Tuesday, November 6, 2018

Smartphones and what they really cost you


When you add up the cost of smartphones over time, they don't look very appealing.

If you think your family’s smartphone addiction is bleeding you all dry, you don’t know the half of it.

Based on typical smartphone costs and usage patterns, your kids will end up spending a staggering $75,000 apiece on their phones over the course of their lives, according to valuation company Flipsy.

And even they’re only scratching the surface, because they missed out the biggest cost of all: The opportunity cost of all that money.

If you factor that in, the true lifetime cost of your kids’ love affair with their Apple iPhone is closer to $300,000.

That figure is based on the average amount spent per year in the U.S. on cellphones, and the average returns you’d make on that money if you invested it instead from age 18 to age 78 and upgraded every 32 months.

. . .

Americans also spend approximately $88 a year on apps and unlimited data plans typically cost around $80 a month.

Put that money into an investment account, and factor in long-term returns of around 4% a year after inflation, and you reach that $300,000.

As with all calculations, there are plenty of assumptions about average users. But they help show the value of reducing these bills. Based on these calculations, someone who buys a cheap $150 Android phone every two years, and switches to a $20 a month plan, would add more than $200,000 to their retirement account.

There's more at the link.

I suppose there's always the utility aspect to consider:  how much one can do with a smartphone, and how much easier it makes one's life in many ways.  Nevertheless, that's a heck of a lot of money to invest in something like that.  Is it worth the cost?  For me, I'd have to say, no, it isn't - but then I don't use a smartphone as anything but a communication and occasional navigation device, with a few rare instances when I might use a browser to look up something.  I don't bother with games, apps, etc.  For others who use those more, perhaps it is worthwhile.

The cheaper option mentioned in the article is attractive, from that perspective.  Miss D. and I make do with cheaper, lower-end Android smartphones, and use a relatively low-cost monthly plan.  We have everything we need, and at a price we can afford.

What about you?  Do you get enough use out of a smartphone to justify those sorts of numbers?  Let us know in Comments.  I think it might be interesting to see the spread of opinions.

Peter

25 comments:

lee n. field said...

Cheapest Android Tracfone cost my wife around $40. $125 will get you 1500 minutes good for a year. Whenever I end up retiring and losing the work cell, I'll probably go that route.

I can't see buying Apple I-anything.

mark leigh said...

Considering that a co-worker was running a side business entirely from his smart phone. I would say that they can be of inestimable value or no more than time sinks but I would bet on future necessity.

Jess said...

From a business perspective, smart phones are replacing full size computers for many daily tasks. That's a necessary business expense and a write off.

From the personal perspective, smart phones offer hours of babysitting, and allow many people to ignore the fact they spend way too much time, and money, on something that is only as important as entertainment television.

I have a flip top. It can connect to the internet, but is mostly useless for such things. It's good for receiving texts, but the alphanumeric typing is so tedious, I usually call a person to communicate.

Pat Haney said...

I have two actually. One for work, one personal that I use for personal communications and a side business. My plan is about that $80, but it covers two smart phones and an ipad.

I find the ipad more useful than the phone at times. The wife's has cell, mine is wifi only. Free wifi is nearly ubiquitous. and if not, I can pair it with my phone.

You're missing the productivity enhancing features. For what I do, it freed me up to the point where I can be anywhere and function at my jobs. So factor in the time I'd have to spend in the office, and that takes a huge bit out of the cost.

It's a specious exercise to calculate the costs, especially opportunity cost. You can do the same with cars, or even smoking. How many packs a day X how much they cost?

You can do it with fast food. It's the same exercise.

Smart phones do come at a cost though, with time needlessly wasted, especially on social media and apps. That said, you're assuming these people would be doing something productive otherwise.

Jim said...

I stick with the older technology. My phone does have a keyboard but that is it. I keep it around mostly for emergencies. I suppose I may upgrade someday, but I believe I'll wait until my present phone bites the dust. Hopefully that'll be years.

HMS Defiant said...

I mostly use my iPod. It has my books on it and wifi is just about everywhere. I have a iPhone 4 that still works just fine. I replaced the battery in it about a year ago and it's as good as new. I'm just waiting now for Apple to kill witih termination of service for IOS older that the current/next generation. Mine is about 6 updates behind because it doesn't have the capacity to upgrade. If I lose it to denial of service, I won't replace it.
Remember when they used to give you the cell phone as part of your plan and your plan only cost $19.00/month? The good ole days.

HMS Defiant said...

I forgot to mention, it's like my Dell Latitude which is now 16 years old and running as sweetly as it ever did. It still runs XP PRO because it couldn't jump the hoops to make it into any later version of windows. Still sitting on my desk.

Feather Blade said...

I have a flip phone. Texting, making calls, and occasionally putting appointment reminders on the calendar are most of what it does for me.

Mad Jack said...

I don't own one. I have a flip phone with the texting feature turned off. I use it to make and receive phone calls from friends, and occasionally, family.

Sam L. said...

I have a flip-phone. I'm just SO retro.

Sam L. said...

I also don't text.

Stan_qaz said...

We lived with no phone for about 10 years and loved it. Anybody really needed to contact us they could e-mail (had a PocketMail device) or mail a letter.

Ended up with a cheap cell phone and plan, not because we wanted one but because pay phones were getting rare and we needed to be able to call for help if needed.

Now we have a bottom of the line flip phone, not many minutes and every future turned off that we can.

Stupid thing keeps ringing with junk calls and scams, we are about to the point we are going to turn the ringer off and just check for voice mail once a day.

suburban said...

I have to use iPhone because of a must have app I use for my field that is not available on any other platform. In terms of usage, I use a smart phone (which is always on my person) to stay connected with email, Facebook (an important way I market my products and services), slack, and browse websites when I am not in front of my laptop. The smart phone is not my preferred way to do anything except phone calls (two services), but it is a handy way to do things when I do not have access to my laptop or iPad. The other thing I find valuable is using my phone as a hot spot when I have no other way to connect my laptop or iPad to the Internet. This last is particularly important in emergencies when lines might be down. The other emergency use is texting since text messages get through when other form of communications do not. Of course when all else fails there is always ham radio.

fast richard said...

I finally broke down and got a smart phone a couple of years ago, a low end Samsung. Haven't had a land line in years. I'm on the road most of the time so the cell phone with unlimited data is my main source of internet. I think about dropping the high speed internet at home, but when I call to do so they drop my bill low enough to keep me for another year. My other alternative is the internet connection available at truck stops, which is theoretically unlimited and only about $100 per year. The reality is that the connection at the truck stop is usually worthless, even after a supposed big upgrade in the last couple of years.

Like anything else, you have to decide whether any given expense gives enough value to justify the cost.

Stan_qaz said...

Free WiFi is sometimes pretty good, I've used Starbucks a few times from my laptop when mom's Internet was dead and I needed something off the net while visiting her. Works fine from the parking lot, no need to go inside.

Looks like there are a lot of free WiFi locators out there:

http://www.wififreespot.com

Aesop said...

IANAStock broker, but if you can show me any investment from the invention of smartphones to now that's gotten 4% return annually over the last 25 years, you're in the wrong business.

Firstly, they're not phones, they're personal computers, which happen to have a telephonic function, and have been for a decade or so.

I'm still using a PC, but could replace it completely with a tablet or one of the larger phones, with little degradation in function.
But I cannot put a PC in my pocket and go to Disneyland, or Timbuktu.

So what's the opportunity cost of not plonking down $2K every two or there years for the PCs that aren't being bought like they were a decade ago?

Secondly, they're not just a PC, they're also an entertainment system and twenty to ninety other things.
Nota bene nobody's publishing encyclopedias anymore, because Google and Wikipedia have killed that market.
What's the opportunity cost of not sinking a couple of grand into that, ever again?

Streaming movies and TV shows?
No TV, no player, no movie system.
Ever.
Or, just a monitor, and streaming the content from phone direct to the screen.

These little black monsters are killing off entire industries.

How are Kindle book sales doing, as print books decline?
You're in that trade, so tell me, are e-books shrinking, or growing?
And dead tree versions, same question?

What about street atlas sales?
Note pads?
GPS handhelds?

Good heavens, man, one of these wipes out most of a major department store except food and clothes, and actual tools.(And mine came standard with a calculator, flashlight, compass, and level function, and it's 6 or 7 years old at this point. Four more things I get with the phone.)

Have you looked for a brick-and-mortar record store or bookstore lately?
How many electronics chains have gone belly up since 1995 or so?

That's what a smartphone is: it's literally wiping out entire malls and downtowns, at the speed of electrons, and putting them in your pocket. (We'll overlook the Orwellian aspects of putting Actual Big Brother in your pocket, and chaining you to the 'net over nearly every square inch of the habited planet for the moment.)

Don't be the guy who notes the higher opportunity cost of a car, and overlooks the savings in hay and vet bills and saddlery and buggy whips and buggies and time spent shoveling horses...er, rose fertilizer.

I choose to use mine as a phone, primarily, because I don't like putting all my eggs in one small basket. Put your whole life into the phone, and then lose it, and then where are you?

But 10-to-20-somethings aren't that prescient, because they've never yet had technology, or life generally, soil the bed on them.

Tewshooz said...

My husband and I both have TracFone Androids and occasionally I text and get pics of grandkids. We use them as phones and turn them off at night. Best thing about a smart phone is that we can turn them off and block numbers. But then, we are old school and do not have to be connected to the rest of the world 24/7. Free range old geezers.

Rob said...

Smartphone? I have a computer in my pocket! It can do phone calls too...

It costs me $45 a month. If this is going to be my only internet access it's $55/month (unlimited data).

I cannot recall what my land line cost.... that was back in 2012.

Hllbillygirl G said...

I had only one phone, rotary, until nursing school. Was forced to get phones for the girls when spermdonor took them out of state without telling me, and left them with people whose last name he didn't even know. Got them phones that week, found a plan with verizon that was a base line with 10$ a month each phone. My bill was around a hundred dollars a month for five phones. Fast forward ten years, and one of the phones started getting weird, and died. When I went to verizon, to replace it, and they found out I was only paying the ten-dollar plan, they flipped. Within a week ALL the phones coincidentally died, totally bricked. Went back to verizon and was forced to get new phones and sign up for another plan entirely, which seemed to go up every month until it approached 400$. I cancelled them and went to Sprint. Same phones, crappier service but a third the cost. Would happily go back to living 19th century, but the phone is now everything all other commenters have mentioned, and pretty necessary for work and school. Calling ability is last on the list.

Will said...

In the early 00's I had three phones. Landline, and one personal and one job issued cells. Never used the land line. At some point the phone company turned it off so they could add a line for someone else in the neighborhood.
Did the Tracphone with purchased minutes for a year or two, and then gave it up as too much hassle.
Got my last flip phone about 5-6 years ago from MetroPCS, and that was ok for a few years @ $25/mo. Needed to replace it, but they were out of stock, so I bought a smartphone (LG) for ~$100, @$30/mo.
Mostly used for calls and text (lots of people only accept text, it seems), and occasionally for navigation. Have Kindle on it, and almost never use it for Google searches. No games or apps. No idea what functions it has besides calculator and camera. Bit large for pocket carry. About the same footprint as my first cell, a Nokia 900 in the late 80's, but much thinner. (That Nokia model number was about the market price, and I wondered if there was a connection)

Barry Needham said...


That's a pretty silly financial analysis, it must be done by the same people who manage government employee pension plans.

My smartphone has replaced 2 out of 3 cameras ( $800), 3 GPS units with charting, mapping, and traffic services ($1,900), my landline which with unlimited voice on my smartphone comes out ~$100/month ahead, 5 newspaper and magazine subscriptions (~$100/month), my calculator ($150), my extra compass ($100), my light meter, calendar, phone book, organizer, the list goes on. Then, reasonably secure communications with VPN and signal, a mobile secure internet router, a backup to my primary internet router, much better real-time weather, and the best pocket reference I have ever had.

Smartphones are disrupting industries and services worldwide.

AJ said...

Forget the $$ cost. For all the reasons listed above they can be a total waste of $$ or a massive $$ saver. Depends upon the user. The real cost is an entire generation of young people who cannot be in the now, where they are and with the people they are with. Faces buried in their screens instead.

Larry said...

Small loss, for the most part. Then again, I usually find it difficult to talk with most people I don't know very well unless work is involved. From what I happen to overhear at work and elsewhere, much of it just seems like sophisticated monkey chatter. Computers and smartphones were a tremendous boon to people like me.

HMS Defiant said...

We are watching the good place on netflix and I like that every bad janet is always 100% engaged with her phone. They struck truth with a hammer.

Unknown said...

I've successfully worn-out two secondhand android phones and an iPhone, purchased late-enough that they were unfashionable and cheap, but early enough that they still ran a reasonably current and secure "OS".

Those three I used on a prepay "MNVO" plan, and turned the data off on the phone, using WiFi for the few occasions where it would be handy to look up a route, business closing time, refer to an email, or the like while on the road away from home and a computer.

The "Must Have App" for work caused me to choose to get a decent data plan with an MVNO for the current smartphone, but my data usage is small enough that I've never exceeded what is "free" in a month, and it is handy to be able to look things up away from home without finding a free wifi hotspot.

For me, $50 to $100 for the phone, and service from an MNVO (https://en.wikipedia.org/wiki/Mobile_virtual_network_operator) has made it a reasonable proposition for my lifestyle. If I didn't have clients insistent upon specific communication apps that require data, it might not be -- but I find more and more one can find a cheap app that allows you to use the blasted thing in place of very expensive testing instrumentation. In fact, when I've needed to specify test gear, I've sometimes gone with a tablet andriod and app in preference to the much less flexible hardware options.

Douglas2