Tuesday, October 29, 2013

Google Glass economics update

From http://www.investopedia.com/terms/s/supplyshock.asp

On October 28, Google announced two initiatives involving its 8,000 Google Glass Explorers. One is an upcoming "swap" allowing existing owners to get upgraded hardware over the next several months. The other is an opportunity for existing Explorers to extend Explorer invitations to up to three friends (at the same price as before, $1,500, but with mail order delivery available, as an alternative to the exclusive pickup-by-appointment terms of the past.)

The press has covered the two programs in detail (for example, see Techcrunch), but my interest, as a student and teacher of microeconomics, is what this does to the Glass "after market". By the terms of Google's agreement with Explorers, resale is not allowed, but many Glass units have appeared on eBay since I've been watching, beginning well before I picked up my Explorer unit in mid-August. The listings are replete with warnings of potential bricking of the device along with an "as is" caveat, and from what can be observed without being a direct party to the transactions, have sold (at least auctions have closed) with prices between the high $3,000's up to $5,000.

So what will this "supply shock" do to the market? After all, the imminent quadrupling of the Glass installed base is quite a "supply shock" and as the graph and short note above indicate (courtesy of Investopedia, one of my students' favorite sources), we would expect, given an unchanged demand curve, for the "equilibrium" price to decrease.

 A quick look at eBay today makes it hard to tell so far, but the "invitations" are out there, at prices ranging from $100 to $1,000 or so. Twitter also includes a number of requests/offers for the invitations, as well.

One more fun thing about being a #GlassExplorer!

1 comment:

  1. I've got an original Kindle, loaded with a couple dozen chapter 1 book previews I could let you have for $3,000 also. "As is"