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1401 Price Target $2500/Month

Background:
People frequently use the words "scientists and engineers", seemingly lumping the two technical groups together - but they are only related by technology -
Scientist Searches for new facts - often using "the scientific method" ;-))

Although resources are always limited, results rather than reliability and cost is the driving factor -

Examples are the large optical and radio telescopes, Large Hadron Collider

Engineer Designs and aids the manufacturer of functional, hopefully reliable & maintainable & cost effective, products attractive/compelling to an economically sufficient number of customers.

Sometimes it takes engineers to keep some things going - such as early steam engines, locomotives and computers ;-))

Examples of attractive/compelling products are, the Model T Ford, GOOGLE, the cell phone, ...

End of "Background" -

So - the people (engineers) tasked with creating the product eventually called - the IBM 1401 - were given a price target - so the product would be price competitive -

This price target is the salt in the soup for engineers, makes the project "interesting" :-))
No salt, and the soup is boring -
It would be like a government project, just pour on more money - no challenge - ;-)) - maybe ;-))

But even though marketeers are often accused of creating numbers out of thin air, or worse, ideally there is some rational thinking/investigating to come up with a price target.

In the case of the IBM 1401, we are fortunate that many of the participants are still living and - rational - :-))
The price target for a basic system to replace a small "unit record" installation was set at $2500.
This new product would hopefully provide sufficiently higher through-put at lower cost than many existing unit record systems.

Recollections of the IBM 1401 price target are from:
Shel Jacobs - down a way
Charles Branscomb - down a way

The down side of providing a less expensive, higher through-put option is that it "cannibalizes" an existing profitable status quo.
Organizations which stay on the down side find themselves leapfrogged, and out of business -
Governments, with no competition, have no incentive to improve - just the opposite -

After Shel and Charles provided their inputs (above), Robert Garner responded:
Chuck, Shel,

Thank you both so much for responding to my question with your fantastic recollections!
It's stunning how much you've both recalled from over 60 years ago.

Here are your canonical examples, costed with estimated monthly rentals from your recollections or from the sources noted below.* 


Chuck's MRU Army site:

024 x 3 = $ 35 x 3 = $ 105
085 x 2 = $125 x 2 = $ 250
512 x 2 = $100 x 2 = $ 200
584 x 1 = $100 x 1 = $ 100
080 x 3 = $ 40 x 3 = $ 120
405 x 2 = $900 x 2 = $1800
                     -----
             TOTAL = $2575

Shel's "many accounts" (but also assuming 3 card punches in the mix)

403 x 3 or 407 x 2 = $500 x 3 or $800 x 2 = $1500 or $1600
602A x 1 or 604 x 1                       = $ 250 or $ 550
311 summary card punch x 2(?)  = $ 80 x 2 = $ 160  = $ 160
026 x 3(?)                     = $ 60 x 3 = $ 180  = $ 180
                                            -----    -----
                                    TOTAL = $2090 or $2490
These totals are indeed congruent with my assertion that: "Small business firms in the 1950s automated their data processing tasks by leasing an assortment of punched-card machines for about $2,500 per month."

Of course, it would be sweet to find an average customer "points" figure for all of IBM's entire small business market back then! :-)
Someone will have to go a looking in some of the other old books lying about, although I doubt such a figure ever leaked out of IBM, even in the court dockets.

Thanks all,

- Robert

* Appendix B of 1961's Data Processing Equipment Encyclopedia, lists purchase and monthly rental rates for unit record equipment at that time.
Also, Google directed me to this cost table below from a scanned "Bourne, C.P. (1963). Methods of Information Handling. NY: John Wiley and Sons." http://sclibraryhistory.dyndns.org/gsdl/collect/historyo/pdfs/Bourne1963_Chapter6.pdf - 2.1 MB
(Perhaps Paul or Dick will have a sales catalog from the the late 50's.)

A few hours later, Bill Worthington contributed
Dear All,

The bank I worked for in Providence, RI had the following unit record equipment:

Machine Number Description Quantity Monthly rental * Total
026 Printing card punch 4 $35 $140
056 Verifying card punch 1 50 50
082 Card Sorter 1 55 55
083 Card sorter 1 110 110
087 Collator 2 240 480
407 Accounting machine 2 660 1,320
514 Reproducing punch 1 105 105
519 Reproducing punch 1 115 115
557 Alphanumeric interpreter 1 200 200
. Totals . . $2,575
* The Monthly rentals are from the original attachment and taking the mid-point where there is a range of prices.

This was the configuration as best I can recall when I joined the DP Dept. at the beginning of 1961. At that time, the bank had an IBM 7070 system on order and switched to a 1401 tape system with 4×729 tapes, 1×1402, 1×1403, 1×1401, 1×1412.

The 1401 arrived late summer and initially came with 8K, Advanced Programming, Multiply/Divide, Sense switches, ??? It was deemed to be too expensive in light of a 1410 system ordered to arrive at the beginning of 1962 and the decision was made to remove 4K of memory, Multiply/Divide, and Advanced Programming.

The programmers successfully rebelled at the removal of Advanced Programming while the Multiply/Divide was implemented in a subroutine. Reducing memory to only 4K meant that we could not use IOCS macros and substituted our own tape support including error recovery. It was a painful downgrade since a lot of the programs had been tested and were working with the 8K design point.

Until they ordered a S/360, the 1401 and 1410 were the computers although the 1412 [ MICR (Magnetic Ink Character Recognition) Cheque Sorter ] was upgraded to a 1419.

Regards,
Bill

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updated through April 24, 2013