Moore's Law, in Reverse

Wikipedia does a good job of stating Moore's Law, a trend first discovered by Gordon Moore, co-found of Intel, back in 1965.

Since the invention of the integrated circuit in 1958, the number of transistors that can be placed inexpensively on an integrated circuit has increased exponentially, doubling approximately every two years.

This leads to roughly a doubling of processing power and performance every two years. But here's the part I love. The costs for the resulting technology doesn't rise to scale. It either stays the same or goes down. So you end up with a reverse of Moore's Law on the cost of electronics, which basically states that, relative to the gains in speed, power, storage space, megapixel count, etc. we see every two years, the cost of this technology is effectively cut in half in the same period. For example, you might pay $1,000 for a 1Ghz computer, and the same $1,000 for a 2Ghz computer two years later, effectively paying only $500 for the same 1Ghz processing power.

Another great example is computer hard drives. For my first Mac back in 1998 I bought a 120Mb (note megabyte, not gigabyte) for roughly $160.00. That translates to about $1.30 per megabyte of storage space. Just a few minutes ago I bought a 1Tb hard drive to back up all of our music and photos, etc. One terabyte is roughly 1,000 gigabytes, or 1,000,000 megabtyes. And I payed less than I did for my old 120 megabyte hard drive. At only $109, the cost per megabyte of storage was only .0001 cents. In eleven years the cost per megabyte of storage space went from 130 cents to one 10,000th of a cent.

Really that's a far faster decline than what would be Moore's Law would prediction of 40 years, halving the cost every two years. That's because we're seeing not only a doubling of performance every two years and the relative decline of price that results, but also a steady real world decline in material prices which amplifies the cost to performance gap.

Given all this, imagine where we'll be in another decade. It's staggering to think about.