RSS

The Bulletin

A typical iPhone would have cost $3.6 million two decades ago

Posting in Technology
Today's typical smartphone replaces a wide range of equipment one would have purchased back in the early 1990s -- from computers to stereo equipment to cameras to clock radios. And, oh yeah, telephones. 
iPhone in use-photo by Joe McKendrick.jpeg
 Photo: Joe McKendrick
 

Now, Bret Swanson of TechPolicyDaily.com has crunched some of the pricing behind these replaced items and more, coming up with an estimate as to what it would have cost to put together a high-functioning smartphone in 1991, comparable to today's iPhone: $3.6 million, versus the $100-$300 price tag (depending on deals) incurred when purchased with one of today's mobile plans.

This reflects the incredible advances in the availability and relative costs of technology in just two decades.

Here is Swanson's breakdown of costs, if one were to attempt to build a smartphone back in 1991:

Memory:  Up to $1.44 million for the typical 32 gigabytes of memory an iPhone holds. "In 1991, a gigabyte of hard disk storage cost around $10,000," Swanson points out. "Today, it costs around four cents." Plus, in 1991, "a gigabyte of flash memory, which is what the iPhone uses, would have cost something like $45,000, or more. Today, it’s around 55 cents. The mid-level iPhone 5S has 32 GB of flash memory. Thirty-two GB, multiplied by $45,000, equals $1.44 million."

Processor: A decent in-phone processor comparable to today's power would have cost $620,000. In 1991, a PC using the 80486SX processor at the time (yielding about 16.5 millions of instructions per second, or MIPS) might have cost $3,000, Swanson says. "The Apple A7... outpaces that leading edge desktop PC processor by a factor of 1,242. In 1991, the price per MIPS was something like $30. So 20,500 MIPS in 1991 would have cost around $620,000."

Network connectivity and bandwidth: At least $1.5 million. In 1991, a mobile phone connection (for basic communications) was about $100 per kilobit per second. The iPhone communications capacity is at least 10,000 times what it was for a mobile phone in 1991.

Swanson also had an interesting follow-up observation to his calculations: you can't make policy based on technology that quickly gets outmoded, or accelerates to new heights of adoption. By doing so, "we close off entire pathways to amazing innovation."

(HT: Mark Perry.)

— By on February 5, 2014, 9:20 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure