April 15, 2009

The Cost of Computers over Time

The Bureau of Labor Statistics tracks consumer price data. Computer equipment is one of the price categories that they track. Below is the trend in the price index of "personal computer and peripheral equipment" for the past 10 years

As you can see the price of computers has dropped drastically over the years. From 1999 to 2003 the index dropped over 20% every year. Lately the rate of price drop has slowed but the prices for computers are still dropping. The index has decreased at a rate of 11-12% annually for the last 3 years.

Remember this is an index of prices so its not directly related to a specific dollar amount for a specific item. They are looking at personal computers and peripheral equipment prices as a whole so its a combination of everything in that category: very expensive computers, cheap computers, monitors, printers, etc. So while the overall prices may have gone down from a 700 level to 100 level that doesn't mean that any individual computer part you buy today will cost 1/7th of what it cost 10 years ago. For example the cheapest Dell system today costs about $400 but the cheapest Dell 10 years ago was not 7 times that much.

Overall this kind of price trend does matches reality pretty well. I remember in the late 1980's that an IBM PC would cost in the ballpark of $3000. I remember spending about $1500 for my first real PC back around 1994. Today you can buy a decent Dell system for around $400. A printer today can be bought for as little as $25-$50 on sale but 10 years ago they'd easily run $150-$200 minimum.

From the index and from direct observation, its clear that personal computer prices have been steadily decreasing over the past decade.

2 comments:

  1. Waste of an article and my read time. If you can not directly relate the trend with dollars on a time basis, and the prices in some cases go up while the trend is down, this is just wrong.

    ReplyDelete
    Replies
    1. There's no market for a 1998 computer these days, and tracking the prices of such would be a waste of time.

      Tracking the general price of what an average person looking for a certain thing of average quality will encounter, on the other hand, is rather helpful. Especially if you think in terms of "okay, I have x amount of money, what can I expect to get?".

      In 1998, the x you needed to be able to contemplate buying a computer was higher than today, by a large factor. For fun, we could compare to the x of 1988, just to see just how far this process has gone.

      The $4000 computer of 1988 is not the same as the $4000 computer of 1998, or indeed of 2008. In 2008, however, you got away with a $700 computer if you didn't need anything hardcore.

      On average.

      You can, of course, buy the high-end extreme computers. There's a market for them. But the point of this article is that you don't have too, and that those looking for the run of the mill computer have to spend less now than before.

      And probably will have to spend less next year, as well.

      Anywho. I'm doing some research for something, and stumbled in here. Since this article helped me out, I'm writing this comment as a thank you-note. Cheers!

      Delete

Blog Widget by LinkWithin