#3000 RAM
9 messages in this thread
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.
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).
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.
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".
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.
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.
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
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
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