iTnews asks: Is it smarter to buy tech stocks or tech toys?

What would have been the better investment: buying that latest piece of IT wizardry, or taking that same money and buying shares in the tech company that built it?

Today, iTnews gives the "Kyle Conroy" treatment to the flagship products of Cisco, IBM and Microsoft.

Berkeley student Kyle Conroy put a new spin on the "return on investment" of technology earlier this month when he published a comparison of the price users have historically paid for Apple products and the profits they would have made by investing the cost of those toys in Apple shares.

Conroy found that the US$4999 a user would have paid for the 1998 Apple Mac Server G3 300 Minitower would have yielded US$205,444 if invested in Apple stocks.

A user that took US$5700 of Apple shares instead of buying an Apple PowerBook G3 250 would have made US$330,563 - 57 times the original investment.

Even the first Apple 5GB iPod, purchased in 2001 for US$399, would have yielded $11,914 in Apple stocks.

Did that Mac server user get US$205,000 worth of productivity out of the server? Hard to know. But we couldn't resist running Kyle's treatment over a few other products.

THE CISCO 2500 ROUTER SERIES

Whilst it wasn't the height of Cisco's innovation, the 2500 series of routers changed network computing in terms of the price a service provider needed to pay for networking kit.

The routers' entry-level price of US$2500 in January 1994 proved an ideal price point - Cisco sold over a million 2500-series routers.

On January 17, 1994, Cisco shares opened at US$1.78, so the price of an entry-level router could have bought you 1404 shares.

Today, that investment would have yielded US$37,542 - 15 times the price-tag of the kit.

THE IBM PC

On August 12, 1981, IBM announced the PC - a landmark date in computing. Machines came in at US$1565 for an entry-level device, US$2665 with DOS thrown in and a business edition at US$4425 with a display and printer included.

If a user had invested US$1565 in IBM stocks, rather than ordering an entry level machine that morning (shipping didn't start until October of that year), today that investment would be worth US$14,135 if you'd pocketed the dividends and US$27,611 if you had reinvested the dividends in IBM stock.

And if you'd thrown the US$4425 for the business version into IBM stock instead, you'd have returned US$39,966 or US$78,071 if you had reinvested the dividends.

That's about 17 times the price-tag at best.

MICROSOFT WINDOWS 1.0

While it had been announced two years earlier (and the idea copied from Xerox/Apple et al), Microsoft's first attempt at Windows was released November 20, 1985 and sold for US$100.

Microsoft didn't list until March 13, 1986 - ten or so weeks later. But for the purposes of this exercise, lets assume you'd forgone your investment in the operating system and thrown US$105 in Microsoft shares (a whole five of them!) a few weeks later.

Today that would be US$42,124. Surely that can't be right - a 420 times better return?

Got another idea of a product to run the 'K.C. treatment' on?

(For obvious reasons I have avoided calling it the 'Conroy treatment').

Feel free to run some other calculations and post them below.