December 4, Digital System Architecture Cost, Price, and Price for Performance Pradondet Nilagupta Spring 2001 (original notes from Randy Katz, UC Berkeley)

December 4, Digital System Architecture2 Review From Last Time (1/2) Given sales a function of performance relative to competition, tremendous investment in improving product as reported by performance summary Good products created when have: –Good benchmarks –Good ways to summarize performance If benchmarks/summary inadequate, then choice between improving product for real programs vs. improving product to get more sales;

December 4, Digital System Architecture3 Review From Last Time (2/2) Execution time is the REAL measure of computer performance! What about cost?

December 4, Digital System Architecture4 Integrated Circuits

December 4, Digital System Architecture5 Integrated Circuits Costs (1/3)

December 4, Digital System Architecture6 Integrated Circuits Costs (2/3)

December 4, Digital System Architecture7 Integrated Circuits Costs (3/3) Defect per unit area (0.6 to 1.2), Fabrication complexity: a (about 3)  is a parameter that correspond to the number of masking level (roughly 3 for CMOS) For Advanced Processes: Die Cost goes roughly with die area 4

December 4, Digital System Architecture8 Real World Example ChipMetal Layer Line Width Wafer Cost Defect /Cm 2 Area mm 2 Dies/ Wafer YieldDie Cost 386DX20.90$ %$4 486DX230.80$ %$12 PowerPC $ %$53 HP PA $ %$73 DEC Alpha30.70$ %$149 Super SPARC30.70$ %$272 Pentium30.80$ %$417 From "Estimating IC Manufacturing Costs, ” by Linley Gwennap, Microprocessor Report, August 2, 1993, p. 15

December 4, Digital System Architecture9 Other Cost ChipDie Cost pinPackage Type CostTest & Assembly Total 386DX$4132QFP$1$4$9 486DX2$12168PGA$11$12$35 PowerPC 601$53304QFP$3$21$77 HP PA 7100$73504PGA$35$16$124 DEC Alpha$149431PGA$30$23$202 Super SPARC$272293PGA$20$34$326 Pentium$417273PGA$19$37$473 Packaging Cost: depends on pins, heat dissipation, appearance,...

December 4, Digital System Architecture Cost/Performance What is Relationship of Cost to Price? Component Costs Component Cost List Price 15% to 33%

December 4, Digital System Architecture Cost/Performance What is Relationship of Cost to Price? Component Costs Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty Component Cost Direct Cost List Price 15% to 33% 6% to 8%

December 4, Digital System Architecture Cost/Performance What is Relationship of Cost to Price? Component Costs Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty Gross Margin (add 82% to 186%) nonrecurring costs: R&D, marketing, sales, equipment maintenance, rental, financing cost, pretax profits, taxes Component Cost Direct Cost Gross Margin List Price 15% to 33% 6% to 8% 34% to 39%

December 4, Digital System Architecture Cost/Performance What is Relationship of Cost to Price? Component Costs Direct Costs (add 25% to 40%) recurring costs: labor, purchasing, scrap, warranty Gross Margin (add 82% to 186%) nonrecurring costs: R&D, marketing, sales, equipment maintenance, rental, financing cost, pretax profits, taxes Average Discount to get List Price (add 33% to 66%): volume discounts and/or retailer markup Component Cost Direct Cost Gross Margin Average Discount Avg. Selling Price List Price 15% to 33% 6% to 8% 34% to 39% 25% to 40%

December 4, Digital System Architecture Assume purchase 10,000 units Chip Prices (August 1993) ChipAreaMfg.PriceMulti-Comment mm 2 costplier Intense Competition 386DX43 $9 $ Intense Competition No Competition 486DX281 $35 $ No Competition PowerPC $77 $ DEC Alpha234 $202 $ Recoup R&D? Pentium296 $473 $ Early in shipments

December 4, Digital System Architecture15 Chip Prices (August 1993) Assume purchase 10,000 units ChipAreaMfg.PriceMulti-Comment mm 2 costplier 386DX43 $9 $ Intense Competition 486DX281 $35 $ No Competition PowerPC $77 $ DEC Alpha234 $202 $ Recoup R&D? Pentium296 $473 $ Early in shipments

December 4, Digital System Architecture16 Workstation Costs: $1000 to $3000 DRAM: 50% to 55% Color Monitor: 15% to 20% CPU board: 10% to 15% Hard disk: 8% to 10% CPU cabinet: 3% to 5% Video & other I/O: 3% to 7% Keyboard, mouse: 1% to 2%

December 4, Digital System Architecture Learning Curve Years production costs volume time to introduce new product

December 4, Digital System Architecture18 Volume vs. Cost Rule of thumb on applying learning curve to manufacturing: “When volume doubles, costs reduce 10%” A DEC View of Computer Engineering by C. G. Bell, J. C. Mudge, and J. E. McNamara, Digital Press, Bedford, MA., nodes = 8,000 nodes/year vs. 100,000 Workstations/year 2 X = (100,000/8,000) => x = 3.6 Since doubling value reduces cost by 10%, costs reduces to (0.9) 3.6 = 0.68 of the original price (about 1/3 less expensive).

December 4, Digital System Architecture19 Volume vs. Cost: PCs vs. Workstations PC23,880,898 33,547,589 44,006,000 65,480,000 WS407, , , ,585 Ratio x = 65 => X = 6.0 and (0.9) 6.0 = 0.53 ญ PC costs are 47% less than workstation costs for whole market. Single company: 20% WS market vs. 10% PC market Ratio x = 32 => X = 5.0 and (0.9) 5.0 = 0.59 ญ PCs cost 41% less than workstations for single company.

December 4, Digital System Architecture20 High Margins on High-End Machines R&D considered return on investment (ROI) ญ 10% –Every $1 R&D must generate $7 to $13 in sales High end machines need more $ for R&D Sell fewer high end machines –Fewer to amortize R&D –Much higher margins Cost of 1 MB Memory (January 1994): PC$40(Mac Quadra) WS $42(SS-10) Mainframe$1920(IBM 3090) Supercomputer $600(M90 DRAM) $1375 (C90 15 ns SRAM)

December 4, Digital System Architecture21 Recouping Development Cost on Low Volume Microprocessors? Hennessy says MIPS R4000 cost $30M to develop Intel rumored to invest $100M on 486 SGI/MIPS sells 300,000 R4000s over product lifetime? Intel sells 50,000, s? Intel must get $100M from chips ($2/chip) SGI/MIPS can get $30M from margin of workstations vs. chips vs. $100/chip Alternative: SGI buys chips vs. develops them

December 4, Digital System Architecture22 Price/Performance Gross Margin vs. Market Segment

December 4, Digital System Architecture23 Price/Performance Gross Margin vs. Market Segment

December 4, Digital System Architecture Information Technology R&D Compaq is #1 PC maker in US

December 4, Digital System Architecture Accelerating Pace of Product Development Product age as % of revenue

December 4, Digital System Architecture Shift in Employment Towards Software and Services

December 4, Digital System Architecture27 Long Term R&D Investments Take Time to Payoff Timesharing Networking Redundant Array of Inexpensive Disks Parallel Computing MicroElectro Mech. Systems Gov ’ t Research$1B businessIndustry R & D Reduced Instruction Set Architecture

December 4, Digital System Architecture28 Power/Energy ÊLead processor power increases every generation Ë Compactions provide higher performance at lower power

December 4, Digital System Architecture29 Energy/Power Power dissipation: rate at which energy is taken from the supply (power source) and transformed into heat Energy dissipation for a given instruction depends upon type of instruction (and state of the processor)

December 4, Digital System Architecture30 The Energy-Flexibility Gap Embedded Processors SA MIPS/mW ASIPs DSPs 2 V DSP: 3 MOPS/mW Dedicated HW Flexibility (Coverage) Energy Efficiency MOPS/mW (or MIPS/mW) Reconfigurable Processor/Logic Pleiades MOPS/mW