Lot's Wife Edition 2 2016

Components and
competition:
Apple’s pricing
game
by Steph Siomos
Illustration by Karla Engdahl
In 1965, Gordon E. Moore, the co-founder of Intel, predicted
that the number of transistors (tiny electronic
devices found within phones and just about every other digitalized
device that are responsible for regulating current or
voltage flow and can also act as an on/off switch) in a dense
integrated circuit would double every year.
A decade later, he revised the expected frequency of
doubling to every two years. So far, this prediction, which
came to be known as Moore’s Law (technically a misnomer),
has been vindicated by the triumphant march of technological
advancement, and explains why phones, and everything
else, are becoming faster. This increasing capacity is linked
to another interesting feature – a decrease in price of components.
As The Economist put it in “Beyond Moore’s Law”
(2015), “the cost per transistor is almost inversely proportional
to the number of transistors crammed in a chip.”
This graph shows that over time the cost per transistor
per Hertz (the frequency, or the number of cycles
per second) has decreased steadily over years. Hence, it is
getting cheaper and cheaper to produce a transistor. Today,
it costs close to $10-19 to produce a transistor for every
Hertz the transistor outputs, compared to $10-13 in 1995
Essentially, as we build chips with more transistors in them,
the cost of production should decrease. Yet, in the case
Graph credit of Singularity University.
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