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Software cost now equals hardware cost

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[First published as Software cost now equals hardware cost on November 13, 2007.]

I observed in a recent post, The Two Hundred Dollar Computer, that acceptable desktop computers can be had now for about $200.

I just spent a little time at Newegg trying to find what it costs to get a copy of Microsoft Vista and Microsoft Office 2007 (Student and Teacher Edition).

Each costs about $100, for a total of $200 for the basic operating system and the applications such as Word, PowerPoint,Excel that so many people are used to having.

So let’s say the software cost of a desktop running Microsoft’s software is about $200.

That means the software cost is now close to the hardware cost, and that’s just for the cost of the Microsoft software.

This makes running Fedora Linux much more interesting. Run Fedora and you cut the cost of your new computer from $400 to $200.

Not too many years back a good desktop cost about $2000, while Windows and Office cost about $300, and probably more. The prices of hardware have fallen much more dramatically than have the costs of Microsoft software,

The marginal cost to Microsoft of producing a new copy is near zero. They don’t have to buy any parts other than a blank CD, a case, and a box. What does that cost? A few nickels, or dimes? So you might think that Microsoft could afford to cut their costs to keep up with the ever-declining costs.

But we know they can’t. That’s because it is the profits on Windows and Office that have made Gates et. al. among the world’s richest people. They need those profits, as none of their other ventures have come within a fraction of yielding such spectacular profit margins.

One of my former professors, Richard P. Feynman, was the scientist on the Challenger panel who did the demonstration with a glass of code water and a rubber ring. I don’t think that too many people have read the final report of that commission, including the Appendix that Feynman wrote and that he insisted be included. It ends with the following sentence:

For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.

Nature cannot be fooled.

Nor can Moore’s Law.

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Written by daveshields

December 12, 2007 at 4:56 am

Posted in xo-laptop

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