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In a recession, tech gadgets become a luxury

7/30/2009

(CNN) -- Matthew Baron is one of those gizmo guys, the kind who covets all toys new and shiny.

The slumping economy has more consumers holding on to older gadgets while holding off on shiny new purchases.

But the Brooklyn, New York, attorney, like so many other American consumers who are watching their bank account balances, is reassessing his gadget habit.

"If I'm going to buy something, I want it to count. I want it to last," said Baron, who incidentally goes by "OMG! Ponies!" when he posts comments on Gizmodo, a popular tech and gadget blog.

So, even though he'd like to upgrade his 4½ -year-old HDTV, this cowboy's holding back the reins. And while the latest iPhone was a "must have" for Baron, he said he's "waiting to pull the trigger" on that camera he's been circling. "I just can't go out and spend $400 right now."

Ignoring what you want. Recycling the old. Fixing what can be saved. Is this the new American way when it comes to tech toys and electronics -- an industry in which new gadgets can become outdated within months?

Many consumers are hoping to make products last longer, which is keeping businesses that repair and refurbish computers and other gadgets and electronics as busy as ever.

"The percent of our business devoted to repair is definitely increasing," said Paula Baldwin, the mistress of propaganda (yes, that is her title) for Geek Squad, a consumer-electronics services company. People are seeking help "to either repair that gear or add to its functionality and what it [the product] does for them."

Scott Steinberg, publisher of DigitalTrends.com, said that function, in fact, "is the new fad."

People may need their cell phones and computers to work so they can simply get by, but they don't necessarily need the highest resolution screens, the sleekest designs and all the technological bells and whistles.

"Shiny is great, but shiny doesn't necessarily let you send that e-mail or send that text message," Steinberg said. "At the end of the day, as long as the gadget functions properly, does it have to be wrapped in white gold?"

But to hear it from Shawn DuBravac, an economist for the Consumer Electronics Association, which represents 2,200 technology companies, we're staying more true to our old selves than you might think.

"During other recessions, we could live without these technologies," he said. "Whether you're male or female, 18 or 81, chances are you'll buy a technology product this year."

People are more inclined to scrimp elsewhere -- tape a bumper to a car, for example -- than they are to go without a new cell phone, he suggested. In fact, the proportion of dollars spent on electronics versus other "durable goods," such as cars, has never been higher, he said, referencing Department of Commerce statistics.

To illustrate how strong the market remains, DuBravac pointed to the popularity of new televisions in 2008, saying that sales for LCD TVs were up 41 percent and digital TV sales, overall, were up 24 percent over the previous year.

"What he's telling you is right, but it's only half the story," said Wilson Rothman, feature editor at Gizmodo, the site "OMG! Ponies!" frequents.

While people are buying, they're paying much less, Rothman said. The Seattle, Washington, journalist believes the TV industry "kind of burned itself out" with its rock-bottom prices at the end of 2008.

"What ended up happening is after most people who wanted a TV bought a TV, the market vanished," leading to layoffs, slashed budgets and to Pioneer -- which he said currently has "the best TV on the market" -- getting out of the business.

"But the good news is everyone has an HDTV now," he added with a laugh.

Just as companies "bend over backwards to get people to buy," Rothman said the next best things are being held up in production because people can't pay for them. The OLED screens for phones and cameras, for example, aren't rolling in the way folks expected. iReport.com: How are you saving on gadgets?

"Kodak sent me an OLED photo frame," Rothman said. "A thousand dollars! I sent it right back and said, 'I'm not going to review it. If I did, I'd only spend 800 words making fun of you.' "

Not only do people want to pay less, they also want more free.

Gizmodo is seeing increased traffic for its Dealzmodo link, where visitors can find discounted games, computers, movies and more. Same for its Hobomodo link, which offers freebies -- including everything from software to teeth-whitening products and tacos.

Nice-looking teeth and food handouts may not make up for out-of-reach tech gadgets, but Rothman, who said his site's audience is made up of "college kids and nerds of all ages," is learning that such things also can't hurt.

"The only agenda we have is we love gadgets," he said, "But we're also sympathetic to consumers."

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