Response to a respite in technological advancement

I ma writing in response to Anna's post entitled: "Will we experience a respite in technological advancement?" Anna states that due to the economy, people have started buying less cell phones, and this will lead a halt or slow down in technological development.

As I am sitting in my lecture writing this (not RMI lecture), I look to my right and my left and every person is either working on their laptop or on their new blackberry or iPhone (or both). As I look around me, I see complicated technological devices and I cannot help to disagree with Anna that technology is still advancing, if not faster than ever. Anna argues that people have started giving up luxury goods due to the recession and I completely agree with her. We all know what is happening to the auto industry, and how people are giving up buying new luxury cars during these times. However, I do not believe that cell phones could be considered as a luxury good. I believe that cell phones have become a necessity! If you do not have a device that is capable of keeping you informed in our fast-paced lifestyles, you are really putting yourself at a disadvantage and ultimately keeps you from your potential income.

Anna brings in a valid point that people are not buying these "luxury" phones since all the big companies are reporting big losses in sales. This could be true since these cell phone contract prices are all based on a time before the current crisis, and people can no longer afford these contracts. This does not mean that technology development will decrease. New powerful cell phones are still being released every other month. Just look at my previous post where I discussed the release of the new Palm Pre and the new Blackberry models that are constantly being released. http://na.blackberry.com/eng/newsroom/news/press/release.jsp?id=1823

Even though there are plenty of cell phone companies in the market, there is still a huge monopoly when it comes to cell phones. These contracts allow potential customers only to buy a particular phone with a particular service provider. This enables service providers to charge monopoly prices, since they are the only company to provide that particular model of cell phone. For example the apple iPhone sells at a very reasonable price, but the iPhone is locked in an exclusivity contract with AT&T, which allows AT&T to charge ridiculous prices for the iPhone 2 year contract. According to a news article on CNN, AT&T is now starting to sell the iPhone at a higher price, but then allows the customer to have the option not to sign the very expensive two year contracts.

AT&T has the right idea. Technology is still developing at an alarming pace and new cell phones are still going to be released very regularly. Thus, service providers need to adjust their strategies and also reduce some of the contract prices in order to attract more customers.