Why are we so obsessed with driving up the cost of computing?

Why are we so obsessed with driving up the cost of computing?

Summary: There currently seems to be a rhetoric that the PC is too cheap. How can it possibly be "too cheap"?

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TOPICS: Laptops, Tablets
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I want something like this, but basically for free.

Two of the best pieces I've read in a long time is Paul Thurrott's piece "Explaining Windows 8 PC Sales Over the Holidays and the related "This Best Buy Circular Says It All".

The reason why I like these pieces is that it lays bare the "damage" that was done by the rise of the netbook. To recap, the netbook was an ultra-cheap laptop computer. They were super-popular for a while, and then suddenly became much less popular when the market started to fall in love with the iPad. In Thurrott's first piece he cites NPD market data that the average selling price (ASP) of a laptop is currently sitting at $420. In his second piece he shows that Best Buy are pitching laptops for $460. It's the netbook that did that, driving down expectations of price to a point that's "unsustainable" as far as the manufacturers are concerned, yet "magical" as far as consumers are concerned.

As an individual, I want computing to be so cheap that if I pour myself out a bowl of cornflakes I want a sparking new tablet computer to plop into the bowl because they are so cheap Kelloggs can give them away as sales incentives. That right there is the target price -- so cheap that the cost can be absorbed in the price of a box of cereal at wholesale. Yum.

Plus, sociologically-speaking, cheaper, more pervasive computing is better for all of us. Most readers of this publication are in the relatively rare position (globally speaking) of being well-paid and well-off. But being able to deliver dirt cheap hardware to those in society who are less advantaged is something that we should all aspire to. Something like the OLPC currently costs about $200 -- that's much, much too expensive. It needs to be more like $20.

I'm not saying that we should all demand what Thurrott calls "throwaway, plastic crap" -- we need to get the OEMs to build good kit, but to do so cheaply. And they can generally speaking do that. Yes, a $100 Android tablet might not feel like a $400 iPad, but there's no reason why it can't deliver the same benefits to the owner. We don't all have to drive Aston Martins.

Personally-speaking, I've been working in IT for 20 years. Unless I've missed something, no change in either software or hardware pricing in either direction has ever affected me in any way. The only people who are wringing their hands about the decline in ASP are companies like Microsoft, Intel, and their partners. And I'm sure I would be too if the gravy train I'd been enjoying for decades looked like it was about to come off the rails.

Read: Windows 8 hardware "overpriced" and offers "no clear benefit in switching from iOS or Android"

Why are so many IT professional and pundits talking about the need to drive up the ASP? Sure, if the market demands new innovations that drive up the bill-of-materials and that drives up the ASP, providing it delivers value, go right ahead. But most people just need basic, commodity hardware that works well enough in order to get on with their lives.

Take the recent Adam Osborne-channeling Intel announcements from CES. On the stuff they're looking to cram into laptops it's all about driving the power requirement down and making smaller and lighter kit. That's great, if you ever actually move your PC. It's long been the case that even laptops spend the majority of their "in use" time in one place and not being moved. (For example, in the office I'm in now there are eight desks, everyone has gone home for the night, all the laptops are on the desks because their owners didn't need them at home.) I admire Intel for moving the story on, but asking me to pay more money for a device that's ultra-portable when I don't need it to be portable at all is simply siphoning cash out of my personal reserves and into the coffers of some corporate that I don't really care about. It doesn't really help me at all -- it's all about Intel and its partners.

Let's then all give thanks to tablets -- the device class that takes up the mantle of the great work the netbook did in driving down prices and takes it to new extremes. Because, given enough time, I'm pretty sure Kelloggs will be able to give away a free Android tablet with a packet of cornflakes. And that will be the start to a great day.

What do you think? Post a comment, or talk to me on Twitter: @mbrit.

Image credit: Google

Topics: Laptops, Tablets

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23 comments
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  • What you want and what reality dictates

    are rarely the same thing. Computers can be too cheap when the manufacturers can no longer afford to build them. So take your pick: No computers are $300 or computers at $600. Your greed of wanting something for nothing is no different than the greed of the manufacturer in wanting you to pay as much as possible for his product.

    In a true market economy (an endangered species in today's world), the result of this competing greed is maximized value.
    baggins_z
    • If the manufacturer can't afford to build them...

      ...he won't, supply will go down and prices will go up. So where's the need for whining, unless, of course, you're trying to make the prices artificially high, which they were at one point in time?

      Back in the 1990s, I was highly suspicious of the fact personal computers steadfastly refused to sell below $1000, no matter how cheap the components were (I still suspect collusion).
      John L. Ries
  • Interesting history lesson

    Funny how this parallels. The 1980s, perhaps the most consumer-centric period in history, also gave rise to a lot of college kids that were raised in the spirit of entitlement, or, "I think I deserve to have this, so I want it". But what got lost was the part that said "and I'm willing to pay for it". That is also when the Internet rose, and then eventually escaped from academia to the larger outside world. No, the Internet wasn't the entire cause (something for nothing was a prime mover for the Bulletin Board System activity before the Net was widely available) but it sure spurred it on. A song, mine for the taking, movies, mine too. And so on.

    Now it is rapidly becoming apparent that even the means of doing this should be free (as in beer) to a lot of people. And no, Open Source and it's friends did not do this either. Why is Windows the most popular general purpose OS? Why is it also one of the most pirated pieces of software, when there are excellent free alternatives? My point exactly. Even FREE is not FREE ENOUGH. Why do people scream about wanting a particular item or that it is too expensive? Because it's what they can't have and feel entitled too.

    In the end though, this will end up costing us all. That "cheap as Cracker Jack prizes" computing has to be paid for by SOMEONE. And in the end, devices will be themselves more expensive or limited as companies bail out of making them (after all, phones, tablets, PCs and all are physical things, and even the Chinese DO want to make something from all this).

    There's a reason the phrase "you get what you pay for" is around. If we keep at it, we will get exactly what we pay for. Has anyone bothered to notice that while devices and software have gotten cheaper or free, content (and especially the means of acquiring it) have gone UP in cost? My free subsidized smartphone isn't a bargain if it costs a fortune to keep it connected. Never mind the free content I could get. Which leads to another phrase "penny wise and pound foolish". It makes more sense to pay up front for the device and then less to run it than the other way around. But in the end, we will probably do both. Device makers will soon learn that you bake it in to the hardware so the most desired devices are more expensive. And content providers and carriers will all figure out that they can make more as they spend less to subsidize devices and (as per the course) leave the rates as they are (everyone is already used to them). So the cheap computing becomes very expensive computing. Then those Froot Loops won't taste so good after all, even if an iPad falls out into my bowl.
    jwspicer
    • The 80s was thirty years ago.

      All the twenty-somethings grew up in the 90s. That's OK, though. The public school system has long revised the actual history of the 80s. Mostly because they hate Ronald Reagan.
      baggins_z
  • I agree... mostly

    I agree... mostly.

    It seems absurd that we should be demanding more expensive computer stuff out of some misplaced altruistic concern for the profit margins of tech firms. However, to the extent that the low price of our electronics reflects inhuman working conditions for the factory workers who assemble the stuff, then yes, a concern that prices are too low is warranted. However that situation will not be remedied by higher prices alone. Only if the higher price reflects better working conditions (as opposed to fatter profit margins) would higher prices be warranted.
    dsf3g
  • It's simple

    These devices are moving from "luxury item" status to "basic necessity". Used to be if you had one computer (or TV, car, cell phone, etc.) you were "wealthy" now everybody has one and many have multiple.
    oncall
  • I think you're wrong Matt

    Prices are already low.
    In the 80's and IBM-PC or Macintosh would set you back around $2000 - $3000. In today's money that would be around what? $6000.
    Today a very decent HP desktop with screen would go for about what, $1200?
    An iMac for around $1400? It's already less than a third of what it cost back then?
    You want cheaper than that? It's also available. If you're now arguing for sub $300 laptops, then maybe, as others have said, YOU GET WHAT YOU PAY FOR.

    I think we should be arguing more for quality and not a race to the bottom. IMO prices are OK.
    MG537-23482538203179240121698430309828
    • I can trump your example

      Please define you terms, WTF is "ASP", as in "The only people who are wringing their hands about the decline in ASP are companies". I'm guessing "P" is for profit, "A" is for "after"(?), "S" ????

      The first computer I bought at the end of the 80's was a white box 386 20mhz cpu, with maxed out RAM, upgraded to 2 whole MB from 640KB and a whopping 80 MB hd. It only cost me $5000 (OK I wasn't a smart shopper).

      On the flip side we are approaching the "cereal box" price ... with Raspberry Pi computers going for $20-30:
      http://www.raspberrypi.org/

      That is a little over 2 orders of magnitude cheaper than my first computer and 1 order of magnitude cheaper than common computing devices today. That price places it in the "collect a bazillion box tops and get this prize for free". When the price of low end computers goes down another order of magnitude (and cereal prices go up some more ...) you will indeed find cheap computers in cereal boxes.
      Ron_007
      • Average Selling Price

        Ron, ASP = average selling price
        99% of the time people can just say "price" instead of using this acronym.
        joetaxpayer
  • Not in the market for a Cracker Jack laptop myself...

    Gotta fund that golden parachute somehow, dontcha know. The stockholders can't be expected to work for a living! That's why we have all those disposable underpaid overseas laborers!

    I'm not personally all that hellbent on getting the newest/fastest/smallest/lightest thing as cheaply as possible. What I do want is hardware that's not so outlandishly expensive I could never afford it, but is customizable, durable and upgradeable so that I can use it the way I want to for a long, long time. But of course that's not what the vendors want to sell me, because then I won't buy a new one in a year or two and they can't easily dictate what I can do with it and how.
    Ginevra
  • Do you get what you pay for?

    I keep hearing this. I haven't found evidence of an any law of nature or economics that you will get what you pay for. The expression sounds like something a person selling overpriced merchandise would say. Sometimes a product is marked up so it looks like it's more valuable, but is still the same as when it was a lower price. I remember when I was in high school (back in the previous millennium) we had the expression, "If it won't run, chrome it!" If it's a so-so computer, put it in a fancier box and sell it for more.

    What I've found is most of the time I end up having to pay for what I get, whatever it is, and I don't mind that. But I greatly object when I DON'T get what I paid for.
    zd1923@...
  • Ok so how do you base your purchases...........

    Me I have a requirement......

    What hardware do I need to make it viable....
    What is the minimum....
    Will I be require to run anything else alongside.....
    What Peripherals will I need to complete the task...
    Is there a total solution that will meet my requirement...

    Then I will require xxx with xxx and additions of yyy what is the cost.....

    Based on these questions I go to the market and see at what cost.

    I then base my decision on that answer and go and purchase.

    It would seem a lot of what I see here is, its new and shiny lets purchase it, then base their comments after it has/does NOT work to their expectations .
    carlsf@...
  • Netbooks were too underpowered to stay popular.

    Netbooks were too underpowered to stay popular. Yeah, I see that people were intrigued about these machines, hence the big sales at first - but I don't think they were ever gonna last. Even something as simple as surfing the web was an exercise in patience.

    Tablets or no tablets, I don't think that netbooks would've stayed popular for long.
    CobraA1
  • Goodbye Windows, Goodbye X86

    There's a strong economic reason why mobile devices are taking over from PCs, and that is that the price of a PC has sunk so low that the two costliest items on the bill of materials are the processor from Intel, and the OS from Microsoft. Both of these companies continue to demand exorbitant profits for their essential parts, leaving just peanuts for the rest of the ecosystem to fight over.

    Is it any wonder that these players in the PC ecosystem are either dying (like HP), or increasingly looking to get into other businesses?

    And those other businesses mean mobile devices. Here the ARM CPUs can be bought much cheaper than Intel ones, and from a range of competing suppliers who don't try to control what you do with them. And Android offers a full-function OS that is available at essentially zero licensing cost.

    With the removal of those two cost bottlenecks, it's no wonder that Android devices continue to come out with more and more compelling new functionality, at lower and lower prices. With nobody trying to dictate what can and can't be done with the hardware and software, the pace of innovation has become downright breathtaking. Or bewildering, for those still trying (unsuccessfully) to interpret it as an extension of the old PC business.
    ldo17
    • The Commoditization of Client Computing

      I seldom comment on articles, but Matt's article is pretty dead-on. Also, ldo17's response is also dead-on.

      Client computing is more and more commoditized. Old models were successful because they filled a need. As things evolve, new models evolve and the old models become obsolete.

      I make my living, in part, by supporting overly complicated and overly expensive client devices. When change occurs and it's change for the better, one should embrace the change or risk being viewed as antiquated in one's approach and implementation of customer solutions.

      An example: I'm writing this response on a Chromebook; a $249 device that I purchased because it intrigued me. So, far I'm very impressed with the device. I tend to like to look at solutions from the customer or end-user perspective. For customers and consumers who have moved or are moving to cloud solutions (a common sense approach from their perspective once they've been educated), this device and similar devices do everything they need it to do.

      Comments?
      Bob_n_TN
    • ARMs are for toys, x86/x64 is for PCs and productive endeavors...

      No ARM comes even close to the power of an x86 processor, and, contrary to your wishes and perceptions, the PC is here to stay, and will never be replaced by the crippled ARM toys.

      The toys can continue being produced cheaply, and they'll even gain some power and features along the way, but so will the x86 platforms.

      If all that the world needs were for texting and phoning and social websites and e-mail, then ARMs would meet the needs. But, if one wants productive work and more than just social media and watching movies, then the x86 cpus will provide the horsepower needed; the ARMs might be able to provide some of those capabilities, but they'd still do so with performance hindered.

      Then, in the current state of things, Intel is actually working to provide the same kind of capabilities that are needed in the small form factors, but with a lot more capabilities and power and features. Thus, the ARM platform might go back to being just another also ran that failed to keep up.
      adornoe
  • Yeah.

    And I'd like to see it rain Scotch whiskey.
    Userama
  • Nothing new here

    "I'm not saying that we should all demand what Thurrott calls "throwaway, plastic crap" -- we need to get the OEMs to build good kit, but to do so cheaply."

    Foxconn already does that with its child labor, wage slaves, and toxic work environments. And we'll pretend not to notice as long as the shinies keep coming.
    Mogster2K
  • We have disposable computing don't we?

    Look at all the embedded microchips with more "oomph" than an NES.

    As for decent prices, go build a system, if you can't pick out a list of parts that will do what you need and then stick them together in the right way (i.e. you can follow the instructions for a lego set) then you shouldn't worry about whether you're getting reamed on pricing.

    For those who are unable to assemble lego sets, grab a cheapo tablet, problem solved?
    Max™‮‮
  • Not an issue of "should be more expensive"

    I think it's more a concern over the sustainability of these prices, and the potential hazards that go along with them. There's only so much that can be cut from the sales of any product, and the attempts to make the systems ever cheaper will have unpleasant consequences when you have rampantly inferior build quality, horribly exploited labor, or crapware that bogs your computer down to a pace that would invite pity from a glacier.

    The problem with this race to the bottom is that for most companies, it will more closely resemble a death march.
    Third of Five