| 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.
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."
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
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.
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.
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:
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.
Here is my response.
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
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.