Happy Birthday, iPhone!
The first iPhone was released on June 29, 2007, so today marks the tenth anniversary of what is perhaps the most revolutionary consumer product ever introduced, and one that (along with the smartphone) has probably done more to impact the lives of ordinary people and in the process change the world more than any previous consumer good in history.
10 Years Young
In honor of the iPhone’s tenth anniversary, I’ll republish and update a related post from January 2014 that appears below.
In January of 2014, Buffalo (NY) journalist and historian Steve Cichon had an article on the Trending Buffalo website (“Everything from 1991 Radio Shack ad I now do with my phone“) featuring a full-page Radio Shack ad from the Buffalo News on February 16, 1991 (see graphic above).
Of the 15 electronics products featured in the Radio Shack ad, 13 of them can now be replaced with a $199 iPhone (required a 2-year contract with a provider like AT&T) according to Steve’s analysis (see the history of iPhone prices here). The 13 Radio Shack items in the 1991 ad are listed below:
Those 13 items would have cost a total of $3,055 in 1991, which is equivalent in 2014 dollars to $5,225 (or $5,500 in 2017 dollars). That compares to only $199 in 2014 for a 16GB iPhone 5S (with a two-year mobile plan) that would have replaced all of those 13 Radio Shack items.
In hours worked at the average wage, the 13 electronics items would have had a “time cost” in 1991 of 290.4 hours of work at the average hourly wage then of $10.52 (or 7.25 weeks or 36.3 days of work).
In 2014, the $199 iPhone would have had a “time cost” of fewer than 10 hours (9.82 hours) of work at the average hourly wage today of $20.35, or just one day of work, plus a few extra hours. That’s an amazing reduction in “time cost” of more than 96% in just a few decades, from 290.4 hours in 1991 to only 9.82 hours in 2014!
The 1991 Radio Shack ad also listed a radar detector for sale at a price of $80 (about $144 in today’s 2017 dollars), and that can be replaced today with free apps like Waze and Escort Live. So we could say that 14 out of the 15 products listed in in the 1991 Radio Shack ad are now available with the purchase of an iPhone or Smartphone!
It’s amazing how much progress we’ve made and how affordable electronic products have become.
When you consider that an iPhone can fit in your pocket and has many apps and features that were either not available in 1991 (GPS, text messaging, email, Internet access, mobile access to movies, music streaming, more than two million mobile apps, iCloud access, etc.) or not listed in the 1991 Radio Shack ad (camera, stopwatch, timer, photo-editing, travel books, encyclopedia, newspaper subscriptions, dictionary, language translator, etc.), it’s amazing how much progress we’ve made in just several decades, and how affordable common electronic products have become.
The comparison above is an example of the “invisible hand” of the free market at work, giving us more goods, better goods, and cheaper goods over time. And the poor and middle class benefit the most. While only the wealthy might have been able to afford the bundle of 13 electronic products costing $5,500 in 1991 (measured in today’s dollars), almost anybody today can afford an iPhone with features that far exceed the 13 products advertised by Radio Shack in 1991.
Instead of spending so much time obsessing so much about income inequality, the income share of the “top 1/5/10%,” the “decline of the middle class,” and generally criticizing and blaming the free market for every woe, maybe we should devote more time to celebrating how the “miracle of the marketplace” has brought about rising living standards for all income groups in America and around the world, especially low-income households.
Falling prices of manufactured goods like food, cars, clothing, household appliances, computers and electronics have probably given low-income households in the US greater access to the “good life” than all of the government programs and safety nets that are part of the trillion dollars of spending on America’s “War on Poverty.”
Happy 10th Birthday, iPhone!
Reprinted from American Enterprise Institute.
Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.