Why buy a smartphone when next year's smartphone will be better in every way?

Because you want to use your smartphone. Smartphones are a horrible investment and you really shouldn't buy one if you're planning on storing it in the basement in its original packaging.

In 30-200 years, they'll probably be a great investment. How many original iPhones will be left? It'll be a priceless piece of history.

Because today (and every day between now and next year) you can use that smartphone to do things that you can't do without a smartphone. So yes, the smartphone has lost money value, but you as a person and in your life, have gained.

Not so with bitcoin.

Unless, you know, you actually want bitcoin. Maybe you want to buy something now with bitcoin (especially something that's more difficult to buy with government currency, like online gambling or illegal drugs), or maybe you just think bitcoin is cool.

Deflation would refer to the value of the same good. Obviously new smartphones are pitched as "new, improved" goods, and marketing sways consumers to get the latest and greatest.

Not so for staples.

Well, you buy staples now because you need them now to survive.

I'm actually more of a paperclip person myself. I haven't stapled anything in years, and I've survived just fine.

Because next year's smartphone will be too large to fit in your pocket, and will make you look like this:

http://www.mp4nation.net/blog/wp-content/uploads/2011/03/Ano...

Nope, by definition deflation occurs when the authority controlling the money supply (eg the Fed) contracts said money supply.

Prices going down is merely a symptom of deflation, but it is not deflation.

Only the Austrians use that definition and they're not a serious school of economics.

"Austrians" are quite serious. Few people take them seriously.

And python is not a serious language. Java is.

Why is this definition good? I mean, why should I or anyone care about changes in the money supply, except in how they affect prices?

It separates (theoretically, as it can't be measured) the price change due to faith-in-currency from price change due to market forces on the products.

That is, the price of good may fluctuate as function of how much current labor you need to buy it, or as a function of how much of your past savings it will cost. The diference between those measurements is due to money supply (in part, for there are other complicating factors)

Eventually, those suppliers of unwanted goods will stop supplying, and prices will start to rise as demand drops, reversing the deflation.

Why should prices rise when demand drops? Decreased demand yields lower prices.