PC buyers finally start seeing memory price breaks

Summary:PC makers have been getting breaks on DRAM pricing but buyers haven't seen much of break. Apparently that state of affairs is changing.

PC makers have been getting breaks on DRAM pricing but buyers haven't seen much of break. Apparently that state of affairs is changing.

Cheaper memory prices have been noted for weeks. Apple said memory and other components were cheaper on its earnings conference call. Other manufacturers have seen the same dynamic. However, few of them have passed lower prices onto consumers.

Slowly but surely the pricing log jam appears to be breaking.

In a research note, A.G. Edwards analyst David Wong said that Dell and HP have both dropped the incremental price for a 1GB upgrade in a new PC by $20 to $30 over the last 10 days (Reviews: desktops and notebooks).

Wong wrote:

As we have noted previously, while DRAM pricing has fallen over the past several months, the price of DRAM to the PC buyer has remained unchanged. This appears to be correcting itself, as both Dell and HP appear to have lowered pricing for DRAM to the PC buyer.

The big question: Why now? Since September 2006, DRAM price per gigabyte remained unchanged at about $120 while the contract price from memory makers has fallen from $100 to $40, said Wong.

The PC pricing developments indicate two things. First, PC vendors may need to stimulate memory upgrades. Second, a lot of PC makers were saddled with DRAM inventory purchased when it was more expensive.

Wong said it's likely that PC vendors loaded up on DRAM inventory ahead of the Vista launch. If Wong's theory is right PC makers are just now working off that excess inventory. The good news: PC memory prices are about to get cheaper.

Your move: Put off buying a PC to save a few bucks. The risk is that too many people put off buying a PC and what DRAM that's left in the channel doesn't get worked off.

"Even with prices coming down for DRAM to the PC buyer, prices still remain rather higher, and we suspect may continue to have a dampening effect on purchases by PC buyers excited about Vista," said Wong. "We continue to believe that pricing for DRAM to the PC buyer remains too high. We expect DRAM pricing to the PC buyer will continue to fall in the future."

A few other observations from Wong:

  • HP has apparently lowered DRAM prices first on its value desktops.
  • Dell has dropped DRAM pricing across its products line.
  • A drop in DRAM prices could stimulate PC demand.
  • Falling DRAM prices will impact desktop demand the most. Notebook PC buyers are less price sensitive. 

Topics: Hardware

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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