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Many tech companies keep customers buying by constantly updating their products with new features. Here's a story of a piece of technology that has not evolved with the times and has been reaping the benefits. Stacey Vanek Smith of NPR's daily business podcast The Indicator from Planet Money has more.
STACEY VANEK SMITH, BYLINE: The movie reel becomes the videocassette becomes the DVD becomes online streaming. There is a name for this - creative destruction. It's the idea that the economy is always evolving, that there are new products that are constantly being invented that make old products obsolete. Mark Perry is an economist at the American Enterprise Institute.
MARK PERRY: Creative destruction is this continual and powerful and very positive force in a market economy that just reflects the dynamism and changes in technology and all different types of fields.
VANEK SMITH: But there are little pockets of the economy where creative destruction doesn't reach, places where being old and outdated is a competitive advantage. Consider the graphing calculator. They were first allowed on standardized tests in 1994 and soon became must-have accessories for calculus and physics students across the land. They were about the size of a Hershey bar, about four Hershey bars thick. They had a big screen where you could graph out equations on an X-and-Y axis. And they were cutting edge. More than 20 years later, smartphones and laptops have left the humble graphing calculator in the dust. But the dust has turned out to be an economic sweet spot. Peter Balyta is the president of education technology at Texas Instruments.
PETER BALYTA: We could easily add features to our calculators like a touchscreen, Wi-Fi or a camera, but we don't.
VANEK SMITH: The fact that the graphing calculator hasn't changed much since 1994 is exactly what makes it so valuable. If it were updated, there would be no real reason for it to exist.
BALYTA: Because it can compromise the test security and really detract from what the calculators are designed to do.
VANEK SMITH: It took standardized tests years to allow graphing calculators. People worried the new technology would give students an unfair advantage. Today, graphing calculators are pretty much the only devices standardized tests allow because their technology has not evolved. They don't connect to the Internet. They can't communicate with other devices. And companies like Texas Instruments and Casio can charge a premium for this. Back in 1994, a graphing calculator cost about $100. Today, a graphing calculator costs about $100, which is expensive considering that now you can buy devices that will do far more for far less money. It also means many students can't afford them. And I asked Peter Balyta from TI about this.
It does seem like the price hasn't gone down that much and, you know, considering the technology involved, maybe should have gone down more.
BALYTA: You know, I will say that when someone's buying a graphing calculator, they're not just buying a graphing calculator. They're buying really a solution for a classroom.
VANEK SMITH: Graphing calculators can command a high price because they own a corner of the market - the standardized test takers corner. TI sells about 6 million calculators a year. And the graphing calculator gets a lot of love. Peter Balyta says students send him photos of their calculators all the time or wearing graphing calculator Halloween costumes. Apparently, they are very big in promposals (ph). And he has a theory about why.
BALYTA: I think it's a tool that they have had with them by their side when studying, you know, what are not always the easiest classes, you know, math, science, calculus. Those are long nights, and they require a lot of hard work.
VANEK SMITH: Or maybe they are just excited about something that managed to escape the forces of creative destruction. Stacey Vanek Smith, NPR News.
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