But IBM did bring prices down. In the 700/7000 series, each new model was more powerful, and more affordable, than the machine it replaced. Also, each was a "drop-in" replacement for the last. Even when IBM switched instruction sets for System/360, they had emulators that let you run your old software, so they continued to produce drop-in replacements. As late as the 1960s, Shell Oil was running software written for the IBM 704 using a 704 emulator for the IBM 709, itself running in emulation mode on a System/360 model 65. They had re-written the application for the new computer, but the new version gave different answers than the old, and people trusted the old program even though the new one gave arguably better answers.

To be sure, IBM had competition from the "bunch": Burroughs, Univac, NCR, Control Data and Honeywell. Later there were other competitors, such as DEC and Prime. However, your three-point economic theory of prices doesn't take them into account, assuming that the new entrants would maintain the same prices as the established players. That is a reasonable assumption, but it turns out not to be correct. At the time that the million-dollar IBM 7090 was the standard of the industry, DEC introduced the PDP-1 for $100,000. The PDP-1 could have sold for twice the price, so why did DEC forego the additional profit? I am guessing it was because they estimated the size of the market at each price point, and decided that $100,000 gave them the greatest total profit.

You are speculating about a time that is very far in the future.

DVD players are unusual because they are heavily regulated by patents. If you tried to sell a DVD player that you build in your garage you would get sued into oblivion unless you paid the DVD rights holders for every unit you sell. That wasn't, and isn't, true of computers, though not for lack of trying. When DEC introduced the PDP-6, they got a letter from IBM threatening a lawsuit because the PDP-6 was a multi-register computer, and IBM had patented the concept when they brought out the IBM 1620. (This was before System/360.) DEC laughed and discarded the letter.

Your three-point economic theory of prices doesn't take into account irrational actors, as I have pointed out in previous replies, and does not consider that a rational player may reduce his price because he calculates that a lower price will expand the market, thus earning a greater total profit. Still another reason for a price decrease is the introduction of a product from a different market sector. I saw this happen with computer monitors. Until the 1970s they were very expensive. When consumer-grade television sets were able to be used as computer monitors, the price fell through the floor. The TV manufacturers saw a small increase in their market, and the computer industry switched from teletypes and communicating typewriters (the IBM 2741) to visual display terminals.

Thus, I think your three-point economic theory of prices is over-simplified.

Your argument is very rational, and almost persuades me. I say "almost" because computer prices have been coming down steadily for 60 years, even though none of your three criteria apply. I think the problem with your argument is that you assume all the established players in a market are rational. In fact, some are greedy and short-sighted. They will reduce their margin to gain market share, and not care that their competitors will eventually (next quarter) match their price reduction.

You have over-simplified the economic situation. When costs fall, if there are enough sellers, one of them will reduce his profit margin to try to gain market share. The others must follow, until prices reach a new equilibrium. An example of this is the computer industry. Prices for a unit of computing capability have been falling steadily for 60 years.

I am finding it difficult to imagine a person less mature than yourself.

If you have a deep well, the source of pollution doesn't have to be uphill from you.

That is good to hear, and it does sound like I am being too distrustful, but here is my nightmare:

A company is founded by engineers, and builds up a base of loyal customers because they do their research, carefully assess risks, honestly estimate costs, and generally do a good job. They develop a reputation for excellence in their field. However, with the passage of time the founders retire and the sales and marketing people gradually begin to take control. The engineering department is considered just another cost center—it is starved of resources and does not have the ear of top management. The legal department is expected to get the necessary permits, and blamed if work has to stop because some stupid government rule is getting in the way of earning revenue. Top management cares only about profits, and middle management cares only about this quarter's numbers. New product development is limited to safe extensions of what the company is already doing successfully.

In this environment it is easy to imagine some middle manager, desperate to make his numbers, who decides that analyzing homeowner's wells is an unnecessary expense. When testing started the company informed the homeowners that they will be contacted if there is a problem with their well water, and if they do not hear from the company they can be assured that their water is good. Our middle manager doesn't renew the contract with the testing company, saving perhaps $100 per year per homeowner. Sampling stops, water testing stops, the manager has better expense numbers, homeowners are not inconvenienced by triennial visits from the water collection people, everyone wins.

Even people who are concerned about the quality of their well water might not notice that no sample was taken in the year it was expected. A letter to the company might even result in a carefully-worded response designed to be reassuring while promising nothing.

Of course, if a well pollution problem is eventually discovered the whole scheme blows up, but in the meantime my family has been poisoned.

My concern was not that the potential polluter would use a non-accredited lab, but that he wouldn't do any testing at all: just discard the samples and claim that there was no problem. I suppose I could deal with that possibility by demanding the analysis paperwork, but if I get stonewalled on my request, I have to have the testing done myself anyway. It seems simpler to just do it myself from the beginning. Am I being too distrustful?

I don't think I expressed myself well. My concern was that a potential polluter would not pay for an accredited lab to do the tests, but would just claim that there was no problem. By collecting the water myself, using the basic cookbook recipe, and sending it to an accredited lab of my choice, I would feel more confident in the report that there was no pollution.

I wasn't aware of the paper trail or the consequences of faking it. That means I don't need to be concerned that the potential polluter will simply dismiss the lab findings, forcing me to go to court. Of course, there is always the possibility that I screwed up the collection process, so I wouldn't mind a re-test, but I would insist that the collection be done under my supervision (so I can be sure the water being tested actually came from my well) and that the testing be done by a accredited lab.

I have a well which has provided me drinking water faithfully since 1969. Every few years I follow the cookbook recipe to collect tap water and send it to a local lab that I have learned to trust. So far, there has been no pollution.

I would prefer that the water quality be checked at my expense. I wouldn't want the potential polluter to use his "in house" water testing facility, which might be biased. If my tester shows there is a problem, I'll send part of the sample to the potential polluter for verification, but if they balk because their numbers don't agree with the numbers from my chosen lab (which I will provide) it's lawsuit time.

Aha, we are now in agreement. My original objections were to your statement that

followed by

.

I don't have any authority to back this up, but I suspect most pepole of all ages, even today, have trouble understanding the workings of computers, just as they do electricity or FAX machines. To most people, I suspect, these are simply magic.

Perhaps I saw a different type of "muggles" than you did. While most of the people I supported in the 1970s were in the computer department, some were not. They were generally the "best and the brightest" among the engineers, who used computers to do their jobs as they used every other resource they had access to. They might simulate a piece of hardware, for example, or compute the radiation pattern of an antenna.

Where I worked there were no mechanics, doctors or nurses, and the lawyers stayed in their offices on the top floor. We had secretaries but they didn't use computers.

I needed it to balance my checkbook. Keeping track of my expenses on paper was tedious and error-prone, and I knew computers could do better. That wasn't my only application; as I said, I also used it for word processing.

In the 1970s I didn't know anyone other than myself who had a computer at home. If I had been living in a city, or in Silicon Valley, I probably would have, but in suburban New Hampshire I was unusual. The people I supported in the early 1970s used computers at work. The application programmers coded in Fortran, assembler and COBOL using either punch cards or KSR-33 teletypes. You can't do that by rote. In the late 1970s I worked for DEC, and there we used VT52s, VT100s and their successors connected to various DEC computers to code in Bliss or assembler. The environment was very different, but none of the engineers operated by rote.

What was your situation like?

They were slow and expensive by today's standards, but I don't agree that they didn't do anything the average Joe needed to do. I bought an Apple II for word processing and spreadsheets, Visicalc being the "killer app" for the Apple II. Those are still two of the major uses of personal computers today.

I also don't agree that most adults who used a computer at work did so by rote. That may be true today, but it wasn't true in the 1970s and 1980s. You had to know what you were doing to get any useful work out of those beasts.

It isn't just people who worked in the field. Personal computers began to be popular in the late 1970s. Anyone over the age of 24 who bought an Apple II or Commodore 64 when they first came out would be 60 or over by now. Such people have had a long time to learn about computers.

I agree, but I do think it is reasonable to protect people from other people doing stupid stuff.