Some thoughts on SDRs and residual values

John G3WGV

With the launch of the new Flex radios there has been much discussion about what this does to second hand values for the discontinued models. I believe we have to think in terms of a new value paradigm which is closer to the world of computing than it is to the traditional amateur radio market. Here's my reasoning:

Traditional (superhet) radios have evolved steadily over a considerable period of time. Competition, technology advances and improved manufacturing techniques have fairly well optimised the cost/performance model. Most advances have actually been in DSP techniques in the last 20 years or so. Traditional radios do not have much room for further significant cost/performance improvements.

SDR is a completely different kettle of fish. Largely based on devices developed for computing applications, the cost/performance trajectory is more closely aligned with the computing world. Anyone who has bought PCs over a period of more than a couple of years knows that the pace of change is fast and yesterday's technology is obsolete and nearly valueless in the second hand market.

I propose, therefore, that we have to start thinking of SDR radios as comparatively steeply depreciating assets, simply because the technology is advancing apace. The good news is that, just like in the PC world, the "**** for our buck" will get better and better. The bad news? You've guessed it: Our SDRs will be worth less when we come to sell them than our old model of radio depreciation suggested.

Of course, just like the PC, our radio still works just as well as it always did, so its value to you, as an owner is just that. My 6500 is just as good today as it was last week. We all managed to adapt to the rapid evolution of the PC and the deleterious effect that had on our investment. We need similarly to adapt to the rapid evolution of SDR.

SDR is already exceeding the price/performance of traditional superhet radios. I firmly believe that soon, perhaps within five years, you won't be able to buy a new superhet radio any more. And the main reason is that the continual reduction in the cost of SDR will make the superhet too expensive to compete. We should welcome that!

73, John, G3WGV

Duane N9DG

I would say all in all a pretty fair and realistic assessment. But I would also expect that the rapid change of pace will slow down some. For example 15-25 years ago I was upgrading PCs about every 3 years, and the best **** for the $ price point machine cost around $8-900 in those days. More recently I have consistently been getting to about 7 years before being compelled to upgrade to a new machine. And the best **** for the $ price point has been closer to $600 over those same last 7 years. I have always bought or built no name clones.

And I have also noticed that traditional HF transceivers historically bottom out price wise on the used market at around the 10-15 years of age point. After that they tend to stabilize and maybe even rise if there is nostalgic collector interest in them. Basically people now having the money to buy a particular radio that they could only dream about when they were younger.

But I don't think superhets will completely disappear any time soon, or ever, just like as to this day you can still buy new regenerative designs. But they will no longer be the dominant design architecture for new radios sold before too long.

Mack

John,

You're thoughts are spot on! The Flex radio is simply a computer server with an RF front end. This is a great way to consider the current technology. I have many computers that are 10 years old that still work fine and I continue to use this for various purposes. But I also have the latest in computer technology when I want optimal performance. That is the paradigm that exists for Flex radio. An older Flex radio will continue to function for many years to come. Change brings additional capabilities to those who want them.

73,

Mack
W4AX

Richard Hubbard

Yes agree. My first radio is an IC7300, and I was looking at superhet's from the usual suspects to

 upgrade, however I find them dated, especially when one considers that with the new Flex 6600

 SDR you get multiple slice receivers, diversity reception, full duplex and two transverter ports, I do

 not see any competition on the market currently, not even the IC7610 at the current specs. 

Technology is the one thing which defies the law of diminishing returns by adding to productivity,

raising capabilities,  and making the impossible possible.  

Flex appear to be pushing the bar, I was  surprised when commentators touted the IC7300 as the

Flex killer, as a user of ICOM it is a nice radio, but its really a hybrid, my thoughts are that Flex are

the innovators and the big manufactures are trying to play catch up fast. I will be getting a Flex 6600.

Ria

I never think of a depreciating asset such as a radio as an investment. My advice is if you want the radio, buy it and enjoy it. Even superhets' prices have been pushed downward by the icom 7300 and other lower priced new radios. The manufacturers are lowering prices, something we haven't seen in a long time. Ria

Mike va3mw

Moore's Law https://en.wikipedia.org/wiki/Moore%2...

Richard Hubbard

True, its all good for the consumer.

Martin AA6E

John -

A reasonable analysis.  Let me add a couple of points.

1. The "value" is determined by the market -- what people are willing to pay.  So there's a psychological factor.  People want the latest, shiniest thing.  Compare with cars: you lose a lot of value when you drive it off the sales lot.  Maybe, if you wait long enough, it becomes valuable as an antique.  (What's the value of a Flex 1000?  

2. A lot of the rapid obsolescence in computers is driven by the software.  Every couple of years, you have a large increase in "bloat" that requires new hardware to run well.  Cause and effect are debatable.  Does software drive hardware or vice versa?  Your basic word processor would still work fine on an i386 processor.  But don't try YouTube.

The original trio of 6000 series radios should maintain their (objective) value for some time, until SSDR grows to the point that many features won't work in older hardware.  Of course, Flex (and the industry) have advanced, so the same feature set can be provided a lower cost.  This is welcome, but it will naturally depress the pricing for existing SDRs.

But in the end it's all about #1 above.

73 Martin AA6E

KF4HR

Even with continued software and repair support, it's a safe bet that as soon as a new model of any type of any radio becomes available, older models will depreciate in value.  It's just a fact of ham radio life and recent proof of this is currently on the virtual hamfest websites such as qrz, qth, eham, etc, for the 6500 and 6300 selling for hundreds less than they did a few months ago.  Although the higher end radio's can sometimes can last several years before being superseded by the next model.  The ICOM IC-7800 and FT-9000 series are a couple of examples.    

While I doubt any of us buy a radio as an investment, I think most of us would like to think our latest and greatest purchase will be designed well enough to compete favorably with future competition for several years and not be quickly superseded, especially the higher end purchases.  

While not a fan of the ergonomics of the Elecraft brand, my hat is off to this company for designing their K3 model to be upgraded to the K3S model, via module swapping.  While these upgrades probably are not nearly as profitable for the company as selling a completely new model, module upgrade swapping maintains buyer loyalty.  I would like to see FRS adopt this hardware upgrade strategy. 

 

Richard Hubbard

Is it possible that FLEX are considering the modular approach to upgrading? The 6600 and 6400 are modular builds with flex stating "for easy repair and serviceability"?

Steve W6SDM

My first commercial rig was a Heathkit DX-60.  Today it sells for three times what I paid for it based totally on nostalgic value.

I believe your depreciation model is accurate.  Rapidly changing technology doesn't hold its resale value.  Look at iPhones. New models come out every year and you're lucky to get much of anything for your old one.   It's not necessarily a bad thing because I don't see the purchase of ham radio equipment as an investment.  It's a cost, and if I were buying it for a business I would totally depreciate it as soon as I took possession of it.  

So, while it may not hold it's resale value, my radio has a tremendous amount of functional value because it can do most of what a newer, more advanced, model can do.  Maybe not as easily or with the same degree of convenience, but it can do it.

Clay N9IO

An additional thought on the new modular design. 
With the upcoming Bouvet DXpedition early 2018 the first Flex Radio only DXpedition I think it would be relatively easy to take along an "extra" of each module just in case a repair in the field were needed considering Bouvet "IS" the most remote location on the globe.  (What a very cool distinction, congrats Flex!)

Clay N9IO

Me too Steve. First radios were the DX60 tx and an SX28 rx. 
The parallel is that the Flex 6k to me holds the same degree of awe as they did when I was 15.

Steve W6SDM

Another thing to consider is that since the Flex is software defined, the obsolescence is much less of a problem.

Jim Gilliam

If things advance as fast as predicted, and you are tight on money. Just be one "notch" behind and enjoy yesterdays used radios and let the "gotta haves right now" pay for the difference.

Jim, k6QE

Bill -VA3WTB

There was a comment that said, the re sale price is determind by the demand.
I have a Flex 3000 here, about 14 years old, people are still looking for them, so I can still get about a 1000 bucks for it if i sold it.
I understand there are many still looking for the 6500 used, the re sale price should stay in good shape. For used gear.

Ned K1NJ

     Price and value are often confused.

     In the case of our radios:
     Price is what it costs.
     Value is what it does.

   We've been doing well with what we have, but Christmas is always nice.

Ned,  K1NJ


   
    

Craig Williams

Waiting for a $1000 6300.

Norm - W7CK

An interesting difference between the 3000/5000 and the 6000s is that the software for the 3000/5000 runs on the PC and it is pretty much in the public domain.  After 14 years, this software is still being developed.  New features are being added all the time.  The 3000 or the 5000 for that matter are not the radios they were when Flex stopped producing them.  Private parties have continued to expand on the capabilities.

With the 6000, that software is not public domain. When Flex decides to move on to something new, SmartSDR will most likely be frozen in time.  No new features will be developed and the rigs running SmartSDR will most likely not see any enhancements after that time.

There are advantages and disadvantages to both platforms.

KS0CW

you may be waiting a minute or two for that price point... KS0CW

Mack

For the immediate future SSDR will run on all Flex 6000 platforms. Mack W4AX Alpha Team

Bill -VA3WTB

So using that understanding, Flex customers have nothing to worry about for a long time. SSDR being being a closed source, even after moving to something later SSDR will continue to to be supported. Yes the features upgrades will end as we see it now in V1. But the community can continue developing API for it. As many have done so far. I think the 6500 and 6300 will hold their own in the used market, we will all know in a couple years.

W9OY

I just wrote a blog post about a Joe ham experience of setting up a WPX contest experience on my 6700 for band fills.  The experience would be exactly the same on my 6300, I just used my 6700 because that is what I had turned on.  So lets say the 6300 drops to $1500, quite a deal for Joe ham to enter the Flex arena and play with the big boys.  If you were going on a DXpedition you might want to bring a 6300 along as back up.  I think ppl are WAY too doomy and gloomy.  The new radios means Flex will live to fight another day
 
http://sdr-w9oy.blogspot.com/2017/05/cq-wpx-2017-cw-goofing-around.html

73 W9OY

Cliff - G4PZK

Spot on Ria. Radio is simply a hobby or 'boys toys' (and 'girls toys' as well of course!). John is quite right, superhet designs are fast approaching being consigned to history, just as super regen and trf sets were.

Cliff

Bill Garfield W1BG

Precisely!  What the 7300 succeeded in doing was to virtually **** sales of Kenwood's new 590(sg) and Yaesu's 1200. Ask any retailer what rig they can barely keep in stock vs which ones he'd welcome the opportunity to just recover his cost.

Richard McClelland, AA5S

And what about the effect on the resale value of my Flex 1500?  It was worth $328.62 last week, now it is worth $315.25.  Somebody owes me compensation for my $13.37 depreciation.  <grin>

KM6CQ - Dan

Life's too short for $13.37 And you thought I was going to say QRP didn't you?:)

Patrick Greenlee

I think the original poster's evaluation is pretty much spot on.  One additional viewpoint... In the PC model obsolescence includes lack of continued support for older operating systems that increases vulnerability to malware.  The PC can do whatever it used to do but is in a more dangerous environment due to lack of continuing support.  The SDR can do whatever it used to do and for many users does not have to be connected to the internet so there is no malware dimension to its obsolescence.

Patrick        NJ5G

Richard Hubbard

Maybe one way in which Flex could be able to keep all customers happy and shied against obsolescence is to have a one box modular approach, with an upgrade path via slot in modules and software unlocks?  

Richard Hubbard.

Rick

I suspect that your initial post is correct and the way of the future at least with Flex radios, and maybe other SDRs. I'm not sure that traditional radios are suffering quite as much depreciation. Those of us who owned the legacy radio from flex learned the same lesson and were shocked and the rapid depreciation. Here was a lot of complaining at the time. And now it's happening again, but at least Flex offers a trade up program like no other company. I advertised my 6300 with ATU about 10 days before the Hamvention asking $2200. A guy came forward offering me my price and I turned him down and took it off the market like an idiot. I readvertised it a few days ago for a little lower price to see what I could get for it on the open market and guys are now offering me a mere $1500 shipped! What an idiot I was!! As a friend and fellow flex user said to me, if we want to use a great state of the art Radio we should just assume that it's going to cost us about $200 a year and he's right in both cases. I'm in a watch and wait mode at the moment, nothing impulsive until I see how things will settle down and the reviews on the new line of radios.

k0eoo

@John,

I like/agree with most of what you say about PC's, Superhet's and SDR price performance and so on....

But, I do not believe my current 6x00 series falls on the same effective performance curve as PC's, and here's why:

PC's have to get faster and faster to keep up with ever evolving software glote, programs get larger and more complex to do more so PC's have to get faster and faster, making them obsolete quickly.  They will run their old software just fine but slow down running the new stuff....

That's not true for our SDR radios.  Our ham bands are the program our SDR radio has to run and that program has arguably not changed that much over the last 30 years, propagation, QRM, QRN, DX, filter bandwidths shape factors and other receiver performance necessities have changed very little.  My 6500 is good to go and beats any superhet I have had.....

My point being, moving forward, SDR's will get cheaper as manufacturers are able to reduce costs but the 6x00 radios we have today is MORE THAN ADEQUATE to deal with band conditions for the next many years, and that's the job/program they have to run....

 Yes there will be new digital modes and maybe new other modes but Flex will update the software and we will run those modes just fine, also, Flex has created an API lib so developers can hook into the radios to add who knows what....

So, I might get a new Flex radio one of these days but it won't be because I think the 6500 can't cut it, it'll be because I want diversity or some other feature the 6500 can't give me.

Enjoy the 6x00 you have, it'll be good for many many years!