Consumers have a near constant demand for electronic gadgetry in the modern age. The prices of phone, computers, tablets, gaming consoles and a wide variety of other devices fluctuate over time. It can be very beneficial to examine what the future holds for consumer electronic prices. While nothing is perfectly predictable, we can use past experience and market knowledge to gain a good idea of electronics prices over the next decade.
History of Falling Prices
First, the good news. Electronics prices have a history of dramatic price falls and an overall long-term trend towards lower prices. Consider the cell phone. When wireless phones were first introduced 40 years ago, they were bulky, limited and extremely expensive. At the time, the phone itself cost almost $4,000 and paying for service was equally inflated.
Today, demand for phones is so pervasive that a useable phone may cost under $50, and even an expensive model is usually free or almost free with a new phone contract. Even if you consider the full cost of some of the most expensive phones available today, they are remarkably more affordable compared to a few decades ago.
This overall trend is true of electronics in general. New technology tends to start high, sometimes very high, but it falls rapidly in price as supply for its components becomes more available. The insatiable consumer demand for the latest electronics is also a driver in the market. While higher demand usually equates to higher prices, in this case, it also equates to consistently strong supply which balances out the demand.
Rapidly Outdated Models
Technology today is also rapidly advancing in both large and small ways. It is estimated that on average six new laptop models and one new TV model are released every day, and a new camera comes out every other day. The constant release of new models is partly attributed to technology advances and partly attributed to consumer psychology. There is a drive to always have the best or newest device, so manufacturers strive to meet this demand.
The result is that models rapidly lose value even if they are not that much different technologically. No matter how fast things change in the next decades, there is a good bet affordable outdated electronics will always be available that are not that much different from current top models.
Outsourcing and Production Efficiency
A significant driving force in price decreases for electronics is outsourcing to cheaper manufacturers, most of them in Asia. Today, nearly all electronic manufacturing is centralized in in Asia, with European countries like Germany taking second place. While a great deal of electronics research and development occurs in the United Sates, very little actual production takes place there.
This is good news for electronics prices so long as the status quo remains, but this is far from certain. Prices based on outsourcing are subject to sudden and volatile changes if trade or foreign economies are disrupted. It is almost certain that prices of electronics would skyrocket if they could no longer be produced using the cheaper labor available in Asian countries.
The many secondary industries that rely on these devices is another major factor in overall costs. The home security industry is a good example. ADT prices tend to be heavily reliant on the costs associated with installing and maintaining security electronics like cameras and sensors. On a bigger scale, the cost to maintain network services is influenced by the prices of servers and communications equipment required to maintain the network. This effect on secondary industries is true of many services people take for granted each day, especially the cost of internet providers or television channels.
While there is generally good news about the future of electronics prices, they are vulnerable to certain unpredictable market factors. Consumers can be assured that electronics will continue to advance and that with a little patience even the most expensive new gadget is likely to become affordable after a few years.