HANDS up if you can remember the good old days when television sets cost half a month’s salary? Or when your chunky telephone was a telephone for life? Those days weren’t that long ago. And they weren’t really that good.
In the Britain of the late 1980s, printers for personal computers cost around £1000. A PC itself could set you back £5000. And brick-sized cellphones cost £1500, not forgetting the weighty subscription to make high-priced calls. Today, a few hundred pounds gets you a good quality laser printer—ink-jet printers cost far less. A decent PC hovers around the £1000 mark. And the price of cellphones seems to be forever in freefall.
Many consumer electronics goods don’t last a lifetime any more. But more people today have TVs, cellphones and computers because they cost less than in the past—even if you take into account running costs and the price of replacing things more often.
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What’s happened?
It’s what I call the “free-lunch revolution”. Manufacturers have realised there is precious little profit to be made from hawking black boxes which are increasingly cheap to produce. This is why you get the product for next to nothing. Manufacturers and distributors make their money by charging you for using the service.
A cellphone now costs little or nothing to acquire. But in order to get one, the networks make you sign a written promise to use it for at least a year. The idea behind pay-as-you-talk is the same: the phone itself costs very little to activate, but a lot to use.
Similarly, computer printers may be cheap to buy, but manufacturers make their money by selling expensive ink cartridges which rivals cannot legally copy, and whose price has stayed high.
And let’s not forget digital TV. In Britain, Rupert Murdoch’s BSkyB, and the ONdigital consortium, are giving away satellite dishes and receivers that would otherwise cost more than £400 to buy and install. To qualify for the free hardware the viewer must sign up to a service that costs money.
The latest hot gadget, on sale in the US and due soon in Europe, is TiVo, a black box which makes video recordings on a computer hard disc instead of tape and lets viewers pause during live TV broadcasts. At $500, it is heavily subsidised. But you have to pay $10 a month for the signals that arrive by phone to program the computer that controls it.
Despite the high cost of running these gadgets, the free-lunch model is ultimately good news for the consumer. Users of digital TV, for example, don’t have to renew subscription agreements after the obligatory first year. The receivers can then be used to watch free digital radio and TV programmes on public service channels. Cellphone users can save money by using their phones to receive calls for free, or make very brief phone-me-back requests. And users of computer printers can buy refilled, original cartridges—cheap and legal.
We could be on the verge of the biggest free-lunch revolution of all. When electric cars hit the mass market, drivers will need to recharge or replace the batteries during journeys. We could be driving free electric cars that can only refuel at approved service stations. How long before smart drivers find a way to get a cheaper charge?
