The Value of a Computer over its Lifetime

I’m currently in the process of compiling a presentation on “Collecting Old Computers as a Hobby” for the upcoming VCFB 2020 event. I’m not sure whether it really fits in that presentation, but I made a highly speculative, subjective chart on, what I think, the value of a computer over its lifetime looks like. Here it is:

Lifetime

Let me explain. First, I differentiate the lifetime of a computer into 4 phases.

The “phase of usefulness” starts when the model comes onto the primary market, i.e. when it’s new. Obviously, the manufacturer thinks that it will be bought because it offers some benefit to the buyer. It is sold at the initial price (which typically will decrease over the time the model is offered by the manufacturer). I think it is not unreasonable to assume that the value of the computer, once bought, drops exponentially in this phase, especially when it it a state-of-the-art model. As it approaches the end of the usefulness phase, it typically drops to a more symbolic value that is basically determined by the minimum amount a seller is willing to accept in order for the entire transaction to make sense at all (i.e. compensating for the effort of the seller to offer, handle, and sell the thing. If the offered price would be any lower, it would not be worth the effort of the seller to do anything. If this computer model was bought originally by a company, it is most probably written off since some time anyway, to the company cannot put any value on it. The length of this phase depends probably on different factors, but maybe something like 10 years is not completely wrong for a computer. This phase transitions into

The “garbage phase“. The computer has no usefulness anymore, but it is not so old already that there are sentimental feelings connected to it. In this phase, the value is minimal and probably quite stable around the symbolic value I tried to establish in the last paragraph. Maybe in this phase it is not handled by the original owner, but by traders who specialize in surplus goods, making the price of the computer maybe even a tad lower because such traders are more efficient at low prices. I put a length of this phase also at around 10 years and try to substantiate that in the next paragraph, because the next phase is

The “sentimental phase“. This phase has a lot to do with the average age of a typical collector of a computer. Typically, they either had this computer model when they where young, or they were around when this model was fresh on the market. Since this phase probably 20 years or more has passed and they remember this time in retrospect with positive feelings (who does not remember his/her youth with joy? The music was much better than nowadays, the world was not that complicated and there was much less hatred and selfishness in the world). Also, being his his/her late 30s, 40s, and early 50s, things start to settle down for yourself. Often, there is less shortage of money, and less time needed to find a partner. For sure you don’t have a midlife crisis, but all this urge to buy a motorcyle… 🙂 Now, this is the time to feel young again with the dream machines of your youth, to fulfill unfilled dreams of owning cool stuff for a bargain. As a result, people start collecting computers. This process starts slowly, only a few people start collecting, but now the prices raise again. More and more people collect computers, maybe collecting becomes cool, and , with the raising prices, maybe even a good opportunity to invest money.

My theory is that the prices of a computer a collector wants to buy are:

  • not dependent on the initial price
  • dependent on a bunch of other factors, e.g.
    • how rare the model is
    • how many other collectors the model want
    • and, almost more importantly, what the buyer is willing to pay for a sentimental, or decorative, or conversation piece

I have also the impression (although I did not invest time into this to prove it) that these new values are clustered (and I put some estimation of how large these clusters are in the figure). Also, these price clusters increase over time as inflation and salaries increase over time. Finally, people think that the prices will go up forever and start thinking of them as investments (which will draw in also non-collectors that will act as investors).

This phase ends when the majority of the collectors starts getting so old, cool stuff from one’s youth is getting less important. This happens when no younger collectors replace the old ones, e.g. because the age of computers being cool stopped at some point. There are some areas where new collectors seem to continously “re-grow”, e.g. art and antiquities. There are other areas that flourished over many years, but suddenly came to a lack of collectors, e.g. stamps. My assumption is that, as computers became utilitarian in the 2000s instead of being fresh and not understood by parents, they aren’t as magical to millenials as they are to earlier generations (this is probably different to consoles and game-related computing, these will probably thrive much longer). If my prediction is correct, then prices at the end of this phase will drop dramatically as the market vanishes and the budget per collector gets much smaller.

It is also no clear to me what the next phase after the sentimental one is, and how this changes the prices for old computers.

In summary, here some conclusions:

  • most computers have their highest value when they are sold initially
  • the best phase to buy an old computer is the garbage phase (which is long gone for computers up to the year 2000)
  • do not buy old computers as a long-term investment

So, here you have it, my wild, highly speculative look into a crystal ball. What do you think?

One Response to “The Value of a Computer over its Lifetime”

  1. digitalesleben8668 Says:

    Good article and interesting graphic.

    This is also absolutely my understanding. As long as there are people who remember their youth and remember their feelings back in the times there will be a market for such collectibles. Memories 😉

    You can see this behaviour also on other markets like oldtimers. Today the hottest market is about cars from the 60s and 80s. Older cars like before the war are no longer requested anymore because the people who have memories with them already died.

    But there will always be a market for well preserved objects.

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