14 Chapter 1 Fundamentals of Computer Design
ing hot spots have become increasingly difficult challenges, and it is likely that
power rather than raw transistor count will become the major limitation in the
near future.
.
Although there are computer designs where costs tend to be less important—
specifically supercomputers—cost-sensitive designs are of growing importance:
more than half the PCs sold in 1999 were priced at less than $1,000, and the aver-
age price of a 32-bit microprocessor for an embedded application is in the tens of
dollars. Indeed, in the past 15 years, the use of technology improvements to
achieve lower cost, as well as increased performance, has been a major theme in
the computer industry.
Textbooks often ignore the cost half of cost-performance because costs
change, thereby dating books, and because the issues are subtle and differ across
industry segments. Yet an understanding of cost and its factors is essential for de-
signers to be able to make intelligent decisions about whether or not a new fea-
ture should be included in designs where cost is an issue. (Imagine architects
designing skyscrapers without any information on costs of steel beams and con-
crete.)
This section focuses on cost and price, specifically on the relationship be-
tween price and cost: price is what you sell a finished good for, and cost is the
amount spent to produce it, including overhead. We also discuss the major trends
and factors that affect cost and how it changes over time. The Exercises and Ex-
amples use specific cost data that will change over time, though the basic deter-
minants of cost are less time sensitive. This section will introduce you to these
topics by discussing some of the major factors that influence cost of a computer
design and how these factors are changing over time.
The Impact of Time, Volume, Commodification,
and Packaging
The cost of a manufactured computer component decreases over time even with-
out major improvements in the basic implementation technology. The underlying
principle that drives costs down is the
learning curve
—manufacturing costs de-
crease over time. The learning curve itself is best measured by change in
yield
—
the percentage of manufactured devices that survives the testing procedure.
Whether it is a chip, a board, or a system, designs that have twice the yield will
have basically half the cost.
Understanding how the learning curve will improve yield is key to projecting
costs over the life of the product. As an example of the learning curve in action,
the price per megabyte of DRAM drops over the long term by 40% per year.
Since DRAMs tend to be priced in close relationship to cost–with the exception
1.4
Cost, Price and their Trends
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