Venturesome Consumers

We have an Apple store in our town square that I have always enjoyed dropping in on.  Not to purchase anything or play with the latest technology - - more to see other people and how they interface with the latest.  In our town, it is cross section of the old and young, all looking, playing, and purchasing the latest.  When the iPad was unveiled, the place was a mob scene; you actually had to wait to get into the store.

What is interesting, and this was pointed out in The Financial Page: Innovative Consumption of the May 16, 2011 New Yorker, buying new products and services is actually pretty risky.  In the case of the iPad, it's hard to know in advance whether a new product will be useful: behavioral research shows that we're bad at forecasting our needs and desires, which is why our homes are cluttered with unused gadgets and exercise machines.

You have all those people in the Apple store buying first generation iPods, iPhones, and iPads - - knowing full well that all the kinks have not been worked out and that most consumer-electronic products are more expensive and much less powerful in their early versions compared with later models.

All of this is good for the economy and technological development - - a culture of consumers willing to take risks and gamble on new products.  Our collective history is one of gambling on new things - - from cars to jets to computers to iPads.  Consider the following observation from the article:

From a business perspective, the willingness of consumers to take risks means that new technologies can see profit faster here than they can elsewhere.  That encourages inventors to invent, and investors to pour money into start-ups.  (It's no coincidence that the modern venture-capital industry got its start here.)  And the speed with which successful products are taken up also allows companies to benefit from economies of scale sooner, bringing prices down and making it easier to reach each even more customers.  But it isn't just a matter of speed.  Venturesome consumers also provide companies with feedback that helps improve products, and often even repurpose them, in ways their inventors hadn't imagined.  In the process, the value of the innovations themselves increases.  In that sense, our culture of innovation depends on consumers as much as entrepreneurs.