Elgan: Why expensive cell phones are worth it

Computerworld - The price of the new iPhone 3G dropped by $200. Although the AT&T bills (necessary to take advantage of the phone's faster data speeds) rose beyond handset savings, many hailed the lower price as an important development. Finally, the price is within the range of what people are willing to pay.

I've seen many people, including friends and family, agonize over whether to buy a phone they prefer, or one that's $200, $100 or even $50 cheaper. And with the economy in the doldrums, the impulse to economize is stronger than ever.

I believe this price sensitivity over handset prices is misplaced. My advice to everyone is to buy the phone you want, regardless of price, within reason.

Let's say you really want a smart phone that costs $400 but are tempted to save money by buying a $200 phone you don't like as much. Wow! Half the price! How could you possibly justify paying double for a phone you like only a little bit more?

Here's how to justify it.

1. Phones are worth more than you pay. Far more.

The low price and small size of handsets have fooled us into thinking that phones aren't as valuable to us as they really are. In fact, surveys show that cell phones are among the most valuable possessions we own.

A survey conducted earlier this year by the Pew Internet & American Life Project found that most Americans would rather give up the Internet itself than their cell phones. Assuming a two-year life for your cell phone, and for purposes of comparison, how much do you pay for two years of Internet access? (By definition, the amount you pay is what you believe it's worth.) So if you pay, say, $50 per month for your Internet connection, then you're paying $1,200 for two years. So to the average American, his cell phone is worth more than that.

Another survey conducted in the U.K. about a year ago, called the Mobile Life 2007 report, found that one in three people in Britain say they wouldn't give up their cell phones for a million pounds (that's about $2 million).

Of course, nobody was waving cash, so the proposition was hypothetical. But the fact is that people really do love, need and highly value their cell phones.

A researcher in human behavior, Jan Chipcase, expressed this eloquently in a Ted Conference talk. Chipcase studies the behavior of cell phone users worldwide, of which there are now some 3 billion.

He makes the point that people own many things and choose to carry a variety of objects with them whenever they leave their homes. Of these, just three objects are universally claimed to be most important to people when they're out and about: keys, money and cell phones. And among these, the one object people are most likely to use is the cell phone. (A study published in May found that one-third of Americans said that if they had to leave the house for 24 hours and could take only one object, they would choose their cell phones over keys, wallet and all other possessions.)

Chipcase makes the point that, "the conscience and subconscious decision process implies that the stuff that you do take with you and end up using has some kind of spiritual, emotional or functional value."

All three of these objects, he said, enhance survival: Keys provide access to shelter, money buys food and other needs, and cell phones can be used in an emergency.