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DRAM Price Fixing
AEton writes "There's an interesting article up at Newsforge, an OSDN sibling site, about price fixing in the DRAM market. According to Melanie Hollands, a technology analyst, market consolidation and uncertain prices have contributed to subtle cooperation between the major DRAM "competitors" to keep prices high. While she finds little "hard evidence of collusion", there are strong circumstantial trends which last year sparked a secretive Department of Justice antitrust inquiry." Allegations of this have been floating around for a while - heck, you can even join the suit.
guess it depends on how much ram you want. if you want it for main memory in your computer, then yeah, it's cheap in the same way that it doesn't cost you much to fill your lawn mower with gas. however, if you're waiting for prices to come down so that something like, say a solid state HDD to become a serious contender in the market (as in priced as such), then this makes all the difference.
Good point, and it has merit. Although if you have been watching the memory market as of late there have been huge jumps in tech around this area. Crazy jumps really. So, it seems that dram will have a short live future anyway. Just like everything else if you price yourself out of the market someone eats your lunch.
Although I understand where you are coming from and agree with you, I don't think you will have to wait much longer.
Neck_of_the_Woods
#/usr/local/surf/glassy/overhead
If there's been price-fixing, it certainly hasn't been very competently done. DRAM prices have been in the flusher for quite a while now, and the manufacturers are losing money at an amazing rate.
It's actually a stupid law. Anti-price fixing that is.
In fact, the most important commodity in America is readily purchased from a price-fixing cartel (aka OPEC).
Here's the howto on legalized price-fixing in America.
Monday... from the Wall Street Journal, "AT&T announces a 4.3% price increase in consumer long distance rates across the board."
Tuesday... from the NY Times, "MCI announces a 4.35% price increase in consumer long distance rates..."
(Result: A successful price fixing.)
Or it could go like this....
Monday... WSJ Reports "AT&T announces a 6% increase in consumer l.d. rates.
Tuesday... WSJ Report "MCI announces a 3% rate hike."
Wednesday... "WSJ Reports "AT&T announces a 50% decrease in a previously announces rate hike due to customer complaints..."
(Result: A successful price fixing in two stages.)
Shit happens man.
Hey, who needs evidence!! "It was HIM" That's all the evidence I need!
Worked for Iraq...
"I'll have a Guinness, no wait, make that a Coors Light" -Grad student I work with, who shall remain anonymous...
When a very limited number of companies control the whole world's market, things like this happen.
The user is helpless when they have so much control. Reached this point, competition is not enough and the market doesn't regulate itself at all. This is when free market means free for big corporations to abuse and screw the rest.
I don't understand the problem. 1GB (2x512MB) of PC2700 DDR memory can be bought under $100.
DoJ should investigate OS or Office suite price fixing instead. These are horribly overpriced.
A) Memory is NOT a commodity at least by definition - nor is it a service. I DO think it should be listed on stock markets as such though. I think DRAM, a "combined finished product", would have to be rewritten as a raw material. I think if there were this type of regulation, rather than regulation on small arms of companies like Samsung, there would be more stabilization. Contrary to what the article makes it seem like though, I think RAM has been VERY reasonable, it has also been been a help to a partial turn around in PC sales over the past 2 years, by helping margins.
There are also a lot of companies producing RAM, at least more than enough for capatilist competition. I can name at least 6 seperate manufacturers off the top of my head. We don't see the same problem in industries where there is less competition. ( Samsung, Hyundai, Motorola, Kingston, Centon(Kbyte) PNY )
2)The area of concentration for price fixing shouldn't be DRAM it should be FlashRAM. As far as I can tell, this type of RAM is outselling DRAM at this point. (If someone could post a link to comparisons it would be appreciated) I haven't seen compareable Flash RAM decreases. The interesting thing about Flash RAM is that it appears to be cheaper to make and easier to sell. There are also LOTS of competition. Most people can't see through the gimmicky 30x 70x flash RAM, and most don't buy into the Kingston, Viking theory of better RAM. (Novices will not attribute their computer problems to bad RAM they got for $10 after rebate)
IF RAM were made a commodity you'd see it traded like crude oil. Venezuelan and British oil do better because of the refining process. The "clear gas" at Amoco really is better than than the gas from Texaco! The RAM from Kingston really is better than the RAM from KByte.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
RAM sellers suck. I don't know where the exact problem is, but it's treated as a commodity, and it's wrong.
In business, "Commodity" typically means an item that is not differentiated from others and sold purely for what it is, without regard for who made it. Price is the only thing that matters when buying a commodity and only the producers that can sell for the lowest price survive. It's typically considered a bad thing when you let your product become so plain that it's considered a commodity. Did you meant to say commodity because that would typically be a good thing for consumers?
Well, I looked into 2Gig of DDR memory for a Dell 8500 laptop. The price is $3300. If you go to Microns crucial website it is $999/gig. This is about 99 cents per gig which is cheap compared to the 60% markup Dell wants on the stuff. So! poor Dell can't make a buck because memory isn't cheap enough. Sheesh! gimme a break Dell. You say it amounts to 5-6% of the PC cost which is $150 on a $3K laptop. Hmmm, maybe you need to redo the math. Micron is trying to make an honest buck while you are doing highway robbery! Now who has to get their quaterly earnings up, Micron is at $9 per share whilst' Dell is at $30 per share. Hmmm, something doesn't compute here. In fact with all the announced Intel price decreases and chip decreases I wonder why Dell doesn't reduce their laptop/workstation website price. Seems like Dell is the one doing price fixing to me since other competitors are very few -- down to about two left. This means that Dells prices will not come down but only go up!
I think it's a tad more accurate to say it worked AGAINST Iraq...
Considering the DRAM manufacturers are typically losing money on every chip they sell ...
Do you have any factual information at all that would support such a statement?
I don't believe it.
I remember back in the 1970's -- before this nasty price fixing -- when you could buy an Altair S-100 1K RAM card assembled and tested for only $139. So, if you needed 512MB of RAM, it would only have required 524,288 of those S-100 boards and the cost would have been a mere $72,876,032.00.
Now those bastards are gouging us with their price fixing. I just checked on Crucial's web site and 512MB (DDR PC2100) costs $65.99!
Sooner or later they will manage to fix prices, and you will be able to tell by consistant profits by memory manufacturers.
Remember the first lesson in business 101 is never be forced to compete. Read Warren Buffet's advice for stock picking: you want a business with a "franchise" that allows it to prevent competitors from eating their lunch, thats where the profits are.
Wumpus
Remember when DRAM was $40 a MEGABYTE?!?!
i've always wondered why the major memory chip producers did not create an OPEC type consortium for DRAM. they would be able to control the price of ram chips and hopefully hold it at a level that would be cheap enough to ensure brisk sales, while ensuring that they would make enough profit to a) keep their workers employeed all of the time, b) keep their production lines running at a certain capacity, c) be able to invest in memory chip technology.
the DRAM constortium could raise the prices on memory chips to a point where consumers would find it too expensive to buy chips, but a) the smaller manufacturers could offer cheaper products b) like OPEFC the consortium does not want to alienate its consumers through higher prices.
on another note, "Regarding the latter "conspiracy", the three main culprits appear to be Samsung and Hynix, both of Korea; and Taiwan's Nanya." though these three companies are geographically more closely located than the other major companies, it does not necessarily mean that they would want to devise a plan to price fix. don't airlines in the U.S. price fix also?
Why did I lurk so long before registering for a Slashdot account? I could have had a Slashdot ID of less than 100000.
Exactly... The market always tends towards monopoly. Either through collusion, (why should companies try to outdo each other when they can help maintain a comfortable status quo?) or competition eliminating the weaker of the competitors through natural market conditions. Of course, that doesn't mean the natural market condition is what is actually wanted, it's a fallacy of capitalism. People won't just 'play fair'. Oh yes, here's some insight about your gas price problem.
Dell Computer Corp. chairman Michael Dell has publicly voiced his displeasure at excessive consolidation in the DRAM business, which has 40 percent fewer players now than in the mid-1990s. And Dell has voted with his checkbook: In early June Dell Computer and Taiwan's Nanya signed a five-year agreement that calls on Nanya to supply up to $3 billion worth of DRAM modules to Dell.
Yeah, we really need to worry about those mem prices , because they are killer when buying a computer or gadget. Wrong. Get the real monopolist as in Microsoft. Put sanctions on this company and tell OEM(manufacturers) to drop all OS tie-ins and make people buy their software off shelves. Then we will see how much people love microsoft.