From: Patrick F. McGehearty <patrick@convex.COM>
Subject: Re: What are people paying for when they by a supercomputer?
Originator: patrick@mozart.convex.com
Date: Mon, 16 Nov 1992 19:23:16 GMT
Reply-To: patrick@convex.COM (Patrick F. McGehearty)
Organization: Engineering, CONVEX Computer Corp., Richardson, Tx., USA
X-Disclaimer: This message was written by a user at CONVEX Computer
              Corp. The opinions expressed are those of the user and
              not necessarily those of CONVEX.

In article <1992Nov15.201147.5302@athena.mit.edu> solman@athena.mit.edu (Jason W Solinsky) writes:
>It seems to me that supercomputing power costs about $250,000 per GFLOP
>nowadays. It also seems to me that a company could sell a GFLOP box that
>has enough memory, I/O and internal bandwidth to support near peak
>performance at under $10,000 and have PLENTY of profit margin.

Ignoring for now the question of what counts as a GFLOP and whether a GFLOP
is really available in a realistic configuration for $250,000, and assuming
only peak rates matter, I still don't know of any design for a uniprocessor or
small number of processors in a shared memory configuration which as a parts
cost of $10,000 and can generate 1 GFLOP.  50 Megaflops maybe, 1 Gigaflop no,
not even close.  The current high performance processors (whether from HP,
DEC, IBM, or SUN) do not come cheap, and I am awre of none of them being
rated at over 200 Mflops for a single processor.  High performance memory
systems require expensive memory and glue logic.  My gut feel (without
calling any vendors for parts prices :-) is that the parts for a GFLOP
system would be at least in the $50,000 price range.  And that estimate does
not include any disks, tapes, etc.  Of course, prices are constantly
changing.  If you think such a design is possible, please post a rough parts
list and nominal parts costs.

Going from parts cost to full product takes on the order of a factor of 5
for low to moderate volume products.  Cost of assembly, including margin
testing, rework, shipping, inventory is not trivial when volumes do not
justify superautomation.  Then you need to cover other things, including
paying for R&D, sales and distribution, general overhead, and maybe even a
little profit.  Generally, if you skimp in one of these areas, your company
is nonfunctional.  Customers tend to not return to nonfunctional companies.
High volumes can help reduce markup, but supercomputers just aren't sold in
high volumes.  So if we start with a hypothetical $50,000 parts cost, we
see a shipping price in the range of $250,000.  Large companies can
selectively target markets for lower margins to gain market share, in the
hope that volumes will rise enough to justify the thinner margins.  A
startup company trying that strategy runs a big risk of going out of
business due to lack of cash before the strategy pays off.

It is also worth noting that any system that is shipping today started its
design 2 to 5 years ago.  A design started today should produce a product
which cost significantly less with a higher performance.  Unfortunately
it would not be available for a while, by which time others would do the
same thing.
Newsgroups: comp.sys.super