What Does RDRAM Really Cost?

As Rambus Dynamic Random Access Memory slowly makes its way onto PCs, the next-generation memory technology continues to sell for a hefty premium--but just how hefty?

Check with memory retailers, and you'll find that RDRAM costs two to five times the price of the Synchronous DRAM it's intended to replace. But Rambus the company, and one prominent analyst, say PC makers pay a much smaller premium for RDRAM. Is someone playing games with the price?

Sticker Shock

Visit Kingston Technology's ValueRAM electronic-commerce site, and the cheapest 128MB RDRAM module you can find is $722. The most expensive 128MB SDRAM module is only $179. The gap has widened in recent months due to SDRAM price reductions, analysts say.

RDRAM-equipped PCs have smaller but still hefty markups, though apples-to-apples comparisons are elusive because RDRAM can't replace SDRAM in a system--they require different motherboard designs.

Compaq says RDRAM adds $300-$400 to a system's cost. Similarly equipped Pentium III-based PCs by Compaq, Dell, Hewlett-Packard, and IBM sell for roughly $300-$600 more when fitted with RDRAM.

Upgrading memory on those systems is equally expensive. Dell, for example, charges $680 to add 128MB of RDRAM to its 1-GHz Dimension XPS B1000r, while HP charges $519 for a similar add-on to its 533-MHz Vectra VL 600. In contrast, 128MB SDRAM upgrades rarely cost more than $250.

Tight Supplies

RDRAM is more difficult and expensive to manufacture than SDRAM, and memory makers like Hyundai, Micron, NEC, Samsung, and Toshiba must pay a license fee to Rambus, the company that developed the technology.

But today's prices are as much a function of tight supplies. "It's on allocation right now," says Liesl Schwoebel, a product manager at Kingston. That means the few companies making RDRAM must dole out small quantities to many customers.

Only one manufacturer--Samsung--is producing it in volume. NEC and Toshiba recently came on-line, and they and others expect to ramp up production this year.

Schwoebel insists that Kingston also pays extra for RDRAM and isn't trying to "rationalize" the situation by gouging consumers.

A March survey of wholesale prices by Dataquest confirms that claim. According to principal analyst Mark Giudice, 128MB of the fastest type of SDRAM costs $124.50 in the U.S., while 144MB of RDRAM (the nearest comparable size in the survey of memory makers and PC vendors) costs $520.