August 22nd, 2009
Save money: buy from the enemy
When Spain opened its passenger vehicle markets to competition on entering the EU, the average new car price fell by about 20%, while the Obama cash for clunkers program, by reducing the availability of used cars, is expected to add about 3% to the value of the average used car still on the market - and significantly more for SUVs.
Those are obvious macro effects of competition. In IT there are similar effects: it’s competition that drives the innovation that drives the cost part of what we see as the operation of Moore’s law: Intel didn’t choose to produce the “nehalem” technologies because it wanted to sell faster processors for less, it got forced into doing this because AMD was eating away at its mindshare within the x86 community and both PPC and SPARC offered more for less beyond it.
As a result of competitive pressure a February 2009 TPC C result posted by Dell shows a per transaction (i.e. per “bang”) cost of just $0.60 compared to the $1.53 the same transaction cost according to a Dell report dated about five years (12/10/04) earlier - a gain of 2.55 times in bang for the buck.
It works the other way too. When Apple dropped the PPC for use in its traditional computer products processor competition declined: in 2002 Apple’s laptops were faster and cheaper than their (comparably equipped) PC counterparts, but today’s Apple laptop is physically indistinguishable from the PC equivalent - and costs more.
IBM has a closed mainframe market and its true believers are almost completely impervious to competitor appeal: thus a 3096 cost $4.5 million in 1982 while today’s version runs about $12.5 million -a larger jump than you’d expect from the consumer price index which grew by only 2.3 times over the period.
I get a fair amount of mail from nitwits rejoicing in what they see as they death of Sun - and particularly of the SPARC/Solaris combination. I don’t know what drives people to hate like that, but here’s a free bit of advice to everybody else: if SPARC/Solaris dies, you can expect to pay far more for your future x86 products than you will if Sun/Oracle gets it together and pushes these technologies as fast and as far as they will go.
Take away competitive pressure from the SPARC/Solaris combination and the rate of price/performance improvement for both wintel and lintel will decrease - imagine that it falls by only 20% (wildly optimistic, in my opinion) and your 2014 cost per “bang” will fall to only $0.29 instead of the $0.23 it’s headed for now. Six cents per “bang” - doesn’t sound like much, does it? The Dell that delivered the $0.60 I mentioned earlier produced 104,492 “bangs” - and that six cents works out to $6,270 for the system.
For you and me that difference won’t amount to much - perhaps a few thousand bucks we could otherwise spend on something else. For big players, however, this can add up to real money real fast - so much, and so fast that people making decisions for thousands of servers every year should be thinking that maybe the best way to get price breaks from the monopoly of their choice over the next few years might be to call their Sun/Oracle representative right now and talk about placing some serious orders.
Paul Murphy (a pseudonym) is an IT consultant specializing in Unix and related technologies. See his full profile and disclosure of his industry affiliations.
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| 08/22/09
