CompuServe Thread

#3000 RAM

9 messages in this thread
#162931From: Brian BartlettSep 8, 1994 3:51 AM
Steven, the new PC-Magazine has an interesting point by John Dvorak. He asserts that there may be a price increase next year for RAM chips. Why? Most computers will need 8 MB of RAM from OEM vice 4 MB as before. May cause shortage ergo, prices go up. Interesting thought. The Four Seasons of Southern California: Fire, Flood, Earthquake, and Riot.
#163025From: Steven D. KapplinSep 8, 1994 3:36 PM
Having read and read about John Dvorak since the days of CP/M when John couldn't understand the big deal about MSDOS, I've come to expect that the shortages John talks about are in his imagination! Having vented my thoughts about JD, he may be right, but since there are many more computers using smaller chips/simms, etc., the demand for an 8 meg simm won't necessarily impact the price of a 1 meg simm. On the other hand if there is an overall chip shortage due to under production, then prices most surely will rise. The increase in ram prices has been pretty consistent probably indicating that the market is sufficiently used to the higher price that sellers no longer feel a need to lower retail prices even if wholesale prices are falling (if they are).
#163107From: Brian BartlettSep 9, 1994 5:11 AM
Steven, what JD was saying is that the minimum amount of memory in all current machines will go up, as well as those being newly produced. Only new machines, if they are set up that way, will use 8 MB SIMMS. The rest will put heavy pressure on demand for 1 MB and 4 MB SIMMS. That was the thrust of his argument. To my mind, it makes a lot of sense. Chicago and other OS's will need more memory, not less, unless something radically changes in the future. Or to put it another way, "the program will expand to fill the available RAM, and demand more." The Four Seasons of Southern California: Fire, Flood, Earthquake, and Riot.
#163189From: Steven D. KapplinSep 9, 1994 6:55 PM
Brian, I don't doubt that the demand for more memory will increase, but that only pressures prices upward if production is unable or unwilling to keep up with demand. Generally, if the demand for a product is growing and is expected to continue growing, then producers increase output to service that demand. If supply continues to grow along with demand, then relative price doesn't have to increase. Furthermore, increased production of a product for which the major capital investment is already in place usually brings about a decrease in average unit cost, thus, price doesn't need to rise in order to maintain or improve profit margins. That is the theoretical basis. Of course manufacturers may feel that the demand is not price elastic, meaning that increased prices results in a decrease in demand at some price point. If manufacturers see an inelastic demand (demand doesn't decline regardless of price) then they have little motivation to reduce price. This condition is sort of like that of a natural monopoly. So, whether ram prices stay where they are or rise is more likely determined by these conditions. It would appear that ram prices are not, presently, very elastic. But if manufacturers are continuing to invest in increased production, ram prices may still decline somewhat in the future. The key word, here, is "may".
#163278From: Brian BartlettSep 10, 1994 4:04 AM
Steven, perhaps I should say that my major field is economics with a specific focus on econometrics and historical economics <BG>. A couple of problems rear their ugly head here. As you state, the price of RAM seems to be relatively inelastic and as such, increases in the price do not seem to draw much of a decline in demand. However, the situation in Japan, which is our major source of RAM chips, is that of a downward decline. Japan, as a result of certain financial misadventures, a decline in the stockmarket, and an impending collapse of the property market, is shutting down those facilities that would answer the increased demand for those chips. If the increased demand is unanswered, we are certain to face increased RAM prices. The other problem is that we, the US, are relatively unable to answer the required increases in production on our own hook. Those firms that are still involved in this arena, such as IBM, can't ramp up their production that fast, especially given hesitation on the part of the capital markets (reasonable in my opinion) towards these firms. If the above is true, we could easily be facing a severely impacted market with respect to RAM chips. Heck, Japan is actually laying off people, which is a first in a good long while. Times are a-changin'. The question is, when, where, and why? The Four Seasons of Southern California: Fire, Flood, Earthquake, and Riot.
#163328From: Steven D. KapplinSep 10, 1994 11:01 AM
Brian, Wouldn't you know I'd be talking with another economist!! Well, not truly. I'm a Finance and Real Estate professor. Here I am preaching to the choir! I agree that unless there is an answer to a decline in producing facilities we will surely see an increase in price. Computer products are beginning to act like gasoline. Regardless of raw material price changes, retail prices keep ramping up. Don't you just hate these industries which have there own natural monopolies? As the "information highway" becomes a reality the demand for electronics will only increase. Of course, we are progressively becoming more dependent on information processing of all sorts. We can only hope that major chip producers will eventually add plant and equipment and hold price increases down, but it's is unlikely that memory prices will drop significantly, if at all, unless production increases.
#163401From: Elliot BainSep 10, 1994 10:42 PM
Brian, PMFJI, but you've missed part of the equation, the Koreans. They are hell-bent on becoming a force in electronics and will probably be more than happy to take up the slack in Japanese production. Elliot
#163556From: Norman HamerSep 12, 1994 1:14 PM
Elliot: There is a tremendous increase in production being developed in the lower Asia areas ( not just Korea). The number of new plants coming on is big. Also these companies are being developed by US companies. I am waiting to see how these companies will get chips into the US: will they keep the prices high and pump the gains back to the US, will they drop the prices and beat Japan (while losing the ability to claim dumping on Japan), or what? If memory chip prices don't come down in cost, then guys like Gates had better rethink Window NT …. I noticed that IBM is trimming the memory requirements for OS/2 …. does IBM know something about the price of memory? Also Intel has a big memory chip factory here in New Mexico and they are planning to increase the size of this plant by four times by 1996. It could be that with everybody making new plants like mad and IBM and maybe Gates reducing the OSs, the price of memory just might start to come down in a few years? ….. That is if the market place were real free! Regards, Norm
#163625From: Elliot BainSep 12, 1994 10:05 PM
Norm, There's also another big U.S. Player, Micron. I ordered some ram from them and had to wait because they were using almost everything extra for their own PCs. As for IBM, I don't think they could ever know anything the rest of us didn't know. I think they're trying anything to make their OS2 acceptable to the public by downsizinge Ram requirement. Elliot