Hacker News Reader

Comment by gist | Hacker News Reader

I'd love to see the original authoritative source that the IBM 360 project cost 5 billion in 1960 dollars. Something about that seems way overstated. I am wondering if it's just one of those facts that has been repeated so long that it's just taken for granted as being correct. 5 Billion appears to well exceed the cost to develop the Boeing 747 which was a massive bet the company undertaking.

View on HN

https://books.google.com/books?id=oaBOuo4mId8C&pg=PA189&dq=I... says:

> Estimates of the total cost of System/360 range from $4 to $5 billion. Of this amount, $500 million to $1 billion was development cost, while the rest was used to expand manufacturing capacity and to produce rental machines.

The references are Wise (1966b), Evans (1983 p.44), and IBM Annual Reports for 1965 and 1966.

Wise (1966b) is a Fortune article titled "IBM's $5,000,000,000 gamble".

I can't find the annual reports readily online.

It looks like you want Appendix C of "IBM's 360 and Early 370 Systems" at https://books.google.com/books?id=MFGj_PT_clIC&pg=PA619&dq=I... , with financial an employee data for IBM from 1950 to 1977.

In the early 1960s IBM had revenue of over $1.5 billion/year. Even then, 360 was a big gamble.

> Fortune article titled "IBM's $5,000,000 gamble".

I think you're missing some 0's there.

Oops! Yes. I'll edit my original. Thanks! (No copy&paste from Google Books views.)

Worth mentioning that this investment figure would have included lots of stuff beyond what our current minds consider the "computer". It would have also included I/O systems, disk & tape storage, communications, terminals, printers, and etc. A lot of this was close to bleeding edge. S/360 was a "system", and that meant a lot of optional peripherals you could buy.

Author of the post here, thanks for reading! Here's a source citing the $5B figure: http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/system3...

That $5B appears to be the cost of the entire project, including production.

In your essay, you wrote "development cost". Is that meant to include production? Because it appears the development cost as its own line item was no more than $1B.

Have you read Wise's Fortune article to confirm that it says what you think it does? I haven't been able to find it online.

Also, I think it's interesting that nearly all of the sources I found cite that Fortune article, and not an IBM publication. Even an IBM site prefers to quote Fortune instead of their own sources.

> That $5B appears to be the cost of the entire project, including production.

I agree. Not that any of this really matters but I hate when inaccurate figures are just repeated and taken as fact which is why I raised the point in my original question. Actually just because the number seemed to high to be true.

We've had two other cases of this that I can remember recently. One was the ADA and flossing. [1]

The other was the "8 glasses a day of water" which is something that has been repeated as gospel. [2]

As a general rule people will always throw in the kitchen sink when stating numbers and make them seem as large as possible. [3] Additionally anyone who was ever interviewed for a news story will know that whatever you repeat to a reporter is rarely questioned. It's taken as a fact and if it ends up in a major newspaper (say NYT or WSJ) it is taken as vetted and authentic. (I have been quoted so that is why I say this..)

[1] And now I am seeing this: http://www.ada.org/en/press-room/news-releases/2016-archive/...

[2] http://www.nytimes.com/2015/08/25/upshot/no-you-do-not-have-...

[3] Unless of course it serves them to make them as small as possible.

In fairness, the figure is mostly accurate. Development cost $1 billion, the entire project including production cost $5 billion. It was a bet-the-company move.

I agree that it's an accurate number. I meant to highlight that "development" can mean "to develop a working system" (R&D) as well as "to develop a commercial product" (R&D plus production, support, sales, marketing, ...).

You might want to edit the part about it being the first, business mainframe. The Burroughs B5000 was published in 1961 then released I think same year as System/360. Quite forward-thinking stuff vs the giant calculator IBM made:

http://www.smecc.org/The%20Architecture%20%20of%20the%20Burr...

Burroughs changed their name to Unisys. They still sell those machines although not with the custom CPU's with hardware-enforced safety/security. (sighs)

That's probably inflation-adjusted. It was about $1 billion at the time. [1]

[1] http://ds-wordpress.haverford.edu/bitbybit/wp-content/upload...

That was the original development cost, in early 1960 dollars. The remaining $4 billion was manufacturing costs.

I'd like to know what a hardware program costing ~US$38 billion in 2016 dollars would look like.

By a remarkable coincidence:

http://articles.orlandosentinel.com/2011-08-05/news/os-nasa-...

But I think it's safe to say that the gamble paid off!

Reply on news.ycombinator.com