Yesterday, I argued that richer consumers would benefit more from technology competitions comparing with the less wealthy consumers. Richer consumers can afford more high tech products than the poorer, so they can experience more benefits brought by the rapid technology development boosted by the technology competition.
More importantly, I think we also need to consider another big party on the buy side, the enterprise. Although enterprise also makes their purchases (investment) decisions based on cost and benefit analysis, since their returns from purchases are more significant, they are more likely to appreciate expensive high tech products which helps to improve productivity and do not care about ordinary people’s “value for money”.
Apple announces its new desktop computer, Mac Pro and a professional standard display. The base model of Mac Pro is priced at $5,999, the display starts at $4,999, and the stand for the display is priced at $999. Many people criticise Apple has seen itself as a luxury brand more than a tech company, they think these products are priced stupidly high. However, these products are not designed for ordinary consumers, they are designed for enterprise, such as film studios. For film editing business, if they are able to edit one more film a year by using this expensive machines, they are going to buying these, because these machines will pay for themselves.
Therefore, if the technology competition significantly boosts the technology development for improving productivity, the enterprise will be significantly benefited, and they are very likely to update their capitals (including both hardware and software) frequently if the improvement is significant. Under such circumstance, developers and buyers mutually benefit from rapid technology development, both are able to generate greater revenues.
Overall, the benefits from technology competition can spread across the entire economy.
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