TO BUY, OR NOT TO buy: That is the question.
Personal computers are notorious for having a half-life of about two years. In scientific terms, this means that two years after you buy the computer, half of your friends will sneer at you for having an outdated machine. In households with children the half-life is closer to six months.
Anyway, at 24 months the owner will almost certainly begin to worry about upgrading the computer with new memory chips, a new processor, a faster CD-ROM drive, a bigger hard disk, a faster modem, a new operating system, a software upgrade or some gadget that was not invented when the machine was new.
The knowledge of this inexorable tumble to obsolescence cannot help dampening the enthusiasm of anyone preparing to spend $2,000 or $3,000 for a new computer.
True, automobiles also begin losing value the minute they are driven from the showroom. They may need periodic repairs, and they eventually wear out. But at least automobiles do not become obsolete or require upgrades whenever someone builds a new highway or roadside attraction. ("Sorry, the minimum configuration to drive in to McBill's Micro Burgers is now a 457-cubic-inch V-8, 17 cup holders and power windows.")
A gently used 3-year-old Lexus holds its value very well. A gently used 3-year-old computer with a 386 chip, four megabytes of random access memory, no CD-ROM and a 40-megabyte hard disk is a handicapped machine.
So, it often comes down to a debate about whether it is better to spend the extra hundreds of dollars for the fastest and flashiest personal computer, in the hope that it will not become obsolete quite so quickly, or to buy on the cheap side of the power curve and simply accept the need to upgrade in a year or two.
Another option is leasing. Some people wonder whether it makes sense to avoid this race to obsolescence by, in effect, renting a computer. When the children begin howling that they will flunk out of school unless they have a computer with tail fins and chrome, the renter can simply hand back the 3-year-old relic and replace it with tomorrow's digital hot rod.
Alas, this does not make sense for most consumers. Clark Covert, president of Leasing Group Inc., the company that handles leasing operations for the Dell Computer Corp., said that leasing and renting are primarily of interest to businesses.
"Small-ticket leasing," one computer at a time, is not even available for home computers, Mr. Covert said. Dell advises home PC customers to buy, using cash, a check or a credit card, either from a bank or from Mr. Covert's company.
But let us assume the computer will be used by a home-based business. Why lease from Dell or any other computer maker?
"Cash flow is the No. 1 reason," Mr. Covert said. A small business might have better uses for $4,000 than to spend it all at once on a computer. Instead, it might wish to budget $145 a month for a computer for 36 months, and spend the rest on frivolities like salaries or electricity.
"The No. 2 reason," he said, "is that some folks don't want to invest in technology that their business might outgrow." Leasing may lessen the sting, though not necessarily the expense, of choosing the wrong computer.
At the end of a typical 36-month lease, the Dell leasing customer has the option of handing the computer back to Dell and starting fresh, or buying the 3-year-old computer for 10 percent of the original price, in this case $400.
In the first case, the total spending over three years will be $5,220, with only an empty spot on the desk to show for it.
If the computer is still doing the job and cannot be replaced for less than $400, or if it can be sold to some sucker for more than $400, the customer can exercise the 10 percent option to keep it, bringing the total spent to $5,620.
It is expensive to borrow other people's money. On the other hand, the customer had use of a good computer for three years.
The consumer alternative to leasing is a "preferred customer card," or some variation. At Dell, at other computer companies and at many computer stores like CompUSA, these are basically company-financed credit cards, possibly but not always with some bonuses attached. The interest rates vary from state to state, but typically are above 20 percent.
The salesman may or may not offer some sort of deal to entice the customer to apply for such a card.
If one has a bank credit card (Visa, MasterCard, or similar) with a lower rate, it makes sense to use it. However, some people choose these "preferred customer" cards anyway because they do not want to exhaust the credit limits on their bank cards.
The hard truth is that new computer prices are coming down so fast, and new technologies are coming up so frequently, that anyone buying a computer on payments is likely at some point to owe more on the machine than it is worth. This is known as being "upside down."
Before buying a machine for the holidays, whether by cash or by credit, it might be valuable to calculate the monthly cost of the TC machine based on a three-year payment cycle. Do not forget to toss in an extra $500 to $1,000 for software and on-line access time.
Then ask, is this computer really worth spending $150 a month or whatever? For many people, the answer is a definite yes. For many others, however, "the calculations may bring them back to financial sanity," Mr. Covert said.