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Rambus Attempts to Corner the Memory Market Dr. John
  The decision yesterday by Toshiba Inc. to voluntarily pay Rambus Inc. royalties on all SDRAM, DDR-DRAM and synchronous memory controllers has the PC industry in turmoil. You can check out several articles on the topic below.

Related Links: 
The Register
The Tech Report
EBN
Rambus 

   The reason it's such a big deal is that Rambus has claimed that all current synchronous memory and memory controller technologies have been patented by them.  Here is a quote yesterday from Rambus: "Our patents are pretty fundamental," said Rambus chief executive, Geoff Tate, during a press conference Friday to announce Rambus' next-generation memory interface technology for the consumer market. "I think it's likely to say that most companies will violate these patents." 

  That's a mouthful. The chief executive of Rambus claiming with glee that they believe they hold patents covering every form of synchronous memory, as well as the controllers for it.  This makes Microsoft's attempts to leverage greater and greater control over operating systems and browsers look like small potatoes. 

  Further, one of Rambus' ongoing lawsuits will attempt to block Hitachi from importing any of it's synchronous memory or memory controller products.  On the face of it, I would say that Rambus hopes to drive SDRAM and DDR-DRAM (double data rate) prices much higher, by limiting supply, and charging royalties to the remaining manufacturers that can import these products. In fact, they will be charging higher royalties on products they didn't design, than on ones they did, which also supports the contention that this is a market-cornering move. Considering that the competing product made by Rambus, Direct Rambus DRAM, costs 5 times more than comparable SDRAM products, it does appear to be a devious way to improve poor sales figures.  I have said it before, but it bears repeating.  Since their inception, Rambus has tried to do with lawyers what they could not do with their engineers; make a better, more affordable product.  

  Hitachi has counter sued, claiming that Rambus Inc. is attempting to corner the memory market, which is a violation of the Sherman Antitrust Act.  You can check out the entire Sherman Act here, but this quote sums it up nicely:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

  Hope Rambus read it more carefully than Microsoft, because that is exactly what they are doing.  But that $10,00,000 fine needs to be raised to account for the size of companies like Microsoft.  I sincerely hope that the Department of Justice is not too busy now to look into this.  I've never seen a better example of an attempted cornering of a modern market. 

  Here is an email I received yesterday in response to my original post on the subject.


John,
 
A comment on your article Rambus Inc: Making Friends in the Memory Industry:
 
Royalties are not a substantial portion of the cost of an RDRAM module and will not add significantly to the cost of DDR if Rambus is successful in enforcing its IP patents.  Last quarter Rambus collected $3.5 million in royalties  (Source: Q1 SEC filing).  Approximately 7 million 128 M-bit RDRAMs shipped first quarter (Source: http://www.eetimes.com/story/chipwire/OEG20000217S0025), or the equivalent of 0.875 million 128MByte RIMMS.  This suggests a payment to Rambus of $4.00 per 128MB RIMM.
 
It's a free market.  If the royalties are too high then some other company will develop a new technology and market it.  Without patent enforcement R&D would be stifled.  Rambus deserves to be compensated for the risk and cost of developing new technology.  Mass production will soon bring the cost of RDRAM closer to that of SDRAM.
 
Ron.

Here is my response.

Hi Ron,
 
  Thanks for the input. I appreciate you taking the time. It will be interesting to see if Rambus can reach the cost-of-production levels that SDRAM enjoys.  Rambus has always argued it's pricing was based on supply and demand in "a free market"... at phrase which you used.  I do not think that is the case, except in the sense that low yields (800MHz), and a difficult manufacturing retool kept supply low... even relative to a fairly low demand.  If it were not for companies like Dell, which have been loyal Intel-only distributors, Rambus would have sold even fewer parts.
 
  Rambus memory has a poor reputation, especially in the enthusiast PC market, because the price differential did not reflect the performance gain, by a long shot.  This leads to customer resentment... it's just human nature.  If Rambus offered drastic performance boosts, they could have justified the rarified prices.  But the benchmarks militate against that view.  The bottom line is that consumers who have followed the situation have lost confidence in Rambus.  This could be reversed if prices dropped dramatically, and future processors such as Willamette truly benefit from the inclusion of dual-channel Direct Rambus DRAM.  But if it costs $1000 or more to put 256MBs in the system, it will still cause resentment.  Fair compensation for intellectual property is one thing, but if Rambus yields are not low, then the high prices must reflect gouging on the part of someone in the production/supply chain. I know that the royalties are not the main reason for the high cost, but something is keeping the prices awful high. If DDR DRAM-based "Sledgehammer" systems from AMD perform as well as Willamette/Rambus systems, with much lower cost memory, it will confirm that Rambus is not a superior technology (price always figures into how "viable" a technology is).
 
  Indeed, if it turns out that DDR DRAM performs as well, but we are denied it at a low cost because Rambus has patents, and is trying to push a more expensive memory platform, then I think Rambus is doing the public a great disservice.  Part of making computing more accessible, and less onerous on the pocketbook, is reducing the cost, not increasing it.
 
  I'll admit I have fairly strong feelings about Rambus DRAM, but they are based on factual grounds, not bias.  I have a very open mind to good data, so if you know something I don't, I'd love to hear it.
 
   John M. ("Dr. John")
   KickAss Gear

Nuff said.

 

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