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Is there a right time to buy new electronics?

Is there a right time to buy new electronics?

By Paul Nelson | Posted - Mar. 11, 2011 at 6:00 a.m.



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SALT LAKE CITY -- It's a big day for techies as Apple releases its iPad 2 Friday. But, is there any way you can figure out how long you should wait to buy one so you can get one at a cheaper price?

Some tech analysts are pessimistic about that.

Historically, we see the prices of new electronics, like game consoles or televisions, drop after a while. The question is, how long do we need to wait? If you wait too long, you'll buy a product that will soon be obsolete because a newer product is coming out.

Sadly, no mathematician or electronics analyst has figured out the perfect formula yet. There are just too many factors to add in.

If you wait until the price of the iPad 2 drops before you buy one, you could be waiting a very long time. Gregg Stebben with AOL says if there is one company that is known for not lowering prices until they release the next generation of their product, it's Apple.

"Here's what happened with iPad 1. The price dropped fifteen minutes after they announced iPad 2," he said.


How can you possibly [determine] when is the best time when human beings are so funny about the value of things?

–Gregg Stebben


While some analysts say figuring out the perfect length of time to wait to buy electronics is impossible, there are many customers who would still like to make an educated guess. So, here are some of the factors that contribute to a product's price:

Demand

Remember when people went on eBay and spent close to $3,000 to buy an Xbox 360 when they first came out? When a hot new product is launched, there are some people who are willing to pay thousands above list price just to say they were one of the first to get it. Stebben calls this "dumb money."

This craze makes it hard to determine how long the demand for the new product will last.

Stebben said, "How can you possibly [determine] when is the best time when human beings are so funny about the value of things?"

But as demand drops, the price may drop, too.

Production

If the company plans on making many more units of a product, that could make the price fall too.

"There is what is called ‘economy of scale,'" said Stebben. "When you know you're going to make 15 million of something you can order a lot more parts at a much better price than you can when you only make a million of them."

Plus, Stebben says electronics makers learn how to be more efficient on how to make their product. So as times goes on, more efficient production could make things cheaper.

Competition

While Stebben says the iPad 2 likely won't fall in price, other tablet computers likely will. Companies like Samsung and Motorola are trying to ensnare customers who may be looking into buying an iPad 2.

He believes if any company has a realistic shot of taking away some of Apple's potential customers, it's Google.

"When the first Android phones came out, they weren't very good," Stebben said. "But look where they've come in just a couple of years. They're now selling more Android phones then they are iPhones."

The real way to decide

You could spend a lot of time researching demand, price points, upcoming sales and future products to guess when the best time to buy a new product is, but that could cost you a lot of time and you may not save a lot of money. So, Stebben says the best way to find out if now is the time to make that purchase is to ask yourself one question:

Will you enjoy the item you just bought knowing the price could go down and the next generation of the product may come out soon?

If you have the money, and if your answer is "yes," Stebben says go ahead and buy it.

E-mail: pnelson@ksl.com

Paul Nelson

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