When It Comes to the iPhone, Waiting Was Golden
June 10, 2008 9:54 a.m.

This is why smart consumers never buy the hottest new gadget.

Always wait.

"Twice as fast. Half the price," bragged Apple today as it unveiled the new "3G" iPhone.

What that says about last year's model is painfully obvious.

The new iPhone runs on fast 3G data networks. That means you can download the Web, music and even videos pretty quickly in most big urban areas. It costs $199, plus cellular contract, for a model with eight gigabytes of storage.

So much for all those who stood in line a year ago. They paid $599 (again, plus cellular contract) for a model with eight gigabytes of memory, and those models only ran on slower EDGE networks.

Of course, as far as Apple's hippest devotees are concerned, only a total dork would be seen dead with one of those now. Apple CEO Steve Jobs even used one of the 2007 iPhones in his latest presentation just to show how much slower they are than the latest version.

How humiliating is that? Owning one of these is like being the PC guy in a Mac commercial.

Those who bought an iPhone after Apple cut the price last September still paid $399 for the eight-gigabyte model. That's $200 more than they would pay today. And, of course, they are stuck with an inferior product. Those who were the earliest adopters, and stood in line when the iPhones first went on sale a year ago, did even worse. They're out of pocket by $300, and that's after counting the $100 in Apple vouchers they later got back.

Yes, the earliest adopters got their iPhones early. Perhaps the happy memories will keep them warm. Meanwhile the third party applications that will make iPhones and (similar) iPod Touch devices really interesting are only just being launched.

One thing I've noticed from personal observation is that a lot of the people who first rushed to get iPhones last year were in their early twenties. No surprise about that, I suppose. I just hope our savings, pensions and entitlement crises have miraculously vanished by the time they turn 65.

If they had waited a year, saved $300, and invested it for their retirement they would probably have an extra $2,700 – in today's dollars – by the time they turn 65. That's assuming a modest return of 5% after inflation. If you factor in that a lot of these people put the cost on a credit card, and that they probably aren't maxing out their contributions to their 401k and Roth IRAs, the numbers will be even bigger.

It's not much but it's something. Money is money.

I don't want to be too much of a spoilsport. Obviously any day that sees the launch of a new Apple product is one of national celebration and joy. Let the citizens dance in the streets. Let the champagne flow.

The interesting thing will be to see if we can now get some really good deals on last year's models. Now that they're hopelessly dorky and old-fashioned they should be going cheap on eBay.

Write to Brett Arends at brett.arends@wsj.com