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Value and cost in hardware and software

Neal Ford's presentation on emerging architecture contained a reference to the controversial Intel practice in the 1990s regarding the 386-SX math co-pro. Intel were producing two variants of the 386 chip at the time:
  • The 386-DX which featured a math co-processor on board which allowed faster execution of floating point maths required in financial applications, graphics packages etc..
  • The 386-SX which was cheaper but did not feature the math co-processor and therefore was less 'powerful'. It had enough to differentiate itself from the previous generation of 286 chips but was regarded as distinctly inferior to its more expensive sibling.

This all sounded fair enough until it became public that the 386-DX and 386-SX shared the same manufacturing process including the construction of the maths co-processor. Where the process differed was that at some point the math copro in the SX chip was destroyed via some mechanical process. Suddenly the perception of the SX went from a lower spec product to a broken product. In Neal Ford's presentation he described the whole process as Intel selling customers their trash, like the SX was a defective unit being offloaded to unsuspecting users as a working chip.

At a very low technical level Neal's statement is true but not at a commercial or practical level. Intel engineers were given a change in requirements by their marketing department: Produce a chip that is going to enter the budget market to complement but not fully compete against the 386-DX. They looked at their system and determined the most efficient way to achieve this end was to 're-configure' existing 386-DX chips. This was likely much much cheaper than setting up a whole new production line and testing the brand new chip it produced. To do otherwise would be against the pragmatic engineering ideals that Agile is supposed to champion. If you flip the argument around and say: Should we redesign from scratch the entire process to achieve the same end result but at much higher cost just so that we claim that the chip contains no parts that it doesn't need. Maybe we find this so objectionable because a chip is a tangible entity and we are used to associating (rightly or wrongly) the cost of raw materials and manufacturing with the value of such items. Maybe we don't factor in the cost of design and marketing, which I suspect are massive for a complex, consumer electronic product like a cutting edge CPU.

This pattern raised its head again, but with less fuss, a couple of years ago when HP shipped high end servers with multiple CPUs. Some of the CPUs were disabled upon delivery. If the customer's processing requirements increased over time (which they always do) then they could pay HP who could then remotely enable the additional processors without the customer incurring the cost of an engineer on site, downtime for installation etc. etc.. Again, this early step towards todays processing on demand cloud computing concept raised some eyebrows. Why should customer's pay for something that was going to cost the supplier nothing? Again, this is a preoccupation with the physical entity of the manufactured component. If the additional CPUs had been sitting idle in a HP server farm rather than at the customer's site and purchasing them involved work being sent across the network my suspicion is that nobody would have had any objections.

We use a UML design tool at my current client site called Visual Paradigm. It has a number of editions, each with a different cost. It has a very flexible license purchase system which we have taken advantage of. We have a large number of standard level licenses because the features that this edition gives will support most of our users most of the time. Occasionally we need some of the features from a more expensive edition. Its not that only one or two individuals require these features, we all need them, just very occasionally. The Visual Paradigm license model supports this beautifully. We have a couple of higher edition licenses. On the rare occasion that users need the extra features they just start the program in the higher edition mode. As long as no other users connected to our license are using the higher edition at that time, there is no issue. The similarity with the examples above is that there is only one installation. We don't need to install a different program binary every time we switch edition. We love this as it makes life easy. I am sure Visual Paradigm like it as well as it simplifies their build and download process.

Two me the two scenarios, software and hardware appear pretty much identical. Everybody appreciates that the cost of creating a copy of piece of software is so close to zero that it is not worth worrying about. Therefore we don't mind when a supplier gives us a product with bits disabled until we make a payment and get a magic key. It's harder to think of hardware in the same way, that the build cost doesn't matter. That there might be no difference in manufacturing costs for two products with very different customer prices. The cost of delivering the product, like delivering software, includes massive costs which have nothing to with creation of the physical artifact.  

Maybe this wasn't the point in the above presentation but I guess the thing that startled me was that my natural inclination was to immediately associate the value with the tangible item. In my head this is all getting mixed up with free (as in speech) software and the idea that it is unproductive and unethical to patent / own / charge for ideas.



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