North American Network Operators Group
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RE: An Attempt at Economically Rational Pricing: Time Warner Trial

  • From: michael.dillon
  • Date: Sun Jan 20 19:14:43 2008 
> It's very true that the underlying cost of the technology is 
> falling.  However, the cost of chip development is growing 
> rapidly as device size falls (tapeout costs are >$1M USD 
> today) and the market is somewhat limited, so the ability to 
> amortize your design cost across volume is somewhat limited.  

> To further limit the market by effectively constraining it to 
> your own internal consumption is going to further increase 
> this effect.

Normally, when a device designer contracts out manufacturing of
their design to the Asian factories, they constrain the factories
to only produce devices for the designer themselves. If the designer
of such comodity devices were to take an open-source approach, and
allow the Asian factories to produce devices for anyone who wants
them, then this constraint is removed. Of course, the price lowering
still depends on lots of others adopting the same hardware so this
only partially solves that problem.

--Michael Dillon