Consumer electronics is a hot topic when it comes to a discussion about efficient ownership. At one extreme, most electronics are commodities - distinguishable (or comparable) by their unique model numbers or SKUs. This makes them relatively fungible and easy to trade online. Computers are the exception as they can be highly customized, making their model numbers less significant and their trading more complicated.

Countering the ease of trade in electronics is the steep depreciation curve that exists across the category. Products are introduced more and more frequently these days, putting significant price pressure on the older models. As I explain in FutureShop, the key to leveraging the auction culture when it comes to electronics is to time the sale and replacement of your goods around the “sweet spot” between when a new model is released and when the prior model is still considered current. Swapping models during that period generally provides the greatest net value and is a good way to own rapidly evolving electronic products that you frequently use (like a cell phone, pda, or pocket digital camera).

Recently, several consumer electronics companies have introduced programs to further facilitate this concept.
CompUSA, one of the nation’s largest computer retailers just introduced a program where you can trade in products you purchased from them for new goods in the store. It’s called “Easy to eBay” and they sell the goods for you on eBay, giving you the choice of either store credit or cash in return. Sony just introduced a trade-in program for your camcorder. Here is an excerpt from their website regarding the program:

The Sony Style Camcorder Trade-Up Program
“Now you can trade in that old camcorder, help the environment, and receive Sony credit. Use the credit for a brand new Sony camcorder purchased online at SonyStyle.com. Click on ‘Get Started Now’ to complete the online estimator and get your estimated trade-up value.”

Watch for more electronics manufacturers and retailers to introduce similar programs as consumers come to expect this type of service as a key part of their shopping experience.

This past Saturday marked the 36th anniversary of Earth Day, a day dedicated to environmental awareness and education. This article in the Seattle Times mentioned FutureShop and its thesis as one of the “top five actions you can take to help both the planet and your pocketbook.” I agree.

As more and more people adopt the auction culture, we will begin to see a renaissance in recycling - but in a much broader and different way than we did in the past. Our past recycling initiatives revolved around the conversion on trash back into raw materials that could be reprocessed into useful things. Aluminum, paper, glass and plastic were core commodities associated with the past recycling culture. In the new auction culture, people will expand their notion of recycling to tangible products that still have useful purposes in their present form (unlike, for example, a used can of Coca-Cola). We are already seeing this with computers and other consumer electronics ( although products from a large percentage of programs targeting technology are not recycled but rather disposed of in an environmentally safe way).

As more people resell their under-utilized possessions rather than throw them away, less waste will be produced since these items will find their way to people who will use them rather than the dumpster. Unlike the prior recycling mindset which was solely driven by either a desire to behave in an environmentally responsible manner or by local ordinances that forced you to do the same, the new mindset will be driven in part by money. There is little direct or measurable benefit to the citizen who recycles newspapers or containers. There is, however, a direct and measurable benefit when you receive a check in the mail from a buyer of your old notebook computer.

Capitalism preaches that if people behave in a purely self-interested manner, such activity will ultimately benefit society as a whole. This axiom plays out in an ironic and powerful way with regards to the concepts in FutureShop. Look for a positive and meaningful impact on our environment as people seek to improve their lives through auction culture and our society begins to adopt the culture of selling our possessions rather that holding onto them until they need to be thrown away.

In the new auction culture, you are doing good whether you think of “green” as an environmentally friendly icon or simply as a synonym for cash.

One of the hot tech stories this week is the Research in Motion (RIMM) patent infringement case which threatens to shut down the use of all Blackberries in the US.

What is the probability that will happen? Apparently, not very high – at least if we use investor and consumer behavior as a barometer. The stock price of RIMM is off its highs, but it hasn’t crashed yet, indicating investors don’t believe there will be a blackout. That’s probably because investors assume that both parties will act economically rationally if forced to negotiate a settlement.

More interesting is the fact that BlackBerry users are not rushing to eBay to immediately unload their devices in the face of this risk. This week, Blackberry’s top model, the 8700 series, which retails for $499, is selling briskly at an average and healthy price of $322. The secondary market holds hidden nuggets of powerful information that aren’t always obvious. In this case, eBay discloses the real-time level of consumer confidence that blackberries are here to stay.

Perhaps the strength of the stock influenced the solid prices on eBay this week. Is the tail waging the dog? Look for a future when the opposite occurs and real-time consumer behavior on sites like eBay lead the stock market.

Every January, I make a resolution to lose weight. The yearly recurrence of this resolution is a testament to my lack of success at acheiving my goal. I’m not terribly overweight - I just need to shed 10 or 15 pounds. But I hate dieting and get terribly bored working out! Along with the resolution, I concoct a new scheme each year to help make the process easier. The scheme usually involves buying something - an online subscription to Weight Watchers last year, a Polar heart monitor watch that downloads and tracks your workout stats to a computer the year before, my very own spin cycle the year before that. The Weight Watchers subscription expired with barely any use. I sold the spin cycle on eBay last year. I still use the Polar watch, though its novelty wore off and it doesn’t get me into the gym frequently enough.

This year, I used the same logic to buy a Sony TX690 computer - a subnotebook that easily rests on an elliptical machine or treadmill. It comes with a built-in DVD player, a wireless card, and access to Cingular’s EDGE network (a new technology that lets you connect at broadband speed from anywhere, including an unwired gym). My new computer should help numb my brain while I run so I don’t get bored.

So how will I use it? To surf the Internet and watch movies while I’m working out, of course!

At my brother’s recommendation, I just purchased the first season of a television show called ‘24‘. This show, which is now in its fifth year, uses an entire season (24 episodes) to track a single 24 hour period (hence the title). Because the episodes are tied in so closely together, the show is extremely addicting and makes for perfect workout material. I keep the DVD locked in the computer so that I can’t watch it unless I am working out. I’m on the seventh episode and it’s working. I can’t wait for my next session on the elliptical!

I have never purchased a television series on DVD before this. In fact, I never really understood why people buy DVDs in the first place, since most movies are only viewed once. And with the advent of the digital video recorder (DVR), extended cable channels and Video on Demand (VOD), it puzzled me even more.

Well, I now understand. The convenience of being able to watch what you want, where you want, when you want is extremely valuable - so much so, that people are willing to pay around $45 for the package when they could have otherwise watched it for free. Of course, “free” assumes that you don’t assign a cost to the time you lose watching commercials. Each one hour episode clocks in at around 40 minutes, which means that over the course of a season, you are spending 480 minutes or eight hours watching commercials. How much do you value your free time? At $20 per hour, it would have cost you $160 to watch the first season of ‘24′on TV, making the $45, or around $2 an episode, a bargain.

The bargain gets even better if you resell the DVD box-set when you have finished watching it. The first season of ‘24′ is trading online for around $27 used. After reselling the DVD, your net cost of watching the series is $18.

But since there are transaction costs in selling online, I recommend that you wait until you have accumulated all four seasons and sell them as a package.

Yesterday, I replaced my electric toothbrush with an Oral-B Pulsar - a high quality electric toothbrush that is completely disposable. It is sleek, compact and could easily pass for a regular toothbrush. On the back of the box it clearly states: “Fully disposable - no need to change parts.” And if that isn’t clear enough, it goes on to reinforce its disposability: “Includes 1 non-replaceable Duracell battery. Product is not designed to be opened.” Oral B doesn’t want you to change the battery or the brush - they want you to use it like you do a regular toothbrush and throw it away when it’s time to replace it. I used it this morning and experienced the best brush of my life - no exaggeration - and all for $5.99.

I bring this up because auction culture will necessarily cause consumers to choose between buying something that has resale value and something that they will eventually just throw away. There will be a flight to quality on one end of the consumer spectrum and a flight to disposability on the other end. This phenomenon will cause two things to happen. It will squeeze manufacturers that produce lower quality, non-branded and non-disposable products. Additionally, as the quality of disposable versions get better, manufacturers of non-disposable versions will have to offer more in their products to stay in the game.

We have been making the choice between permanent and disposable products in our everyday lives for years. Do you use a fancy, gold plated razor or a Gillette? A Bic Pen or a Montblanc? A Dunhill Lighter or a .99 cent special? Can you remember when disposable diapers didn’t exist? Twenty years ago you might not have believed that cameras would be available in a disposable version. And while the economics of an inexpensive cell phone makes it technically disposable, we haven’t officially embraced cell phones that way yet. What happens when the economics of buying something used makes an otherwise permanent acquisition technically disposable - will you treat the product that way?

The disposable electric toothbrush has officially arrived. The cell phone is just around the corner. The computer is close behind. What’s next?

And how will the permanent versions of these products evolve to compete?

This month I stumbled across an interesting service that complements auction culture. It’s called Cierge and the best way to understand it is to think of a concierge service for consumer electronics. Cierge is a division of Sony and provides its members with VIP access to their product line. Specifically, Cierge gets a special allocation of Sony products before they are released to the general public. As a member, you get the latest, greatest cameras, computers, game consoles and other goodies months before they are readily available in stores.

The price for access - a cool $1500 a year (you get free membership if you are an American Express Black Card cardholder). Given the cost, membership tends to be made up of people that are either tech junkies (like me) or tech-challenged (those that require special hand-holding when buying technology - Cierge will actually come to your home to install anything you buy if needed).

So why am I writing about this service? Simple. By being able to buy the newest gadgets in advance of broad public availability, you can enjoy owning these products for less. How? Because you get to own the newest gadgets depreciation free for several months. Typically, during the first few months of a new product’s life, it isn’t easy for people to get their hands on it. During that period, these products trade at a premium because people are willing to pay more to own the newest things (for example, the Xbox 360 is currently trading on eBay at almost 2X MSRP in its second month).

So by joining Cierge, you technically can amortize your cost for electronics over a much longer period than the average person. When it comes time to upgrading to the next best model, you can flip the old model to someone on eBay during a period when 1) it is still a current model and 2) you already got a lot of use out of it.

You can also use Cierge a different way - to try out the latest products for free! How? Buy the item, try it for a month or so, and if you are unhappy with the purchase, you can probably sell it online at cost (and sometimes at a profit) since there are always people willing to pay a premium for the newest hard-to-get models.

If you are interested in joining, call 877-295-7669 - They are so exclusive that they don’t have a website. But you can view Sony’s latest products at www.sonystyle.com.

For a list of the 50 greatest gadgets of all time, click here.