MacPrices.net

Finessing ‘Book Depreciation

by Charles W. Moore

Your biggest computer expense is depreciation. In this column we’ll explore how to minimize it or make it work for you.

Computers depreciate on a curve whose trajectory resembles that of a falling rock - even worse than cars. I resist depreciation, which is one reason why I have never bought a new car, and likely never will. Unfortunately, while a ten-year-old automobile can still be excellent, no-compromises transportation, a ten year old computer is a poor vehicle for anything but the least demanding tasks. It’s the price we pay for a rapidly advancing technology, but I still detest watching the value of anything I buy melt away with every tick of the clock.

High-end PowerBooks were traditionally fast depreciators, partly because their prices were somewhat inflated to begin with. For a historical example, Back in May, 1998, just over eight years ago, a top-of-the-line 292 MHz WallStreet would set you back up to a nosebleed-inducing $6,396 - more than twice what a highest priced MacBook Pro you can buy does today. Even worse, these 292 MHz WallStreets depreciated into the $2,000 range - or by more than the price of four new MacBooks today - in their first year of ownership.

Personally, my computer purchasing philosophy has usually been to buy a low-end configuration, reasoning that I am getting essentially the same engineering as in the top-of-the-line version, and paying a lot less for it up front as well as not getting clobbered nearly as badly by depreciation.

My WallStreet LE, which listed new for $2,195, had most of the good stuff you got with the contemporaneous high-and 300 MHz model except for the latter’s bigger screen, larger hard drive, twice as much video RAM, 32 MB more system RAM, and the faster processor - not trivial distinctions, but the low-end Wall Street did a fine job for me (and continues to do so for my wife), and the difference between 233 MHz and 300 MHz does seem pretty trivial now. A year later you could buy a refurb. WallStreet 300 MHz machine for $2,000. That represented a mind-numbing $3,600 (64.3 percent) depreciation over ONE YEAR, even worse than the earlier PowerBook 3400c/240’s 57.5 percent freefall in its first 12 months. In August 1997, the PowerBook 3400c/240 and 3400c/180 were selling for $5,879.02 and 3,821.02 respectively, a difference of $2,058. That two-K and change bought you a slightly faster processor (MacBench 4 - 337 vs. 293), and a 3 GB hard drive instead of a 1.3 GB capacity. Otherwise, they were essentially identical machines. Two years later, the difference in price between them refurbished had shrunk to $200. What other high-ticket consumer commodity depreciates 60 to 70 percent over two years? None that I can think of even comes close.

Fortunately, things have improved substantially in this regard since 1998. A major shift of the landscape in Mac portable prices has taken place over the last several years, and especially since the Macintel transition has been upon us. For one thing, the most expensive MacBook Pro you can buy today lists at $2,799.00.

A year-old 1.67 GHz 17” PowerBook, which sold for $2,699 when new, is still worth about $1,800.00 refurbished; $900 is still a big depreciation bite over 12 months, but it’s a whole lot lot better than the 292 MHz WallStreet’s $4,000+ drop in value over a similar period! Apple laptops are not only cheaper to purchase new than they ever were, but they depreciate a lot more slowly as well.

Starting at a lower price point is critical to minimizing the depreciation bite. One way to do this is to buy a computer with a lower price point like the MacBook, so long as it has the power and features to do what you need to do with it, and few users will need more power than a MacBook has in a notebook computer. Early adopters who buy high-end machines - the cutting edge of the cutting edge - have always gotten hosed a lot worse by depreciation than those who go for more modest low-end versions of the same model (the base 1.83 GHz MacBook at $1,099.00 compared with the only slightly faster and better-equipped Black MacBook at $1,499.00 is a good example). One way to have a reasonably current machine while cutting your depreciation losses is to buy your computer at the end of its production run. Buying a computer at the end rather than the beginning of its production run usually means that bugs and teething problems that often afflict early-production units will have been ironed out.

Another angle is to make depreciation work for you. The flip-side of the depreciation equation is that you can buy a computer that was the cutting edge a year or two ago, and that still has plenty of potential, for a very attractive price today.

Prices of used and refurbished PowerBooks and iBooks families have declined substantially and converged on one another, with G4 iBooks currently in the $500-$750 range depending upon configuration; 12” PowerBooks running from about $600-$1,100, various 15 inch PowerBooks ranging from $750 - $1,250, with used and refurbished 1.67 GHz 17” PowerBooks available for as little as $1,800, and even refurbished Intel-based MacBook Pros as low as $1,548.00 and low-end MacBooks from $900. With MacBooks available that cheaply, it is testimony to the high esteem in which the G4 PowerBooks are held that they still can command the prices they do.

By historical standards, today’s MacBook Pros and MacBooks - even the top-end 17” MacBook Pro at $2,799.00, are tremendous bargains, especially given the level of performance and features they offer.

If you’re looking for reasonable power for a low-ball price, it’s hard to beat a used or refurbished G3 or G4 iBook., with 500 MHz G3 units now selling for as little as $199, and refurbished examples of the last 1.33 GHz 12” iBooks at $700 - $800, with a wide spectrum of choice in between. I have a middle-of-the-G3-pack 700 MHz 12” iBook with CD-ROM and a 20 GB hard drive that gave me flawless service as my main production machine for more than three years until I replaced it with a refurbished 1.33 GHz 17” PowerBook last winter, and it still acquits itself amazingly well running OS X 10.4.6 Tiger. This model is currently being advertised in the $300 - $350 range, and it certainly performs and feels like a lot more than a $300 computer. If you want a bit more punch, a bigger hard drive, and a combo drive that will play DVDs and burn CDs (recommended), http://www.techrestore.com/TechRestore will put you in one, or if you want you can go for a 900 MHz G3 iBook with a 30 GB drive for $479.99 or a 1 GHz G4 with a 30 GB HD for $679.99. TechRestore refurbs. come with a 6-month warranty and a 30-day no-hassle return policy.

TechRestore is offering a $25 discount to The The Road Warrior readers off any PowerBook or iBook in stock. Just enter the code CWM during checkout when ordering online. The coupon code is valid from now through 12/31/2007.

For more information, visit:
http://www.techrestore.com/

Baucom Computers, Wegener Media, Expercom, and The PowerBook Guy also usually have a selection of used and refurbished iBooks in stock.
http://www.baucomcomputers.com/
http://www.wegenermedia.com/
http://www.expercom.com/
http://powerbookguy.com/

For a list of clearance MacBooks, PowerBooks, and iBooks, visit the Clearance Mac Laptops Price Tracker at PCPrices/Mac.

Others contend that the best policy is to buy a high-end machine early in its product life, which theoretically gives you a longer tenure with cutting edge or at least ballpark competitive performance. However, I don’t buy it.

For example, if you had bought a 1 GHz 17” PowerBook new in, say, March, 2003, early in its production run for $3,299, by now it has depreciated by about $2,400. However, if you had bought an 867 MHz 12” PowerBook of the same vintage for $1,799, it will only have depreciated by about $1,200. Of course, you will have had to live with lower performance, a smaller screen and hard drive, and no SuperDrive, but the lower depreciation with the 12” machine would have allowed you to trade up sooner, and neither 867 MHz nor 1 GHz are very “cutting edge” now that the cheapest MacBook Pro come with 1.83 GHz, and a much more husky breed GHz at that.

If you can afford it, by all means by the upmarket model and enjoy the extra performance and deluxe features, but doing so can’t be justified rationally in terms of pure economics unless you really NEED the extra speed for production work.

Some readers readers may be be thinking: “Yeah, but he has a 17” PowerBook. What is this; ‘do as I say, not as I do?’” True, recently, my strategy has been expanded to include buying high-end machines used or refurbished, and this has worked well for me with my Pismo PowerBook and my 17” 1.33 GHz PowerBook - both top-of-the line models when they were new. Buying previously-owned units harnesses depreciation to work in your favor, and if you go with an Apple Certified Refurbished ‘Book, you get exactly the same standard warranty and AppleCare eligibility as with a brand new MacBook or MacBook Pro.

My 17” PowerBook is a refurbished unit purchased from TechRestore. It’s a 1.33 GHz unit that TechRestore currently lists at $1,399, and I lucked out and received an Apple Certified Refurbished machine (not all TechRestore refurbs. are ACR) that had no signs of having been used at all, and thus far, over the first seven months or so, it has “just worked.”

Was it a better deal than a new 1.33 GHz iBook that sold for $999 at the time? It’s a good question, and I wouldn’t say unequivocally that it was, but it’s certainly nice to have that big screen, lots of VRAM and video power, and all the PowerBook bells and whistles. ON the other hand, the iBooks were a fabulous deal at $999 and $1,299 for the 12” and 14” models respectively, and still offer a great value used and refurbished.

Indeed, if you’re buying used or refurbished, the relative depreciation equation gives you more value for your dollar buying a high-end configured model than an entry-level model. An early-edition refurb. MacBook Pro at $1,548.00 has depreciated more in a eight months than a 12” iBook or base MacBook will in two or three years.

Another money-saving ploy used to be buying a “leftover” computer discounted just after the end rather than at the beginning of its production run, which usually meant both up front cost savings, and also that the that bugs and teething problems that often afflict early-production units will have been ironed out (viz. the issues being experienced by many MacBook and MacBook Pro early adopters). However, Apple has tightened up its inventory control so efficiently in recent years, that there have been very few end of line machines available after upgrades and new model introductions (and I suspect that at least some leftover stock gets repackaged and goes into the certified refurb. channel, although I don’t know this for a fact). The biggest bargains, IMHO, are the Apple Certified Refurbished units, which are happily available pretty much constantly, albeit with variable product. selections.

If you can be content living a bit back from the bleeding edge, and don’t need the raw power and cross-platform capability of the new Intel machines, you can turn the depreciation dynamic to your advantage.

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