Jeff Atwood writes Hardware is Cheap, Programmers are Expensive.  "Given the rapid advance of Moore's Law, when does it make sense to throw hardware at a programming problem? As a general rule, I'd say almost always."  Yeah, but... 

Here's the comment I posted:

Jeff, your comment is written from the point of view of a user.  If you're creating an application for your own company, sure, hardware is much less expensive than programmers.

This situation is different from the point of view of a vendor.  If you're creating an application which thousands of customers are going to use, *your* programmers are much less expensive than *their* hardware.  You really don't want to make customers pay more for your application because it requires more hardware.  (Vista is an extreme example, as an OS, but this is doubly true for vertical applications.)

For example my company Aperio makes digital pathology systems.  These manage lots of really big images.  If we didn't have efficient code our customers would have to buy more hardware - CPUs, disk, bandwidth, etc - and it would make our applications more expensive.  We'd be less competitive and deliver less value.  So for us spending programmer resources to reduce application hardware resources is the right trade-off.

BTW this discussion bears on the choice of language, too.  If you're creating applications for yourself, sure, go ahead and use C#.  If you're creating performance critical applications to sell to others, C++ might make more sense.

This is apparently a hard thing to wrap your mind around...  Microsoft struggled with this same thing in the early days of Vista, rewriting large parts of the OS in C# only to discover that "managed" code was too slow, and the whole world wasn't going to buy next generation PCs all at once.  Even after large amounts of the rewritten code were rewritten again, Vista still ended up being slow and piggy, and adoption has been sluggish.  Don't hold your breath waiting for Office or SQLServer to be written in .NET, or Photoshop, or Quicken...  or any decent game you might name.

This recalls an earlier post Jeff made in August 2005: Despite the incredible slowness and sparseness of features, this is really cool, in which we debated the relative merits of Java (nice for in-house use) and C++ (nicer for "mainstream" apps).  Here we are three years later and not much has changed.  Same as it ever was...