40 % price drop in memories shakes assembler market

RAM prices in the country have been recording a steady fall in the JAS quarter. Currently, the price of Transcend's 128 MB SDRAM is around Rs 1,000-1,200. The same product for Simmtronics and other brands are available for Rs 900-1100. Nearly 90 percent of memory business comes from the gray market sales, where prices hover in the Rs 700-900 bracket.

Interestingly, these prices are stable abroad, but have been going down since the past two months in India. Sources say this is because dealers here had excess stocks of SD RAM, which they are trying to liquidate quickly.

According to Sathya Prasad, MD of VanPac Systems, 128 MB SDRAMs priced at Rs 1,900 three months ago, is currently sold at Rs 1,000. "Even 256 MB SDRAM, which was available at Rs 3,000 last quarter is being sold for Rs 1,600," adds Sanath Babu, MD, Memory Place.

Price-drops of this nature are favored by technology trends prevailing in the memory business. The demand pattern has been triggered by the introduction of newer motherboards, which gives better performance with larger memory modules. Also the introduction of Windows XP, which requires higher memory (at least 128 MB) for optimum performance, has stimulated the demand shift. The introduction of DDRRAM is another big reason for the price drop of SDRAM.

Currently, DDRRAMs are sold at the same price as that of SDRAMs three months ago. A 128 MB DDRRAM costs Rs 1,800 while a 256 MB costs Rs 3,200. "Even DDR RAM prices have recorded a drop of 10-15 percent over the last few months," says Kishore Jeswani, Director, Pacific Infotech.

Market sources are also cautious about the future, as the growing popularity of and price drops in DDR RAM might replace the usage of SDRAM in due course.

These price drops has had an adverse effect on assembler's margins, which has gone down by Rs 400-700 on custom-made PCs. The price drop has also affected margins earned by resellers and local memory distributors. According to market sources, the margins have shrunk by 20 percent during the past three months.