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␈↓ ↓H␈↓¬␈↓ α≡OFFICE MEMORANDUM  *  STANFORD UNIVERSITY  *  OFFICE MEMORANDUM

␈↓ ↓H␈↓ε␈↓ βBSTANFORD ARTIFICIAL INTELLIGENCE LABORATORY

␈↓ ↓H␈↓α␈↓ ¬iAugust 9, 1977




␈↓ ↓H␈↓αTo:␈↓ αH␈↓William Massy

␈↓ ↓H␈↓␈↓αFrom:␈↓ αH␈↓John McCarthy

␈↓ ↓H␈↓αSubject:␈↓ αH␈↓IBM mass storage system

␈↓ ↓H␈↓Dear Bill:

␈↓ ↓H␈↓        Congratulations on your new job.  I hope you will decide that your empire can be trimmed.

␈↓ ↓H␈↓        The␈α∞IBM␈α∞salesman␈α∞called␈α∂me␈α∞yesterday␈α∞to␈α∞tell␈α∞me␈α∂about␈α∞SCIP's␈α∞plan␈α∞to␈α∞acquire␈α∂an␈α∞IBM
␈↓ ↓H␈↓mass␈αstorage␈αsystem␈αand␈αto␈αarrange␈αa␈αmeeting␈αto␈αdiscuss␈αconnection␈αof␈αthe␈αAI␈αLab␈αand␈αLOTS␈αto
␈↓ ↓H␈↓the␈α
system.␈α
 At␈α
≡rst␈α
I␈α
was␈α
enthusiastic,␈α
because␈α∞I␈α
have␈α
wanted␈α
access␈α
to␈α
such␈α
a␈α
system␈α∞for␈α
many
␈↓ ↓H␈↓years␈αand␈αbecause␈αI␈αthink␈αthis␈αis␈αjust␈αwhat␈αStanford␈αneeds.␈α However,␈αbecause␈αof␈αmy␈αwell␈αknown
␈↓ ↓H␈↓worries␈αabout␈αSCIP's␈αe≠ciency␈αI␈αquizzed␈αhim␈αabout␈αprojected␈αprices,␈αand␈αwhat␈αI␈αheard␈αcon≡rmed
␈↓ ↓H␈↓my worst fears.  Here are the relevant numbers as I recall them.

␈↓ ↓H␈↓        1.␈α∞SCIP␈α∞now␈α∞charges␈α∞about␈α∞$50.00␈α∞per␈α∞megabyte␈α∞month␈α∞for␈α∞storage␈α∞on␈α∞3350s,␈α∞and␈α∞this␈α
is
␈↓ ↓H␈↓scheduled to go down to about $40.00 soon.

␈↓ ↓H␈↓        2.␈α⊂The␈α⊃mass␈α⊂storage␈α⊃unit␈α⊂to␈α⊃be␈α⊂acquired␈α⊃from␈α⊂IBM␈α⊃rents␈α⊂for␈α⊃about␈α⊂$.30␈α⊃per␈α⊂megabyte
␈↓ ↓H␈↓month.

␈↓ ↓H␈↓        3. SCIP intends an initial charge of $15.00 per megabyte month.

␈↓ ↓H␈↓        4.␈α∞The␈α∞AI␈α∞Lab␈α∞can␈α
extend␈α∞its␈α∞current␈α∞3330␈α∞imitation␈α∞system␈α
at␈α∞a␈α∞cost␈α∞of␈α∞$12,000␈α∞per␈α
200
␈↓ ↓H␈↓megabyte␈αdrive.␈α Dividing␈α$12,000␈αby␈α200␈αgives␈αa␈αpurchase␈αprice␈αof␈α$60␈αper␈αmegabyte.␈α Four␈αyear
␈↓ ↓H␈↓amortization␈α∪suggests␈α∩an␈α∪e≥ective␈α∩cost␈α∪of␈α∩$1.25␈α∪per␈α∩month␈α∪ignoring␈α∩ine≠ciencies␈α∪that␈α∩might
␈↓ ↓H␈↓increase␈αcosts␈αby␈αa␈αfactor␈αof␈αtwo.␈α Comparing␈αthis␈αalternative␈αwith␈αSCIP's␈αproposed␈αprice␈αsuggests
␈↓ ↓H␈↓that␈α∂we␈α∞can␈α∂amortize␈α∂the␈α∞cost␈α∂of␈α∂more␈α∞imitation␈α∂3330␈α∞storage␈α∂in␈α∂four␈α∞months␈α∂relative␈α∂to␈α∞using
␈↓ ↓H␈↓SCIP.␈α
 We␈α
also␈α
retain␈α
direct␈α
access␈α
to␈α
the␈α
information.␈α
 For␈α
us␈α
to␈α
bene≡t␈α
from␈α
use␈α
of␈α
a␈αpublic␈α
mass
␈↓ ↓H␈↓storage system, the price must be below $1.00 per megabyte month.

␈↓ ↓H␈↓        5.␈αLOTS␈α
is␈αnot␈αin␈α
as␈αgood␈αa␈α
position␈αas␈α
the␈αAI␈αLab.␈α
 The␈αlist␈αprice␈α
of␈α200␈α
megabyte␈αunit
␈↓ ↓H␈↓from␈α⊂D.E.C.␈α⊂is␈α⊂three␈α⊂times␈α∂the␈α⊂free␈α⊂market␈α⊂price.␈α⊂ This␈α⊂means␈α∂it␈α⊂would␈α⊂take␈α⊂a␈α⊂whole␈α⊂year␈α∂to
␈↓ ↓H␈↓amortize␈αthe␈αcost␈αof␈αrenting␈αmass␈αstorage␈αfrom␈αSCIP.␈α However,␈αlist␈αprice␈αis␈αnot␈α
realistic,␈αbecause
␈↓ ↓H␈↓D.E.C.␈αis␈αselling␈αus␈α
disk␈αunits␈αat␈αa␈αreduced␈α
price␈αas␈αpart␈αof␈αa␈α
package␈αdeal,␈αbecause␈αthey␈α
wish␈αto
␈↓ ↓H␈↓discourage␈αus␈α
from␈αbuying␈α
a␈αcontrol␈α
unit␈αthat␈α
will␈αaccept␈α
imitation␈α3350s.␈α
 If␈αwe␈α
were␈αto␈α
go␈αthat
␈↓ ↓H␈↓route,␈α
our␈αmarginal␈α
price␈αwould␈α
be␈α$12,000␈α
for␈α317␈α
megabytes,␈αso␈α
that␈αonce␈α
the␈αhurdle␈α
has␈αbeen
␈↓ ↓H␈↓jumped, a price of $.60 per megabyte month would be needed to lure us to public mass storage.

␈↓ ↓H␈↓        6. The Business School should be in about the same position as LOTS.
␈↓ ↓H␈↓αWilliam Massy␈↓ ¬iAugust 9, 1977␈↓ 
nPage 2␈↓ 


␈↓ ↓H␈↓        The␈α∃costs␈α∀are␈α∃realistic,␈α∀because␈α∃none␈α∀of␈α∃the␈α∀PDP-10␈α∃installations␈α∀would␈α∃require␈α∀any
␈↓ ↓H␈↓additional␈α⊂personnel␈α⊂to␈α∂add␈α⊂more␈α⊂drives␈α∂to␈α⊂their␈α⊂present␈α∂systems.␈α⊂ The␈α⊂space␈α⊂requirement␈α∂per
␈↓ ↓H␈↓drive is about that of a ≡le cabinet.

␈↓ ↓H␈↓        I␈α∞cannot␈α∂believe␈α∞that␈α∂charging␈α∞50␈α∞times␈α∂the␈α∞IBM␈α∂rental␈α∞can␈α∞be␈α∂justi≡ed␈α∞by␈α∂the␈α∞marginal
␈↓ ↓H␈↓costs␈α∞or␈α∞even␈α
the␈α∞average␈α∞costs␈α
of␈α∞running␈α∞SCIP.␈α
 There␈α∞must␈α∞be␈α
an␈α∞attempt␈α∞to␈α∞subsidize␈α
some
␈↓ ↓H␈↓other service that SCIP is running at a loss.

␈↓ ↓H␈↓        I␈αbelieve␈αthat␈αpublic␈αmass␈αstorage␈αis␈αvery␈α
important␈αto␈αStanford␈αand␈αthat␈αthe␈αIBM␈αdevice␈α
is
␈↓ ↓H␈↓cost-e≥ective␈αfor␈αthat␈αpurpose.␈α A␈αfull␈αIBM␈αsystem,␈α472␈αbillion␈αbytes,␈αwould␈αstore␈αthe␈αmillion␈αmost
␈↓ ↓H␈↓frequently␈α∪used␈α∪books␈α∩in␈α∪the␈α∪Stanford␈α∪library␈α∩at␈α∪an␈α∪a≥ordable␈α∩cost.␈α∪ The␈α∪library␈α∪could␈α∩be
␈↓ ↓H␈↓accessible from anywhere on the campus or anywhere in the world.

␈↓ ↓H␈↓        ␈↓αI␈α∞propose␈α∞that␈α∞Stanford␈α∞solicit␈α∞management␈α∞proposals␈α∞for␈α∞operating␈α∞mass␈α∞storage,␈α
the
␈↓ ↓H␈↓αmost␈α∂important␈α∂part␈α∂being␈α⊂the␈α∂rental␈α∂that␈α∂would␈α∂be␈α⊂charged␈α∂and␈α∂the␈α∂amortization␈α⊂plan␈↓.␈α∂ I
␈↓ ↓H␈↓believe␈α∂that␈α∂IMSSS␈α∂could␈α∞make␈α∂a␈α∂proposal␈α∂much␈α∂more␈α∞attractive␈α∂than␈α∂the␈α∂current␈α∂SCIP␈α∞plan.
␈↓ ↓H␈↓The␈α∂SCIP␈α∂plan␈α∞is␈α∂unlikely␈α∂to␈α∂be␈α∞cost-e≥ective␈α∂for␈α∂other␈α∞computer␈α∂systems␈α∂on␈α∂campus.␈α∞ Besides
␈↓ ↓H␈↓IMSSS,␈αoutside␈αvendors␈αshould␈αbe␈αsolicited.␈α The␈αAI␈αLab␈αor␈αLOTS␈αwould␈αmake␈αa␈αproposal␈αonly
␈↓ ↓H␈↓if no other organization made a reasonable proposal.


␈↓ ↓H␈↓Sincerely,



␈↓ ↓H␈↓John McCarthy


␈↓ ↓H␈↓cc: W. Miller, C. Dickens, Arjay Miller, P. Suppes, T. Rind∨eisch, R. Gorin