Computer Dollars: Why to Upgrade instead of Buying New

Oh man did I come close to buying that computer. Three days in a row I
visited the apple store website, and click through all but the final
screen to purchase it - just doing research on what the whole package
would cost, I told myself. There's a certain kind of consumer lust that
apple fanatics are a particular victim of, but I think everybody with a
computer has felt this, how great it would be to start afresh with the
instant gratification of a shiny new, fast system.

My friend snapped me out of it. He pointed out $2000 is a large amount of
money, for something I probably didn't need that much. In fact if I put a
small fraction of that money towards upgrades, I could be very happy with
my 6-year-old computer which I use for modest purposes (such as blogging).
With computers especially, waiting to buy a new one is almost always
better. *Always* better? I protested. But then when would you ever buy a
new one? Well eventually, but it's important to know just how much a
new computer dollar spent now will cost you; or alternatively, how much
money you can make by holding off on buying a computer for another year.

I looked at laptops at the $1299 US price point, one which apple is fond
of and which my modest dream computer (before the bells and whistles) was
at. I compared it to the specs on the mac laptop selling for the same
price that was available 2 years earlier, to see how much more bang for
your buck you get. (note that apple has fairly messed up pricing, partly
because of exploiting aforementioned consumer lust, so the exact values
will be quite different for PCs, but I'll bet the story by and large the
same) These are both 13" intel core 2 duo MacBooks. In two years the same
money buys you twice as much hard drive space (from 80 gigs to 160) and
twice as much RAM (1 gig to 2). The clockspeed has not increased, but the
Speedmark 4.5 overall benchmark (courtesy MacWorld magazine) has gone from
185 to 195, a 10% increase assuming a ratio scale (actually I thought it
would be more - it seems after going to Intel and adding a second
processor dramatic speed gains are harder to come by - but who knows when
the next big jump will be?) Finally, it's gotten lighter, from 5.2 lbs to
4.5, a 13% decrease, and with a nifty aluminum unibody construction.

So the same amount of money buys dramatically more built-in goodness. But
it came home to me when I looked at it a different way: If, in January
2007, I had shelled out the money for a computer as good as the $1299 two
years later, how much would it have cost me? A roughly comparable computer
of the time, according to the speed tests and the ram and hard drive, was
the 15" MacBook pro with 2.33 gigahertz. This computer cost $2499, $1200
more than the 13" 2 gig model. You could say some of that goes to the
larger size of screen, but on the other hand it had a 40 gig smaller hard
drive than the $1299 2009 macbook, and it was also more than 20% heavier.
Let's knock off $300. By holding out for 2 years, its like you've earned
$900-worth of computer. Take $250 worth of upgrades it might take to keep
you content with your old computer over that period, it's still like
earning $650 on $1300 that you put aside. A 50% return over 2 years,
which is like a compounded yearly interest of 22%. I don't know anything
about investment, but that seems good. (note that another thing you
might draw from this is that it might make sense when buying a new mac to
get a low-end model, and then soup it up with 3rd party components)

There's lots of other issues I'm ignoring, like resale value (I have never
sold promptly enough for the resale value to be worth anything) and the
math will be totally different for the PC world possibly leading to
different conclusions, but this exercise has led me to think it's *always*
worth souping up your computer before buying a new one - and for PCs,
where you can actually replace the CPU, maybe it virtually *never* makes
sense to buy an all-new computer.