There are numerous flash manufacturers all racing each other to build out capacity and increase density because they want to eat the HDD market.
DRAM is controlled by a small cabal, all of whom have multiple convictions for price fixing and collusion. I believe Hynix shipped some sacrificial C-suite execs to do prison time in the US over it. To a large degree no one is building out DRAM fab capacity as well.
DRAM prices have stayed high because the manufacturers want it to stay high and are colluding (either explicitly or implicitly) to keep prices up. The capital cost to compete is enormous: many billions before you can make your first sale. The day you break ground memory prices will mysteriously drop so low as to make your venture unprofitable, meaning your commercial loans get called in and you go bankrupt. Everyone understands this and avoids attempting to compete.
This is quite controversial and sounds more than a little conspiracy theory-esque.
While I'm sure this sort of thing goes on, if you could back your statements up with some evidence it would be really helpful.
What you're suggesting here allows for the possibility that at some point some tech firm finds creates a way for us to ditch traditional DRAM and use the cheaper flash storage instead.
My gut tells me there is more to it than politics and capitalism.
"This is quite controversial and sounds more than a little conspiracy theory-esque."
Maybe so - but about 90% of the world economy competes this way.
People are not stupid.
'Competing on price' is a dumb thing to do in an oligarchy, because it's effectively handing surpluses to another part of the value chain.
Every industry CEO knows how this game is played, and they definitely play it - there's no explicit collusion needed - it just happens naturally when there are 'reasonably intelligent actors acting in self interest within a market oligarchy'.
'Dumping' to exterminate competition is a very common tactic, used throughout history.
It takes a lot of disruption to change institutional dynamics.
I can't speak for the facts in this situation - I have no idea if those allegations are true or not, but they seem reasonable, I wouldn't be surprised if they are valid statements.
"My gut tells me there is more to it than politics and capitalism." - that's usually all it ever is :)
If that's the case it does leave the door wide open to a technological alternative.
My point is that greed and self-interest are not the only tent poles in this situation - which I fully appreciate are so common.
The technical aspect of DRAM's performance and configuration is clearly another, otherwise the industry would have moved on. This suggests either:
1) a wider circle of collusion, with other manufacturers in the back pockets to lock in the environment ripe for an oligarchy, especially preferential if the market is expecting to disappear (a better option is primed to surface); or,
2) simply that nothing beats DRAM at the moment so we're stuck with this until someone intentionally sacrifices themselves simply in order to drive down the price.
I can't see that happening, of course.
What's more likely, IMHO, is that research and development into other approaches is proving fruitful and the companies who have already invested heavily in the status quo are merely fixing their prices to maintain healthy balance sheets/market cap while they phase in the next-gen tech.
Although this is a great article, I'd suggest this is not by any means a 'well known strategy' - it's rather a brilliant bit of entrepreneurialism and an anomaly at best.
It would take some serious financial backing, wherewithal to pull this off, moreover, it could really only be done in a commodity market.
Hynix price fixing appears to be have taken place over ten years ago. Does your "break ground and get killed" principle still apply? Have any new vendors shown up?
Comments
It is not the speed, reliability, or processes.
There are numerous flash manufacturers all racing each other to build out capacity and increase density because they want to eat the HDD market.
DRAM is controlled by a small cabal, all of whom have multiple convictions for price fixing and collusion. I believe Hynix shipped some sacrificial C-suite execs to do prison time in the US over it. To a large degree no one is building out DRAM fab capacity as well.
DRAM prices have stayed high because the manufacturers want it to stay high and are colluding (either explicitly or implicitly) to keep prices up. The capital cost to compete is enormous: many billions before you can make your first sale. The day you break ground memory prices will mysteriously drop so low as to make your venture unprofitable, meaning your commercial loans get called in and you go bankrupt. Everyone understands this and avoids attempting to compete.
This is quite controversial and sounds more than a little conspiracy theory-esque.
While I'm sure this sort of thing goes on, if you could back your statements up with some evidence it would be really helpful.
What you're suggesting here allows for the possibility that at some point some tech firm finds creates a way for us to ditch traditional DRAM and use the cheaper flash storage instead.
My gut tells me there is more to it than politics and capitalism.
I mean, 5 different companies have pleaded guilty to price-fixing in the DRAM market, so I don't think what is suggested here is too controversial.
https://en.wikipedia.org/wiki/DRAM_price_fixing
Wow. Thanks for surfacing this!
"This is quite controversial and sounds more than a little conspiracy theory-esque."
Maybe so - but about 90% of the world economy competes this way.
People are not stupid.
'Competing on price' is a dumb thing to do in an oligarchy, because it's effectively handing surpluses to another part of the value chain.
Every industry CEO knows how this game is played, and they definitely play it - there's no explicit collusion needed - it just happens naturally when there are 'reasonably intelligent actors acting in self interest within a market oligarchy'.
'Dumping' to exterminate competition is a very common tactic, used throughout history.
It takes a lot of disruption to change institutional dynamics.
I can't speak for the facts in this situation - I have no idea if those allegations are true or not, but they seem reasonable, I wouldn't be surprised if they are valid statements.
"My gut tells me there is more to it than politics and capitalism." - that's usually all it ever is :)
If that's the case it does leave the door wide open to a technological alternative.
My point is that greed and self-interest are not the only tent poles in this situation - which I fully appreciate are so common.
The technical aspect of DRAM's performance and configuration is clearly another, otherwise the industry would have moved on. This suggests either:
1) a wider circle of collusion, with other manufacturers in the back pockets to lock in the environment ripe for an oligarchy, especially preferential if the market is expecting to disappear (a better option is primed to surface); or,
2) simply that nothing beats DRAM at the moment so we're stuck with this until someone intentionally sacrifices themselves simply in order to drive down the price.
I can't see that happening, of course.
What's more likely, IMHO, is that research and development into other approaches is proving fruitful and the companies who have already invested heavily in the status quo are merely fixing their prices to maintain healthy balance sheets/market cap while they phase in the next-gen tech.
There are well-known strategies for breaking cartels doing price-cutting. e.g. Dow chemical (https://fee.org/articles/herbert-dow-and-predatory-pricing/)
Although repackaging chemicals is probably easier then reselling DRAM as I assume there are IP rights involved.
Although this is a great article, I'd suggest this is not by any means a 'well known strategy' - it's rather a brilliant bit of entrepreneurialism and an anomaly at best.
It would take some serious financial backing, wherewithal to pull this off, moreover, it could really only be done in a commodity market.
I'm not even sure it could be done today.
It happens in all sorts of industries.
Going back a bit, this one
http://www.heraldscotland.com/news/12093375.display/
I don't doubt that price fixing happens.
I doubt that small businesspeople can out-compete big cartels who want to dump on them.
Yep. As usual, it's impossible to have a reliable cartel if the government doesn't support it.
Hynix price fixing appears to be have taken place over ten years ago. Does your "break ground and get killed" principle still apply? Have any new vendors shown up?
Would you take a billion dollar chance on it?
Would Apple?