Tech Policy Daily: How much would an iPhone have cost in 1991?
Amazing! Today’s iPhones have the same capabilities (and more!) than 13 distinct electronics gadgets, worth more than $3,000, found in a 1991 Radio Shack ad. Buffalo writer Steve Cichon was the first to dig up the old ad and make the point about the seemingly miraculous pace of digital advance, noting that an iPhone incorporates the features of the computer, CD player, phone, “phone answerer,” and video camera, among other items in the ad, all at a lower price. The Washington Post‘s tech blog The Switch picked up the analysis, and lots of people then ran with it on Twitter. Yet the comparison was, unintentionally, a huge dis to the digital economy. It massively underestimates the true pace of innovation and, despite its humor and good intentions, actually exposes a shortcoming that plagues much economic and policy analysis.
To see why, let’s do a very rough, back-of-the-envelope estimate of what an iPhone would have cost in 1991. ...
... Considering only memory, processing, and broadband communications power, duplicating the iPhone back in 1991 would have (very roughly) cost: $1.44 million + $620,000 + $1.5 million = $3.56 million.
This doesn’t even account for the MEMS motion detectors, the camera, the iOS operating system, the brilliant display, or the endless worlds of the Internet and apps to which the iPhone connects us.
This account also ignores the crucial fact that no matter how much money one spent, it would have been impossible in 1991 to pack that much technological power into a form factor the size of the iPhone, or even a refrigerator.
Tim Lee at The Switch noted the imprecision of the original analysis and correctly asked how typical analyses of inflation can hope to account for such radical price drops. (Harvard economist Larry Summers recently picked up on this point as well.)
But the fact that so many were so impressed by an assertion that an iPhone possesses the capabilities of $3,000 worth of 1991 electronics products – when the actual figure exceeds $3 million – reveals how fundamentally difficult it is to think in exponential terms.
- See more at: http://www.techpolicydaily.com/communications/much-iphone-cost-1991/#sthash.BtbAXb4D.dpufTim Lee at The Switch noted the imprecision of the original analysis and correctly asked how typical analyses of inflation can hope to account for such radical price drops. (Harvard economist Larry Summers recently picked up on this point as well.)
But the fact that so many were so impressed by an assertion that an iPhone possesses the capabilities of $3,000 worth of 1991 electronics products – when the actual figure exceeds $3 million – reveals how fundamentally difficult it is to think in exponential terms. ...
Indeed!
Amazing! Today’s iPhones have the same capabilities (and more!) than 13 distinct electronics gadgets, worth more than $3,000, found in a 1991 Radio Shack ad. Buffalo writer Steve Cichon was the first to dig up the old ad and make the point about the seemingly miraculous pace of digital advance, noting that an iPhone incorporates the features of the computer, CD player, phone, “phone answerer,” and video camera, among other items in the ad, all at a lower price. The Washington Post‘s tech blog The Switch picked up the analysis, and lots of people then ran with it on Twitter. Yet the comparison was, unintentionally, a huge dis to the digital economy. It massively underestimates the true pace of innovation and, despite its humor and good intentions, actually exposes a shortcoming that plagues much economic and policy analysis.
To see why, let’s do a very rough, back-of-the-envelope estimate of what an iPhone would have cost in 1991.
- See more at: http://www.techpolicydaily.com/communications/much-iphone-cost-1991/#sthash.BtbAXb4D.dpufAmazing! Today’s iPhones have the same capabilities (and more!) than 13 distinct electronics gadgets, worth more than $3,000, found in a 1991 Radio Shack ad. Buffalo writer Steve Cichon was the first to dig up the old ad and make the point about the seemingly miraculous pace of digital advance, noting that an iPhone incorporates the features of the computer, CD player, phone, “phone answerer,” and video camera, among other items in the ad, all at a lower price. The Washington Post‘s tech blog The Switch picked up the analysis, and lots of people then ran with it on Twitter. Yet the comparison was, unintentionally, a huge dis to the digital economy. It massively underestimates the true pace of innovation and, despite its humor and good intentions, actually exposes a shortcoming that plagues much economic and policy analysis.
To see why, let’s do a very rough, back-of-the-envelope estimate of what an iPhone would have cost in 1991.
- See more at: http://www.techpolicydaily.com/communications/much-iphone-cost-1991/#sthash.BtbAXb4D.dpufAmazing! Today’s iPhones have the same capabilities (and more!) than 13 distinct electronics gadgets, worth more than $3,000, found in a 1991 Radio Shack ad. Buffalo writer Steve Cichon was the first to dig up the old ad and make the point about the seemingly miraculous pace of digital advance, noting that an iPhone incorporates the features of the computer, CD player, phone, “phone answerer,” and video camera, among other items in the ad, all at a lower price. The Washington Post‘s tech blog The Switch picked up the analysis, and lots of people then ran with it on Twitter. Yet the comparison was, unintentionally, a huge dis to the digital economy. It massively underestimates the true pace of innovation and, despite its humor and good intentions, actually exposes a shortcoming that plagues much economic and policy analysis.
To see why, let’s do a very rough, back-of-the-envelope estimate of what an iPhone would have cost in 1991.
- See more at: http://www.techpolicydaily.com/communications/much-iphone-cost-1991/#sthash.BtbAXb4D.dpuf
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