A Short History of Time-share

Time-share, the rental of use of a computer via telephone connection, started in the late 1960's when computers cost huge amounts of money. By the 70's, it was an immense business, bringing computing resources to companies which could not afford the huge amounts required to provide computing services. The basic costs of providing time-share services were the costs of hardware, the costs of the telephone lines, and the costs of the administrative labor to hold it all together. A typical price of such service in the 70's was $500 to $1,000 per user month, with an additional cost of $300 to $1,000 for telephone service.

Time-share died off as a major business in the 80's and 90's because the cost of computers fell by more than a factor of 100, making it viable to put small, uncomplex, computers in people's businesses.

But to say that it was the price-change of computers alone is a mis-statement. What happened was that while computer prices fell, telecommunications costs did not, and administrative costs remained an inflation-adjusted constant. Time-share ceased to be viable because it was cheaper to put administrators and support technicians in a car than to pay the ongoing communications costs of connecting each user.

In the last five years, telecommunications costs have finally caught up with computers. Basic connection prices have fallen by a factor of more than 10, to the point where anyone can get a 56k dial-up service for $19.95 a month, or a cable modem or DSL service for a little more, and the effective cost per datum transmitted has dropped by a factor of 1,000 in the last 10 years.

While all these changes occured, the labor costs of keeping the computers alive kept rising for two reasons. The first was that salaries kept rising, because there were not enough specially trained people relative to demand. The second was that systems rapidly increased in complexity, and were expected to do more things, increasing training times, and actual work-times required to keep systems alive.

And, ultimately, the only way to really control these labor costs is to centralize the services. While there are transport and infrastructure costs, the administrative labor costs which are 80% to 90% of a stand-alone computer facility remain a constant whether there are two or two-thousand users to support.

Internet based Time Share will be a viable alternative going forward for one simple reason: the labor costs of keeping multi-user computers alive have not declined. It is still very expensive to keep a multi-user computer alive, and this cost must be borne whether the computer system in question serves two users or thousands.