Preliminary Cost Investigation

Source: Jef Raskin, "Preliminary Cost Investigation" (27 September 1979)-- in "The Macintosh Project: Selected Papers from Jef Raskin (First Macintosh Designer), Circa 1979," document 5, version 1.
Location: M1007, Apple Computer Inc. Papers, Series 3, Box 10, Folder 1.

1. Cost

One of the primary goals for Macintosh is that it should sell for $500--with the possibility of reducing the cost to $300 with increasing quantity.

By our present selling price versus manufacturing cost ratio this means that Macintosh should cost us about $125 to build. Consider this highly speculative cost breakdown (assuming a case and board about Apple II size).

keyboard 20 10
CPU 6502 4 3  (minimum cost)
6809 12 7 (likely candidate)
68000 90 65 (upper end)
64K bytes 80 50 (8 64K RAMS (@ $10 and $6.25))
video chip 15 10
modem chip 20 15 (with DAA)
case 15 5 (depends on size)
power supply 15 10
p c board 12 8 (depends on size)
misc 25 15 (connectors, fasteners)
SUBTOTAL 214 130 (basic electronics cost)
build, test 10 2 (design for automation) (this last category has much room for lowering cost, and thus it is included even though it is not part of parts costs.)
disk drive 80 35
display 40 20
printer 50 25
TOTAL 346 212

For this very minimal estimate we assume a 6809 processor as a passable compromise between power and cost. It is readily available, allows our video techniques, requires few support chips, and is relatively efficient in terms of compiled code size.

At a 4X selling cost vs our cost ratio there is no way, even without disk, printer or di

splay, that we could get below $850 given these prices. Fully loaded, the selling price may well be $1400. And there are many items omitted from this list, and the costs are probably optimistic. At the minimum prices that I can forsee, the base machine might be able to sell for $520. The full package for $850.

These costs may not be spot on, and the 4X multiplier is not fixed, but these are indicative ball-park figures. While the minimum price of $520 might look close to our goal, remember that it is extremely optimistic, includes no peripherals, and should (to meet our goals) be well under $300 (our "eventual" figure).

1.1 Two Possible Directions

Either we can continue the design of Macintosh with the present desiderata, and abandon our price goals, or we can keep the price ceiling and see what kind of machine we come up with. It seems that the higher priced machine that falls out of this analysis is not much different from a price reduced Sara. Therefore we will examine what we can do for a $500 selling price limit.

1.2 The Macintosh 500

One item on which we should not compromise is a keyboard. $ 20

Assume, for the purpose of having truly adequate software, 64K RAM $ 80

We build our own video and modem chips $ 35

Keeping the case quite small, it and the PC board might be lowered to $ 25

If things are kept small, the power supply might drop to $ 12

Add $ 18 for miscellaneous, and a $10 CPU to bring us to a nice round total of $100.

A machine with no peripherals will have to have some ability in ROM. Assume 32K ROM with a word processor and BASIC (both written in Pascal and compiled to 6809 code). This adds $25 or so. This, inflated by details and committee embellishment, gives us a chance at a $500 computer.

Note the following facts:

A. No display is included B. No disk is included C. No printer is included.

The solution to providing these is as add-ons that attach both mechanically and electrically to the basic Macintosh product.

Document created on 6 June 2000;