Memory Prices Drop by 85 Percent

Considering a PC memory upgrade? Don't stop with a measly 64MB of SDRAM. More memory is always better, and the price is right to leap 128MB or beyond--and reap significant performance gains.

Prices have dropped dramatically over the past year. For example, last summer direct-memory vendor Crucial was offering a 128MB DIMM of PC-133 memory for $140 on its Web site. Today the site sells that same product for $27.50. Crucial's 256MB SDRAM product sold for $314 a year ago; now it is priced at $47 (an 85 percent drop). And if you're still considering that 64MB upgrade, Crucial will sell you a PC-100 version, for $21.59 (just six bucks less than the 128MB product).

Even punch-drunk PC vendors, stunned from the dramatic slump in the PC market, are taking advantage of the lower costs, says Sherry Garber, senior vice president of memory market research firm Semico. Most vendors are offering their low-end products with 128MB of memory now, she says. Midrange products are shipping with 192MB; and the 256MB number continues to be the standard configuration for high-end desktops at least through the rest of the year.

To what do memory-starved PCs owe this harvest of RAM? Simple forces of supply and demand, say experts.

Overstock Means Deals

The PC memory industry has a history of tumultuous ups and downs, says Mike Bokan, general manager at Crucial. But the current price situation is the most dramatic he's ever seen. So what happened?

PC manufacturers are the biggest consumers of PC memory, he says. When PC sales began to drop off last year, vendors required less memory. However, memory makers continued to pump the stuff out. It wasn't long before the supply of memory was out of balance with what the industry actually needed. To sell off the excess, memory sellers dropped prices dramatically.

In time, the supply and demand will even out, and prices will likely rebound, Bokan says.

The supply adjustment is already starting to happen. Some memory makers have taken the unusual step of slowing down production, so the flow of memory to the market is dropping. Couple that with expected upturns in PC sales for back-to-school and the holidays, as well as Microsoft's scheduled release of memory-hungry Windows XP in October, and in time prices will start to creep upward again, he says. As for just when that will happen, he won't hazard a guess.

Steve Rodriguez, director of strategic initiatives at Crucial competitor Kingston, is counting on Windows XP to push more users to upgrade their memory.

"You'll need at least 128MB (for XP), and some people are recommending 256MB," he says. Rodriguez expects memory prices to rise again by the first quarter of 2002.

DDR vs. RDRAM

In the meantime, SDRAM continues to be the major memory seller, and up-and-coming standards DDR-SDRAM and RDRAM continue their battle to be the next-generation memory of choice. Experts differ on which of the two has the early lead.

At Crucial, more than 70 percent of current sales is SDRAM for desktops, while about 20 percent is DDR (the rest of the mix is SDRAM for notebooks). The company does not sell RDRAM memory, and clearly hopes to see DDR evolve into the high-speed memory of choice. (It should be noted that Crucial is a division of Micron Technologies, a memory manufacturer currently involved in litigation with Rambus, the company behind the RDRAM memory standard.)

"The evolution to DDR is occurring," Bokan says. The 20 percent sales figure for DDR at Crucial is impressive because relatively few DDR-based systems are yet out there, and because the company has only offered DDR since January, he says. Currently only AMD Athlon-based PCs are using DDR memory. Crucial prices its DDR products at parity with its standard SDRAM products, Bokan adds.

Over at Kingston, Rodriguez says the company is technology-neutral, but he sees RDRAM as more established than DDR thanks to Intel and the Pentium 4. He expects both standards to do well, but sees RDRAM dominating high-end desktops while DDR finds greater penetration in servers.

Rodriguez says he's not worried that an upcoming Intel chip set that pairs the P4 with PC-133 SDRAM will affect RDRAM sales. Sure, the SDRAM it will be cheaper, but people who want top performance will stick with RDRAM, he says. Using SDRAM "is like putting a governor on your car," he adds.

Despite drops in recent months, RDRAM prices remain substantially higher than SDRAM and usually carry a premium over DDR, says Semico's Garber. DDR prices are hard to nail down, as they're "all over the board," with some vendors (like Crucial) offering parity with SDRAM, and others charging a premium that's closer to the price of RDRAM, she says.

Kingston's pricing seems to mirror Garber's take. Last year at this time Kingston's 128MB, 800-MHz RDRAM product sold for $351; today it sells for $146. The 256-MB product sold for $929, and now it sells for $280. That's a major drop, but its still a premium over Kingston's own SDRAM and DDR products. Kingston wasn't offering DDR at this time last year, but now 128MBs of 266-MHz DDR sells for $56; 256MB sells for $96. Kingston's 128MB SDRAM price was about $70 and is now about $35; its 256MB was about $155 and is now about $67.

Kingston's Rodriguez insists for some users, RDRAM's improved performance makes it worth the higher price. PC World.com tests conducted last year showed a less clear advantage to RDRAM.

"If your applications demand it--if you're doing more than word processing, or using it for video editing--than it [RDRAM] is a no-brainer," Rodriguez says.