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    National Environment: Computer pricing
    Figure 16.2: Prices do not follow Moore's Law (impressionistic)Figure 16.2: Prices do not follow Moore's Law (impressionistic)

    Moore's famous law is that computing power at a given price doubles every 18 months. The inverse formulation is that the cost of a given amount of computing power falls by half every 18 months. However, the corollary that consumer prices for computers falls at the same rate does not hold. Starting from when the base price of an adequate computer was about $4000 we would have expected that by the end of our study this price would have dropped to well below $1000. What we actually saw, through a program of tracing ads for an entry-level computers, is that prices dropped fairly rapidly to around $2000, and held there for some time. Towards the end of the study period there was a new break down to $1000. Apparently the strategy of manufacturers was to identify market price points that are acceptable to consumers and to improve the configuration of the computers rather than drop the price past those points. If Moore's law held strictly, a general purpose computer adequate for the use of online books over the 56 kbps lines should now cost only $300.