Economics and Sustainability

1
Economics and Sustainability

• Financial Factors Influencing Success

2
What are the Cost Components of a Design?

• Research
• Engineering Design
• Hardware Components (ICs, boards)
• Software
• Manufacturing

3
Costs (continued)

• Testing
• Engineering Support
• Service
• Sales
• Marketing
• Business Infrastructure

4
Component Costs1990 Sun Color WorkstationRef
Computer Architecture A Quantitative Approach,
Patterson Hennessy, 1990.

• CPU Cabinet
• CPU Board
• I/O Devices

5
Workstation Component Costs (continued)
Rule of Thumb Cost CPU Cabinet Sheet
metal, plastic 50 1 Power supply and fans
.80/watt 55 1 (50/watt in 2001) Cables,
nuts, bolts 30 1 Shipping box,
manuals 10 0 Subtotal
145 3
6
Workstation Component Costs (continued)
Rule of Thumb Cost CPU Board IU, FPU, MMU,
cache 800 16 DRAM 150/MB
2400 48 (40/MB in
2001) Video logic (frame buffer,
DAC) 500 10 Printed circuit board 8
layers 1/sq. in. 50 1 (17/sq.
in. in 2001) Subtotal 3850
76
7
Workstation Component Costs (continued)
Rule of Thumb Cost I/O Devices Keyboard,
mouse 50 1 Display monitor
1000 20 Hard disk 4/MB
400 (1/MB in 2001) Subtotal
1050 21
8
Cost Versus Price

• Categories that make up list price
• Direct Costs - costs directly related to making
  the product. Includes labor, scrap, warranty
  (typically adds 25 to 40 to component cost)
• Gross Margin - overhead that cannot be billed to
  one product. Includes RD, marketing, sales,
  manufacturing equipment maintenance, building
  rental, cost of financing, pretax profits, and
  taxes (typically 45 to 65 of average selling
  price)

9
Cost Versus Price(continued)
Cost (1 Direct costs) (1 -
Average discount) (1 - Gross margin)
List price
10
Cost Versus Price(continued)
Component costs
11
Sustainability

• Maintains functionality and user satisfaction
  over an extended life cycle
• Compatible with existing and emerging standards
• Tracks positive pricing and availability trends
  in technology (e.g., design includes new,
  innovative ICs that are likely to be produced
  competitively in volume)

12
Sustainability (continued)

• Position in market evolves by freely encompassing
  new technology (design is resistant to being
  outdated by competing, incompatible technology)
• Design is low maintenance (service costs are
  controlled)
• Quality control in part supported by design for
  test features