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HOW much does this cost?

Remember that these are only ballpark figures, based on what experience and understanding I have of the costs of existing technologies.

In manufacturing, especially electronics manufacturing, the raw materials used in the manufacture make up only a very small, (usually, tiny is the more appropriate word) percentage of the total end price of a product.

The vast majority of the price of a consumer product is the reseller's markups, which usually more than doubles the wholesale price the manufacturer sold the item to the reseller for. In other words, if you examine a consumer product, it is usual that it is costing you twice what the manufacturer originally sold it for.

To the manufacturer, the main costs involved in manufacturing are labor, research and development, planning and design, equipment costs, power costs, shipping costs, and taxes. These costs usually contribute more than 90 percent of the price the manufacturer sells the product for.

In semiconductor devices, integrated circuit chips and circuit boards, this is usually closer to 98 or 99 percent, because the actual silicon wafers, metallic pin connections, and plastic packaging materials are all very inexpensive.

In 1981, Intel was selling the 8088 microprocessor chip, the heart of the original IBM PC, for upwards or $500. In 1989, you could buy a vastly improved version of this chip, as many as you wanted to buy, for 88 cents each. At 88 cents each, there was still a respectable amount of money being made.

This is because of the immense research and development costs, and the immense tool design and retooling costs associated with microprocessor development. After these huge expenses were paid off, the price of the chips fell drastically towards where the actual value of the materials was better reflected. Even so, at 88 cents each, the cost of the raw materials amounted to less than 10 cents per chip.

As I stated earlier, existing equipment can be used for manufacturing the semiconductor camera elements. All the other integrated circuit chips required, including microprocessors, already exist, as does the equipment to manufacture them.

The UV CCD camera elements will have to be designed from scratch, which entails some degree of research and development costs. However, a CCD is a very simple type of semiconductor device. The 8088 processor is at least four orders of magnitude more complicated than a 30 element CCD design.

The equipment used to design and manufacture the 8088 is no longer usable for the production of state of the art microprocessor chips, but is 4 orders of magnitude more capable of CCD design and manufacture than is required.

(Note that computers designed the 8088, because humans are incapable of that level of complexity in design without the design process taking more than a hundred years to complete.)

If this equipment is used for the R and D, the costs of the R and D would be no more than 5 percent of what it would take to start from scratch as Intel had to do.

Considering the materials and other costs involved in manufacturing, you can apply these facts to off the shelf equipment such as multiplexers, coax fiber cables, copper power feed wiring, etc., and use the above to gain a fair estimation of the manufacturer's raw materials costs.

Divide the retail price by 50 percent, and divide the result by 10 percent (or 2 percent for semiconductor devices or circuit boards or circuit board components), and you are certain to be within 20 percent, usually 5 percent, of the actual costs.

Examine an off the shelf internet color video camera that you can buy for around $180 to connect to your computer in order to have two way internet videophone. These are popular items, and the price is falling rapidly.

Half of $180 is $90. 10 percent of $90 is $9. This is near the manufacturer's actual raw materials costs.

Now in this case, the manufacturer has undoubtedly bought almost all circuit board components from other manufacturers, such as wiring, resistors, capacitors, inductance filters, logic gates and video circuitry, and so this is not an entirely good basis for an accurate comparison with what we require in a camera. We will not have to pay retail for any of these components, since we will have the use of the plants that manufacture them.

So, to be more accurate, we will use a division factor of 2 percent rather than 10 percent. 2 percent of $90 is $1.80. Of course, we will still need the support circuitry, but we will have our prisoners manufacture it.

Again, these figures are in no way exact, but it can be seen that they are near the actual amounts. It is extremely unlikely that this method of cost calculation can be in error of more than 20 percent, at worst. In this case, a 20 percent error on the high side adds 36 cents to the $1.80 figure arrived at, for a total of $2.16.

In the case of the above mentioned camera, it is almost certain you have a manufacturer that manufactures no actual components, but rather buys the necessary components, assembles them into a working camera unit, and sells the assembled units.

Possibly, the manufacturer may have designed their own CCD camera receiver unit and manufactures that, but it is virtually certain that the wiring, resistors, capacitors, etc. are all bought elsewhere from others.

This is standard practice in electronics component manufacturing. There are a vast number of individual standardized components which are bought and then assembled onto circuit boards.

Each manufacturer's circuit board is different, but the 99 percent of the time the individual components on these boards are interchangeable from board to board. The manufacturers all design their circuit boards to utilize these off the shelf components, available in a wide variety of standard values and tolerances.

Many times an individual manufacturer designs an integrated circuit from scratch and hires a chip maker to produce it, and places this chip on their board, but more than 95 percent of the other board components will still be the widely available standardized components. Even this practice is becoming somewhat rare, with the advent of programmable arithmetic and logic, or PAL chips.

There are a standardized set of 5 NTSC video decoding VLSI chips, for example, which are used in the vast majority of all NTSC color television sets made. Different manufacturers and brands and sizes of televisions, different designs and circuit boards, but always are the same five chips soldered onto the boards. There is another set of standardized NTSC video encoding VLSI chips which are used in NTSC color video cameras.

Because of these chips, there have been significant manufacturing and consumer price reductions, because the manufacturers do not have to reinvent the wheel every time they design a new television circuit board.

Just remember that of the example above's price breakdown, out of the $9 that results using a division factor of 10 percent, part of the raw cost calculation formula must again be applied to this $9, because the $9 reflects the wholesale and in some cases retail price of these individual components. This means taking 10 percent of $9, which is 90 cents.

Given volume buying, $9 is very near accuracy for the components costs required for an internet camera unit, from my experience with electronics manufacturing.

I will err on the side of caution and use $5.00 per camera parts costs, rather than $1.80 plus 90 cents or $2.16 plus 90 cents.

Remember, we are not paying anything for labor (that we aren't already paying, unless some warden decides to give his prisoners an extra rat to eat each week as a work incentive), little for shipping, nothing for retail packaging, nothing for research and development or planning and design (except as stated above in the case of the UV CCD chips), nothing for advertising, accounting, or sales, and no taxes. We likely will have to pay for electricity, some maintenance, and fuel for shipping, but we have our own trucks.

I will use $5.00 then, per camera, as a preliminary estimate. The estimates that follow for the multiplexers are grossly overestimated, considering that these prices are near 50 percent of wholesale multiplexer prices. rather than the 2 or 10 percent they should be. The estimates for the laser holographic memory substations is probably near accuracy.

If there are 3.2 billion cameras costing $5.00 each then the total cost for these is 18 billion dollars.

Different areas require different multiplexers. In a crowded city, 200 or greater input multiplexers will be used exclusively, each multiplexing the input from 200 cameras.

In remote areas, it makes more sense to use 20 or lesser input multiplexers, since the camera density per square mile is far less than in a city.

Assume a total of 3.2 billion cameras (1.2 billion camera banks, each possessing 3 cameras). Assume that a third of these units will be located in densely populated areas, another third in remote areas, and the remaining third in midrange population areas.

1.2 billion / 200 means 6 million 200 input multiplexers are required. If each costs $800, then the total is 4.8 billion dollars.

1.2 billion / 50 means 24 million 50 input multiplexers are required. If each costs $200, then the total is 4.8 billion dollars.

1.2 billion / 20 means 60 million 20 input multiplexers are required. If each costs $80, then the total is 4.8 billion dollars.

Assume that each holographic memory substation can process the inputs from 50,000 camera banks (100.000 video inputs).

3.6 billion / 100,000 means 36000 holographic memory substations are required. If each memory substation costs $125,000 then the total is 4.5 billion dollars.

The total initial estimate so far, for the cameras, multiplexers, and laser holographic memory substations, is 36.9 billion dollars.

Of course, we still need an immense amount of copper wire, but we will obtain this by mining and manufacturing it ourselves. The cost will be at most ten percent of retail. You can examine the accounting and the quarterly and annual records of small telephone or cable companies to get a general idea of what their network wiring cost. Multiply this by the amount needed, and take ten percent of that to arrive at an cost estimate accurate to within at worst 20 percent of the actual cost.

If copper mining companies and corporations are afforded free mining rights by the government for their participation, then take 5 percent from the above instead of 10 percent.

Copper is expensive, but at most we are in the ballpark of at most 5 billion dollars here.

A far easier method of copper wiring cost determination exists. For only 3 billion dollars, one could easily buy a copper mine, a copper wire mill, a wire insulation and production plant, a respectable fleet of semi trucks, and have a respectable amount of capital left over when all the required manufacturing and shipping had been done.

We need fiber optic cable, rivets, nails, gas for vehicles, maintenance on vehicles, and many other small items and details need to be considered and figured into the total estimate. There are logistics and communications costs. There are surveying and mapping costs. There may be system programming costs, although most system programming will likely be donated.

However, we have addressed the costs of the main components of the system, and arrived at a total of less than 50 billion dollars.

I stand by my estimate of a total of 80 billion in costs for the system.

Home The System The Atom The Economy The Opposition The Cost

Copyright 1997, 1998, Robert J. Nelson.

See also COPYR978.GIF, an integral component of this work, for a full legal copyright notice.

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