Gadgets: Great Value For The Money

From touchscreen-enabled smartphones to high-definition television sets, today’s hottest gadgets and consumer electronics may seem like a ridiculous extravagance. But in reality, they’re not. Call it a recession optical illusion: Our economic woes have warped our pricing perception. New gadgets only seem pricier because we no longer have the disposable income to blow on them.

Don’t believe me? Check out this chart, comparing the cost of some suddenly cheap gear to its average selling price five years ago (stats courtesy of the Consumer Electronics Industry, the folks who put on CES every year). As you can clearly see, price trends are definitely working in our favor, as costs plummet on many of the most popular gizmos on the market today.

Granted, maybe there are some gadgets that don’t seem that much more affordable, especially from the perspective of those struggling to make the monthly rent. But even these gizmos can still do a lot more than they did five years ago, offering greater value for the money.

For instance, camcorders are actually a bit more expensive now ($315 avg. sales price) than they were in 2004 ($297) because of all the fancy new high-priced HD options. But with the recent flood of new so-called "toy" video cameras, pocket-sized HD models priced less than $200 from Flip, Kodak, DXG and others, that ASP is bound to sink quicker than the Dow did last fall.

For instance, in a couple of months, DXG will start selling its latest HD camcorders: The $129.99 DXG-517V that shoots 720p H.264 HD video and 5 MP stills, and the $99.99 slab DXG-125V that also shoots 720p H.264 HD video and 3 MP stills. It’s likely that these cheap camcorders will begin to outsell "regular" camcorders in a few years.

DXG-125V and DXG-517V

In addition, a handful of gadgets are both way easier on your wallet, and do a lot more to boot. For proof, just compare the newest Canon digital cameras over a five-year time span:

Take into account that the dollar is probably worth less today than back then, and you’re getting twice the camera for practically half the price.

There’s no reason to believe that inverse pricing/capabilities trend won’t continue either – it always has.

But aside from normal technological advancements, there are two major trends that, in five years, could radically alter this century-old paradigm, making things even more interesting for today’s consumer.

Usb And Flash Storage Prices Plummet

The biggest technology shift will not be some new killer app, but the vertiginous drop in flash memory prices, coupled with a meteoric rise in capacity. To wit, you can now buy a 16GB SD card for nearly half the price of a 2GB card just three years back.

Kingston, which sells both flash memory cards and thumb drives, was kind enough to supply us with its retail SD card pricing over the last three years, illustrating the point:

Built-in memory on various devices is also getting cheaper. Nothing exemplifies this point more eloquently than the iPod Classic. Per below, note how prices have remained nearly constant over the last five years while memory capacity has increased six times over:

So much more memory for so little money could soon make the hard drive extinct, which means cheaper, lighter, more reliable and less power-hungry laptop PCs in five years – possibly even sooner. In other words, it won’t be long before we’re all enjoying netbooks with today’s full laptop capabilities and more.

One Gadget For All

The second major trend is the combination of technologies, with individual standalone gizmos quickly merging to form more practical and cost-affordable multi-use devices. Digital cameras and camcorders, for instance, are slowly melding – almost all digital cameras priced over $250 now offer H.264 HD video recording, and a good chunk of HD camcorders offer 5MP or greater still picture taking capabilities.

Standalone digital cameras remain better at shooting stills than camcorders with these capabilities (mostly because of lenses and processing technologies), and vice versa. But pretty soon someone will create a combo that handles both still and video well enough to satisfy even the most ardent critics.

The most important example of this new generation of Swiss Army knife-style devices is, naturally, the humble cell phone. First, handsets were just phones. Then they became PDAs. Then digital cameras. Then text messaging and email devices. Then multimedia hubs. Then Web browers, video players, portable GPS units and so on. When Mobile DTV service is launched this fall, they’ll even become portable digital television sets.

With memory prices dropping, functionality increasing and open cell phone operating systems such as Android, BlackBerry, Symbian, Windows Mobile and Palm webOS proliferating, the mobile handset is already becoming the black hole of high-tech accessories, absorbing all other standalone devices into it. The first of these cell phone black holes was the game-changing iPhone, released two years ago. In a couple of months, Apple reportedly will release its third generation iPhone with 32GB of memory, a 3.2MP camera and video recording, as well as multiple additional advances.

But this is just the beginning, or the end of the beginning, or the beginning of the end of the beginning, or whatever. In any event, five years from now, the iPhone and dozens of other cellular handsets running one of these various open operating systems will connect to worldwide 4G LTE networks, have 120GB+ of flash memory on-board, OLED touch screens, 5MP cameras or better, full accelerometer functionality, advanced video game play, HD video capture features, video GPS, video telephony, and a host of other advanced technologies we haven’t even thought of. Not to mention, that is, access to hundreds of thousands of imaginative applications that take advantage of all these wondrous technologies – all for less than $200.

So the next time you balk at dropping a few precious shekels on the latest must-see gadget, realize. In many cases, you’re actually getting a pretty good deal, at least until another six months pass, and prices freefall yet again…