According to http://smithsonianchips.si.edu/augarten/p64.htm "In 1981, they slashed the cost of 64K RAMs from some $25 each to about $5, and the price hovered at that level throughout the following year."

This was a surprise to me; the Commodore 64 cost $595 on introduction in 1982, and answers to When did 64K RAM become about as cheap as 16K? basically discuss 64K becoming cheap in the 1982-84 timeframe. Ads in the back of Byte support my previous impression e.g. December 1982 doesn't even list a price for the 64k chips, just "Call" which suggests they are still scarce and expensive.

Is the above quote inaccurate? Or is it that the wholesale price of 64k chips did indeed fall to $5 in 1981, but for some reason it took a couple of years for this to filter through to consumers? If the latter, why?

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    It's doubtful that C= was paying $200 for just the RAM in a retail $595 C64. $40 seems much more realistic. Also ads requiring you to "Call" for a price just means the price is volatile, not necessarily that it is high. So those Byte ads may be indicating rapid price declines at the time. – Brian H Aug 26 '18 at 12:29
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    @BrianH I was about to write much the same thing, particularly about volatile pricing. A small company (and many of the ads in the back of Byte were from small companies) couldn't take the risk of losing money on RAM but wouldn't want to list a high price (e.g., the real price at the time the ad was submitted) because in the 2 months from ad submission -> publication -> mailing -> responses the price probably would drop significantly. – manassehkatz-Moving 2 Codidact Aug 26 '18 at 14:25
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    Why was there so much volatility? Were process yields varying wildly? Rapid expansion of fabs? Unexpected product demand? Or were buyers going bankrupt causing flooding? – hotpaw2 Aug 26 '18 at 14:38
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    @JimMacKenzie - yes, the chips in question would almost certainly be 4164s, which are 64K x 1-bit. – Jules Aug 26 '18 at 19:08
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    Around the end of 1981, I imagine there was a sudden peak in demand for 4164 chips, as a lot of people were expanding their new IBM PCs, and the most common revision of the PC motherboard took 4164 chips. Prior to this, 4164s were a bit of a novelty, and most established machines used 4116s (or similar 16K chips) both for their base memory and any expansions. The adverts were probably hedging their bets not just because of supplier price volatility but also as they couldn't be sure what supply/demand level they would be seeing, and wanted to be able to react to that as the situation changed. – Jules Aug 26 '18 at 19:12

In ‘81, $5 was closer to a negotiated large volume pricing than the “consumer” single unit retail price. This phenomena is common during the roll out of a new technology to a new market, as channel arbitrage hasn’t yet matured.

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