable or no longer functional after a certain period of time. Planned obsolescence has potential benefits for a producer because to obtain continuing use of the product the consumer is under pressure to purchase again, whether from the same manufacturer (a replacement part or a newer model), or from a competitor which might also rely on planned obsolescence.

Our old toasterWe recently remodeled my mom's home and moved in. It has an interesting history as it was built by a Hyatt, of the hotel chain. It had a helipad on the roof. The rumor is that JFK and Marilyn Monroe had a tryst there. We have already noticed that some of the products we have bought for the home have started to fail. Naturally, just a little past the one year warranty. So far the first to go is the toaster. Not a high ticket item, but it was annoying. 

We did not buy the same model, even though it was still available. We bought a competitor’s toaster. This is why I doubt that the obsolescence is planned—as I mentioned, it hurts the brand.

What is happening instead is price competition. If your product sells for $60, and the competitor’s for $50, and there is no perceivable difference, which will you buy? The engineers know this and they must reduce production costs to be able to sell their product at their competitor’s price. This leads to a higher failure rate. I do not think that evil engineers sit around trying to make an inferior product. They sit around trying to reduce production costs, which from the consumer perspective is identical. It is the system that does this. 

Apple avoids this by making top products that last a long time. They get a premium, deservedly so in my opinion. I am still using my 6 year old computer and it works fine.

However Apple does use a form of obsolescence—stylistic. This is planned and is much more subtle, I would even say insidious. Can you tell I am in the market for a new computer? I will blog about how Apple does it tomorrow. 

Apple is a poster boy for how most obsolescence works in our modern world. 

Thursday
Feb212013

The Pain in Spain

I was reading an interesting article about the Spanish crisis and how bad it is. Here is the introductory paragraph. 

Beleaguered Prime Minister Mariano Rajoy just broke another record. As if a plague of corruption scandals was not enough, Spain's debt-to-GDP has now reached levels not seen in over 100 years. As El Pais reports, Spanish debt levels rose at an alarming EUR 400 million per day in 2012 making for the largest annual increase in debt in the nation's history - all the while proclaiming austerity.

Several thoughts came to mind as I read this article. The first was that those that are against austerity do not have a viable alternative. The second is that there has been no real austerity anywhere except Estonia. It is not that I am I favor of austerity, it is just that there is no viable alternative. 

The final thought was the most disturbing. Look at the chart on the right from the article. It shows how rapidly the debt is growing in Spain. It is now 84% of the Gross Domestic Production (GDP). This is shockingly large. The last time it was this large there was a huge crisis. I assume that debt was repudiated in the 1880's in Spain. What can't continue, won't continue. (Note that it is only public debt. Private debt and unfunded liabilities from the banking crisis needs to be added to this to get the total debt picture.)

More Riots in Spain? 84% is way too large to be sustainable. 

What is the public debt to GDP for Japan? 230%. What is the debt to GDP for the US? 105%. What is the debt to GDP for Russia? 9%. Who won the Cold War? (Note that the Wikipedia article is out of date as the Spanish situation is deteriorating rapidly).

Remember, what can't continue, won't continue. The example of Japan shows that the US has some time remaining. Will that time be squandered?