The economics of an iPad

The economics of an iPad

You do not have to be a gizmo worshipper to know about a new product launch these days, such is the avalanche of product reviews, advertisements and social buzz when the latest contraption hits the market. The new iPad launched by Apple last week is further proof of this phenomenon.

Steve Jobs’ innovation factory has been lavished with loads of admiration these past few years, as it revolutionized the personal computing, music and telecom industries. The iPad is the next big thing from Cupertino, and could change the very definition of mobile computing.

But what is really interesting in all this is that only the risk taken by companies in developing a new product gets noticed. Far less attention is paid to the risks that consumers take to buy a new concept that may or may not be a trendsetter. One must also not forget that the next generation of tech products gets cheaper as later versions start rolling off the factories.

Innovative consumer products would never succeed if there were no risk-taking consumers out there to buy these new products. Think of the first of the faithful who lined up to buy the iPhone: pricey and untried. Harvard Business School professor Amar Bhide has called this “venturesome consumerism". An innovative economy cannot survive without it.

We wonder what drives these venturesome consumers. Is it the desire to be part of a group of faithfuls? Or is it an attempt to signal to the rest of the world that they have the money and the chutzpah to buy an untried product?

Adam Smith wrote in the Wealth of Nations that even though a linen shirt is not a necessity of life, “a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct".

We wonder: Is the iPad the linen shirt of today?

What drives the consumption of innovative products? Tell us at