Milestone or Millstone?, Eb Guenther

Did I really spend five million dollars on computers?
Then - Twenty-five Years - Now
We have passed twenty-five years of personal computing. That’s how long it’s been since I bought my first computer, an Apple II+ with 48 KB of RAM, and a floppy disk drive with 120 KB capacity. There were no hard disks available yet, but the floppy was leaps ahead of the alternatives, a tape drive, or no permanent storage at all. The killer app of the day was VisiCalc, the original spreadsheet. We have come a long way since then.
How Much Have Computers Really Changed?
Hype aside, I’m sure it’s not news to you that computers are cheaper and more powerful today than they were in the early days of personal computing. Curiously, retail prices are about the same, at the high-end level. Shouldn’t they be cheaper? How much more powerful are they?
Are Computers Cheaper Now?
In pure dollar amounts, prices for computer systems are about the same. My Apple II cost $4,000 in 1979. That’s about the same as high-end consumer desktops today. But, when you take the purchasing power (inflation) into consideration, it’s a different story. In 1979, $4000 would have paid my real estate taxes for ten years; today it’s not enough for one year. In ’79, four grand would have bought a cheap new car; today you’ll have to spend more than ten grand for a low-end new car. In ’79, I could have eaten lunch at Andre’s in River Oaks twice a week for a year for four grand; today, it doesn’t cover once a week. The inflation for the last twenty-five years is about 3:1. Things cost three times as much today as then. So in today’s dollars, my ’79 Apple cost me $12,000. Three times as much as today’s desktop (ah, well; once upon a time we could buy a scoop of ice cream, or a cup of coffee, or make a telephone call for a nickel).
So what did we get for all that money back then, and how much more power do we get for so much less money today?
How much more power do we have today?
There are a number of ways to measure power. But let’s forget benchmarks and concentrate on the superficial. After all, that’s what we used to select among the many offerings, isn’t it?
In 1979 the Apple CPU had a clock speed of 1 MHz, versus 3 GHz (1,000 times as fast). The Apple’s data bus was 8 bits wide, compared to current 64 bits (there are a couple of processors that much - 8 times - wider). The old 64 KB memory capacity compares with capacities of 4 GB today (65,000 times). We’ll have to compare hard disks today to floppies then, because there weren’t any hard disks available in 1979. The 120KB floppy then compares to the 100 to 200 GB disks today (about one million times as large). When you compound these numbers (more RAM affects speed separately from the larger disk space, and separately from the CPU speed), you get a technological increase of about 500 Trillion times as much power for a third the money. You could never tell, if you saw my Apple side-by-side with a modern desktop. Did you hear the sonic BOOM, when computing power broke the sound barrier?
Less Money
I touched on inflation above, when I compared retail prices. Since we buy hard disks and RAM in terms of Giga Bytes nowadays, let’s look at the cost per Giga Byte of storage in inflation adjusted dollars. The $15 (adjusted for inflation) per 120KB floppy translates to about $125,000 per GB, or 250,000 times the 50 cents per GB we pay for hard disks today! RAM cost around $30 per KB (inflation adjusted) in 1979. There are a million KBs per GB, so this translates to $30,000,000 per GB, or 300,000 times the $100 we pay per GB today.
Complete storage devices, if they had been available in ’79, would have cost astonishing amounts of money then. The 100 GB hard disk we can get for $50 today might have cost more than 12 million dollars back in 1979. RAM is even worse. The 4 GBs of RAM most motherboards are capable of would have cost $120 Million in 1979!
Of course, these are just measures of cost. By the way, we’re talking before Bill Gates made his famous pronouncement, that nobody would ever need more than 640 KB of RAM. Did you hear the sonic BOOM when the prices broke the sound barrier on the way down?
Bragging Rights
If you purchased one of the early home computers (late 1970’s), you can honestly say:
“I paid $30,000,000 per Giga Byte of RAM!” No need to mention the miniscule fraction of a GB you bought (1/20,000th of a GB).
Opportunity Costs
It pains me to admit, that over twenty-five years I have spent over $30,000 (actual dollars) on a dozen computers and countless software packages. Sometimes I wonder, what would have happened if I had invested this money in Microsoft stock instead (AND gotten out in time). I would have paid an average of about 70 cents per share, and sold at $110 to $120. This would have netted about $5,000,000 (virtual dollars) instead of several museum quality computers. Financial managers call this “opportunity cost” (what I gave up in opportunity to acquire my computers). In that light my computers were rather costly. Then again, not purchasing the computers would have meant rejecting the computer age. Why would I have bought Microsoft, if I didn’t have confidence in computers? I might have invested in Sears or Kodak instead - and look where that would have gotten me.
So my computers cost me $5,000,000 in opportunity cost. This has had an unexpected side effect. I don’t dare have parties at my house anymore. I’d be too afraid that my drunken friends would stumble around, smashing five million dollar’s worth of computers.