Memory is dirt cheap at a time when it should be expensive

If you were looking to stock up on memory, now would be a good time.

Years ago – decades, really – a friend told me "memory equals performance." I've yet to see that maxim proven wrong. So if you want to upgrade your PCs or Macs with more memory, now would be a great time to do it.

Normally memory prices shoot up around this time of year as system builders gobble it up for their Christmas inventory build-up. While we have new CPUs from both Intel and AMD, the expected pop in PC sales from a new version of Windows did not happen, and memory is at its lowest point in recent years.

Why? Avril Wu of the memory market research firm DRAMeXchange told Digital Trends the problem was the freebie Windows 10 upgrade. "Notebook shipments in the third quarter fall short of what is expected for a traditional peak season mainly because Windows 10 with its free upgrade plan negatively impacted replaced sales of notebooks to some extent rather than driving the demand for these products," she said.

She has a point. Microsoft worked diligently to make sure Windows 10 would run on the same hardware that ran Windows 7 and 8.1, and with that icon in the system tray telling you your free copy is ready for download, Microsoft killed a lot of incentive to upgrade. Then again, if your migration was anything like mine you might just want to buy a new system with Windows 10 installed.

DRAMeXchange now puts the average price of a 4GB DDR3 memory DIMM at $18.50. That's just crazy. Twenty years ago I upgraded my 486 PC from 4MB to 8MB and it cost me $500. Shows the power of mass production.

And that's what caused the price drop. Memory makers Samsung, Inotera and Hynix flooded the market with DRAM in 2014, according to a report by RBC Capital analyst Mahesh Sanganeria (via Investor's Business Daily). Now with the market flooded, production and capital expenditures will drop for at least two years.

This isn't even the end, according to a Deutsche Bank analyst, who projects that NAND flash and DRAM gross margins will continue to decline through 2016. A recovery might not take place until 2017.

Believe it or not, this has happened several times before. I've lost count of the number of times I've had this conversation with Jim Handy at Objective Analysis or other analysts, like at IHS and IDC. The memory industry is the sloppiest one in tech. The flood the market with memory. Memory becomes dirt cheap. The memory guys lose their shirts and cut back. Prices spike a year or two later after no investment in foundries or new process nodes. So they rush to make up for it and flood the market with new memory.

Rinse, repeat, and one or two players go out of business. These guys just don't learn. But hey, Windows 10 Home can handle up to 128GB of memory and 32GB DDR3 memory kits on New Egg are as low as $150. Time to go nuts and build a PC with a RAM disk.

This story, "Memory is dirt cheap at a time when it should be expensive" was originally published by ITworld.

Copyright © 2015 IDG Communications, Inc.

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