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The Top-Performing Alternative Investments: Vintage Apple Computers and Other PCs


As old computers become increasingly rare, a market for tech lovers grows deeper.

Most people were unaware of the vintage computer market before last November when, at a Christie's of London auction, an Apple I sold for more than $200,000.

The sale stunned the uninitiated and computer enthusiasts alike. "All of us on the hobby side were confused because that particular model had some problems," says Evan Koblentz, 36, a computer historian who also heads an organization called MARCH, or Mid-Atlantic Retro Computing Hobbyists. He points out that the computer sold by Christie's had been purchased by its former owner for just $50,000 a few months before the London auction. But that's the thing about a new market -- its ways are unpredictable.

How It Works: The vintage computer market is a loosely organized affair, at least for now. Buyers and sellers of collectible computers find each other on eBay (EBAY) and via a handful of specialty sites, but also at vintage computer festivals held almost every year in California and New Jersey, and in hobby club meetings across the country. No one knows how many collectors are in the market, but Koblentz says he recently tried to find out, enlisting the help of a few friends to conduct an informal study. Together they estimated that the market consists of about 5,000 people. Many of the top collectors know each other.

A computer qualifies as vintage if it was made at least a decade ago, though that definition is starting to change. "There used to be a 10-year rule, but that could mean Windows 2000 now," says Koblentz. In reality, he says, vintage, collectible computers are those made between the mid-60s and the mid-80s. "Before the '60s, computers were room-sized beasts. After the mid-1980s, they all start to look the same and they all work with the same Wintel software."

Like any other collectible, though, what makes a computer worth its plastic is its rarity, condition, provenance and its historical place in the world (see more below). Also, adds Koblentz, "Is it just the computer, or is it also the software and the manuals, everything that came with the original packaging?" The more paraphernalia attached to your old computer, the better.

Who's Investing and Why They're So Good at It: You might expect that it's all computer programmers, and mostly men, making this market run. You'd be half right. Koblentz says that about 50% of the collectors he knows are "power users" of technology, not people who work in the tech industry. It's not an entirely male community either; several women have joined the ranks of dedicated collectors.

The market's alpha investor-collector is Sellam Ismail, a Silicon Valley software developer who has amassed more than 2,000 computers in his 4,500-square-foot warehouse in Livermore, California. Ismail, the founder of the Vintage Computer Festival, also owns a company called Vintage Tech -- the only full-time vintage computer consultancy in the U.S. The firm serves patent lawyers, Hollywood prop lawyers, researchers and designers, to name a few. Ismail also works as a private broker for people who want to build their own old tech collection.

A few billionaires have become expert collectors, too, including Paul Allen, the co-founder of Microsoft (MSFT), and Mitch Kapor, Lotus computer founder. Overall, though, the most successful collectors are programmers and fans who know what's rare, like to keep an eye on the market anyway and can keep the machines in working order.

What They're Making: It's too early in this market's history to say what the average returns looks like. Koblentz says one of his best investments was the $170 he spent on a now-extinct mobile device that one year later sold to an eager buyer (a Silicon Valley billionaire Koblentz can't name) for $5,000.

Some of the computers that can make a fine penny are the Apple-I, the Apple-II and, of course, the Apple Lisa, which is worth $15,000, "easily," says Koblentz. Rumor has it that one reason Lisas are scarce is because Apple (AAPL) buried its overstock in a landfill when the computer was first taken off the market.

Collectors also covet the PDP-8, a minicomputer made by Digital Equipment Corporation, which will fetch $20,000 to $30,000 on an auction site. The Altair, made by Micro Instrumentation and Telemetry Systems and introduced in 1975, was the world's first popular microcomputer and is a natural collectible, says Koblentz. The Altair inspired 19-year-old Bill Gates to drop out of Harvard and focus on computer software development. Around the same time, a bunch of computer fans in Silicon Valley came together to form the Homebrew Computer Club, a group dedicated to using and programming the Altair. Some early members of the Homebrew Computer Club -- including the founders of Apple -- went on to become legends in the industry. Most Altairs on the market come with a $2,000 to $5,000 price tag.

And what about the Commodore 64 in the back of your garage? It may get you about $100, if it's in pristine condition and comes with all the accessories, says Koblentz. "We're not saying throw them away, please don't, that would be sacrilege," he adds. "But don't count on it bringing you a lot of cash." (Koblentz's group only accepts computer donations and does not make purchases.)

More modern collectibles include the first iPod, the first smartphone -- which would be the Simon (IBM) -- and, possibly, the first iMac. Koblentz also sees potential in a few Internet appliances that were produced in the late 1990s and early 2000s, like the 3Com Audrey.

Why They Really Do It: Some of the most avid computer collectors are people who lusted over computers at a young age. "We were kids, and now we're grown up and we can go get it and relive those times," says Koblentz. Many other collectors are in their 50s or 60s, and ready to revisit the tech tools of their youth. "I'm already excited to see high school kids point at a 486 and say, 'Wow, retro,' " Koblentz notes.

Investors and collectors agree that old computers have more character than the machines we use today. They used various operating systems and offer varied functions, making them more fun to use and explore. "I know very few people who are in it for the money," says Koblentz. "I've seen divorces because of this hobby."

How to Get Started: If you're planning to get into this market as an investor, go after the mid-value computers, like the Altair. "They're not unobtainable," says Koblentz. "But if you start collecting Apple-Is and hope to make $1 million one day, I would advise you to be patient until you can find one in good condition."

There's also the option of investing in new products that may be collectible in the future. And don't forget about computer magazines, books and posters; the first issue of Byte magazine, which launched in 1975, has since been stolen from libraries around the world. The October 1971 issue of Esquire includes the first major article about computer hackers and is considered a part of tech history.

Amateurs Be Warned: As with any young market, it's difficult to predict prices and demand. No one knows exactly what inventory exists around the world, meaning there could be an influx of vintage computers at any point. There's also some speculation in the market, especially following the Christie's auction.

As with any niche market, amateurs run the risk of being swindled; it's dangerous out there if you don't know your tech. Finally, remember that with a computer, preservation is key to maintaining a machine's value. If you buy a 30-year-old computer, you have to open it up, clean it, and know what you're doing. This market may be exciting, but it's anything but plug-n-play.
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