With iPhone, It Pays to Wait


WASHINGTON (TheStreet) — The Apple (Stock Quote: AAPL) iPhone 3GS smartphone may seem less intelligent once the 4G arrives, but snubbing its $97 Wal-Mart (Stock Quote: WMT) price for a costlier, unproven device is really dumb.

After Apple released the 3GS last year, the original 3G model was marked down to $99 and sales spiked from 3.8 million in the 3G-only second quarter of 2009 to 8.75 million a year later. However, since Apple's sales figures don't differentiate between the two, we don't know who's getting the video-challenged original recipe and who's shelling out an extra $100 to $200 for voice controls.

If you think it doesn't make a difference, ask Sony (Stock Quote: SNE), which only a year ago announced that the 10-year-old PlayStation 2 was outselling the more current PlayStation 3 and PlayStation Portable combined. Though that situation was alleviated when Sony dropped the price of the PS3 by $100 last fall — as Microsoft (Stcok quote: MSFT) did with its Xbox and Nintendo did with its Wii — the PS2 is a prime example of a proven, price-friendly tech product undermining an anticipated upgrade.

"It's a long-established rule in electronics that if you hold out a little bit longer, particularly for a brand-new product like the iPad or first iPhones, you're likely to get a better deal," says Paul Reynolds, electronics editor for Consumer Reports. "In many cases with mature products, as well, they've achieved a level of performance where the incremental gain with each new processor, for a computer, or each new successive version of a digital camera line — which are refreshed very often — may not be something that's really critical."

Across the tech sector and in every electronics store, there are scattered examples of the benefits of being a step behind. Few people know this better than the plasma television-purchasing public, which has been the prime target of the 3-D push. Samsung wants $1,800 to $3,800 for its 50- to 63-inch 3-D plasma televisions, while Panasonic is seeking $2,500 to $3,000 for its new Avatar-playing plasma models. However, a large subset of consumers who don't feel like shelling out for new 3-D-compatible Blu-ray players, $100 to $200 pairs of glasses and copies of Clash of the Titans 3-D are more likely to pick up Panasonic's well-received 50-inch Viera TC-P50C1 for $800 or Samsung's 50-inch PN50C450 for $50 less.

"There have been some advancements in plasma, notably the addition of 3-D, but in many ways plasma technology has been somewhat stable and very reliably delivering a good picture for many of the brands we looked at," Reynolds says. "Going to the past generation of the plasma set really is not taking that big a risk, and you really can get some good deals."

Readers just now buying into e-books have been similarly rewarded for their sloth. Last summer, when Amazon's (Stock Quote: AMZN) Kindle 2 and its 6-inch screen was selling for $359 and the newly released DX with its iPhone-style rotating 9.7-inch screen was just $130 more, first-timers were content to let first adopters play pioneer just out of their price range. After the Kindle 2's price plummeted to $259 last fall — following the release of a $199 5-inch Sony Reader and forcing the newly released Google (Stock Quote: GOOG) Android-powered Barnes & Noble (Stock Quote: BKS) Nook reader to match it — bargain readers and their timely technical upgrades gave consumers better options than their small smartphone screen or the immoderate and inscrutable Apple iPad.

Service-based devices, especially GPS devices, are a case in point. Garmin, TomTom, Magellan and other navigation-based companies offer free traffic services with many of their devices that — while not ideal in all case or locales — draws a clear dividing line between them and newer products supported by subscriptions to Sirius XM, Microsoft's MSN Direct and other services. Garmin's new Nuvi 265T, for example, may not have the camera, Wi-Fi connectivity or e-mail contacts of the new 3G-capable Nuvi 295W, but, at $180, it's $100 less than the newcomer and boasts the free traffic access that its suped-up stablemate lacks.

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