Early adopters: should you be the first to take the plunge?

News David Crookes Dec 6, 2012

This is the season of fresh tech launches. So should you, like David Crookes, take the plunge early or sit back and wait?

Tech lovers face frequent dilemmas which not only tax their brains but have the potential to pulverise their wallets too. The Wii U is the current big issue: is the fading memory of that day you put your Nintendo’s original Wii into the loft enough to prevent you from splashing out on its latest tablet-accompanied console? Even at a cost of £250, with only one ‘Gamepad’ controller and no game, it’s a gamble that many will be giving serious pre-Christmas consideration.

At the heart of the dilemma is the issue of early adoption. Those who love new kit frequently want to get their hands on the latest model, and you only have to check out the long queues outside Apple stores across the world whenever a new iPhone is introduced to see it. Some people will have made their mind up to upgrade the very day the previous model came out the year before. For them, it’s less about the technology and its usefulness and more about getting their hands on the latest and greatest.

The grapples for Apples

I saw this at first hand when queuing for my own iPhone 5 in September. Arriving at 7am, I was 15th in line. The person at the front had been there since 5am and he was still regaling people of the chaos at Manchester’s Arndale Centre, which had led to the police being called. He’d ducked out of that, and headed for an out-of-town retail park where it was a little quieter.

Almost as soon as he sat down, he was back on his feet again, jogging to the iPhone 5 display in the O2 store to have a good look at the new model. His iPhone 4S lay abandoned on the desk of the sales assistant who was dealing with him. It looked to be in mint condition. It would, no doubt, have had iOS 6 on it. The new version – as your correspondent can verify – is barely different to that model, and is certainly not a handset to become too excited over.

It is a strange phenomenon, the drive to buy new when the current model is perfectly fine (in my case, the home button of my iPhone 4 was causing me to lose even more hair, so it had to go, hence my queuing). What makes it even stranger is that it is clear that the prices of these devices tend to fall, that the item being bought has a finite lifespan, that hours will have been spent irrationally trying to buy something before much of the population has had time to open their box of Cornflakes.

Some buy gadgets on day one because they love new technology and features. Others enjoy having their friends, family and work colleagues look at them with jealousy as they show off a device that makes them appear more wealthy or higher in status. For these people, the time and money spent is of immense worth and the Facebook and Twitter chatter will speak volumes.

“Obviously consumers are heterogeneous because some people decide to be an early adopter while others take a wait and see approach,” says Jay Pil Choi, Professor of Economics at the University of New South Wales, Australia, who has written a paper on such herd behaviour. “Early adopters tend to be so-called ‘techies’ who are interested in the most up to date gadgets. For them, possessing new products with fancy features may be similar to a fashion statement. So the psychology driving them to adopt early may be similar to why we have fashions and people queue for the first run blockbuster movies. This phenomenon is also driven by well-orchestrated marketing efforts.”

Net(work) effects

For some reason this behaviour reminds me of the TV sitcom George and Mildred when, in 1978 the suburban couple were eager to upgrade their bathroom to match that of their next door neighbour. Showers were relatively rare back then, prompting Mildred to coo “oh, you’ve got a proper shower as well, all tiled”.

Such eagerness was used to ‘comedy’ effect there, but this, says Prof Choi, could be an example of the ‘network effect’, when those who adopt early create a market that self-perpetuates and builds on itself.

“The success and attractiveness of these products are determined by how many other people also adopt the same products, the so-called network effects,” he explains. “As more people adopt iPhones, for instance, it is more profitable to develop apps for iPhones, which makes iPhones more attractive, creating a virtuous cycle. The same thing for a viscous cycle that explains for the demise of failing products. Thus, the management of consumer expectations becomes crucial for marketers because expectations are self-fulfilled. The whole interdependency of these products also confers a huge advantage for the first mover who creates a successful eco-system.”

The ballad of Betamax

Yet the drive for iPhones and similar tech today (and the desire for showers in yesterday) could be less about early adoption and more about conspicuous consumption. British professor Roger Mason observed conspicuous consumption in 1976. He said people were preoccupied with acquiring status goods that boosted their relative social standing and prestige. It’s easy to come to the conclusion that over the past few decades, people have come to define themselves by their possessions more, even to perceive that a rise in consumerism has seen an increase in social mobility. However, while this may or may not be the case, what is certainly true is that modern society places pressure on people – and their pockets – to fund the purchase of ‘The Next Big Thing’.

There is no doubt that early adoption can be a costly business, since there is no way of telling what technology will take off in the long term. AC was deemed better than DC and the audio cassette triumphed over 8-track. VHS beat Betamax but this was perhaps less to do with the tech quality and more to do with the inability to squeeze enough porn on a shorter-lasting Betamax tape.

Recent history is littered with casualties and problems. Within months, the £399 Blackberry PlayBook was retailing for less than half that cost. Similarly, the Nintendo 3DS dropped from the pre-order price of £229 to as little as £115. Nintendo compensated early adopters with free games but subsequently created a larger-screen version of the glasses-free 3D handheld games console. Going back further, the Dreamcast became Sega’s final machine when sales of the rival PlayStation eclipsed it. Again, many believed it to be the better machine, but it lacked DVD support and some of the PS’ high-profile games.

Famously, despite the Gizmondo handheld games console being backed by F1 driver Jenson Button and a host of other celebrities, only 25,000 were ever sold and the company ultimately filed for bankruptcy having gobbled up $300 million in capital. It later emerged that some of the management team had criminal pasts, and one of the founders Stefan Eriksson almost died after losing control of his $2 million Enzo Ferrari sports car. If you were one of the 25,000, or an investor, you’d be excused for being annoyed with the people you’d chosen to put your faith in. 

The problem is that, when adopting early, you could fall prey to a buggy product with malfunctioning software or even a malfunctioning company. Costs are usually higher initially and there is a danger that, as we have seen, a new product becomes obsolete quickly. HD-DVD drive, anyone?

Early adoptionitis

The term early adopter was coined by sociologist and writer Everett M. Rogers. He broke people down into innovators who create and pull the change, early adopters who test out new ideas and lead opinion, the cautious but rapid adopters to make up the early majority, the sceptics who use an idea when loads of others do (the late majority) and laggards who remain critical of innovation. As many as 68% of people are early or late majorities with just 2.5% innovators, 13% early adopters and 16% having no care for the new.

So if you’re motivated by exclusivity, co-creation (where early adopters feed into the development of a product), the privilege of being first or a wish to become an early expert and impart knowledge once a product becomes popular, how can you know when something will work out well? The answer is you can’t, and even the most ardent tech-heads are massively let down at times.

“I’ve been bitten by early adoption,” says Mihaita Bamburic, contributor to the website BetaNews. “The first one was Red Hat because I wanted to try it when I was 13, I think, but I did not know anything about Linux in the first place - that’s just because of my lack of experience combined with my early adoptionitis. The second – and worst - was Windows XP Professional x64. If my Red Hat early adopter story was my fault, this was all on the environment - I had to get involved in beta testing security software to help speed up the process, the drivers weren’t really there, the software wasn’t really there and it was just a mess. It kickstarted the 64-bit desktop operating systems from Microsoft, but it was a total failure around the time it was released.”

Short-term crystal ball

This Christmas, Sony will pour more money into the festive line-up for its Sony Vita handheld than it did at launch in a bid to boost flagging sales. A Vita can be had for under £200, which is only a little cheaper than the launch price and you could argue that people should still hold fire, mainly because - Uncharted aside - the games have been rather lacklustre. Vita sales have been underwhelming thus far, and the negative reaction to Sony’s E3 press conference in terms of Vita (where it was almost neglected by Sony) showed that Gamescom would be a make or break moment for the handheld.

That said, are the wise gamers those who buy a Xbox 360 or PlayStation 3 now, some years after their release when the prices are lower than ever before? Not necessarily. Some want to be involved with a new gaming experience as soon as possible, others want to wait until the price is right before they jump in. It doesn’t necessarily make one group wiser than the other.
Ultimately it is up to the individual. People buy new technology for all sorts of reasons: status, price, particular games, friends and so on. Even now, people buy old consoles because there’s a game they remember and want to play again. There’s no definite answer for when someone should decide to buy something or not.

Kickstarting early adopters

As if early adoption of readily available goods is not enough, however, crowd-funding websites such as Kickstarter are seeing a scramble to buy into items that, in the majority of cases, are months away from arriving and may not have even got to a prototype stage. This is set to get even more popular, especially in the UK where Kickstarter is gaining a stronger foothold.
The Ouya games console, which runs using the Android operating system, is due out next March. When the group behind it asked for $950,000 on Kickstarter, it walked away with a cool $8.6 million. In return for their investment, most backers were promised to receive the console before it hits shop shelves.

Games developer HandyGames stumped up over $10,000 to buy into the Ouya. CEO Christopher Kassulke said it did so because the machine was innovative and open, allowing independent developers to produce games without the costs involved in creating for other consoles. While this decision was business-based, others do it for the love.

“I enjoy being an early adopter because it suits me. I do not want to be one, I just am one,” says Bamburic. “I honestly don’t think it’s a matter of preference or want - it’s just ‘I have to do that’. As for crowd-funding, I think deep down there is a need for people to make their mark on a product to which they can relate to and secretly claim that it is their own.”
We should be grateful to such people. Those who aim to be ahead of the curve are rather like guinea pigs; testing the products and making an investment so others can wait, assess how successful a product is, and get it cheaper too.

“The technophile 2% accounts for most of the initial launch market of a new product in the first few weeks,” says futurologist Ian Pearson. “They are savvy enough to make it work, want it desperately enough to pay the higher initial prices and they also help iron out lots of the launch bugs.

“Companies then fix these and the products become better quite quickly. Waiting even a few months after a product first appears means you’ll pay less for a better product. You don’t get the street cred of being the first on the block with the new gadget, but neither do you pay through the nose in cash and extra difficulty. For the 98%, though, it’s the path that makes sense.”

When it comes down to it, early adopters do it because they want to and even if a product doesn’t take off, the satisfaction of having something rather rare can be just as much of a buzz, leading to hobbyist tendencies in some people. Without early adopters, we would have a stalemate. Companies would release items, people would wait to buy and they would fail. Someone has to take the plunge at some point. The question is: next time, will it be you? mm