Quick Take: Q1 DRAM Price Follow-up, 8GB DDR3 Below Target

In September 2009 we predicted that average 8GB DIMM prices (DDR2 and DDR3) would reach $565/stick by year end (with DDR3 being higher than DDR2) and at now we're seeing the reversal of fortunes for DDR2. At year end, the average price for benchmark DDR2/DDR3 was $591 retail, with promotional pricing pushing that below$550 as predicted. Today, we're seeing DDR3 begin to overtake DDR2 in the 8GB ECC category, dropping below $510/stick, while DDR2 climbs to $550/stick (promotional, on $625/stick retail.)

In 4GB ECC configurations, DDR2 enjoys only a slight retail advantage (13%) while promotional pricing (likely due to inventory reduction initiatives) are providing a bit better value short term. However, the price gap is only 1/2 the power gap, with DDR3 delivering a greater than 35% reduction in power over its DDR2 equivalent (about $1.25/year/stick at $0.10/kWh). The honeymoon is almost over for DDR2.

Benchmark Server (Spot) Memory Pricing - Dual Rank DDR2 Only
DDR2 Reg. ECC Series (1.8V)	Price Jun '09	Price Sep '09	Price Dec '09	Price Mar '10
KVR800D2D4P6/4G 4GB 800MHz DDR2 ECC Reg with Parity CL6 DIMM Dual Rank, x4 (5.400W operating)	$100.00	$117.00 up 17%	$140.70 up 23% promo	$128.90 ($151 retail)
KVR667D2D4P5/4G 4GB 667MHz DDR2 ECC Reg with Parity CL5 DIMM Dual Rank, x4 (5.940W operating)	$80.00	$103.00 up 29%	$97.99 down 5%	$128.74 ($149 retail)
KVR667D2D4P5/8G 8GB 667MHz DDR2 ECC Reg with Parity CL5 DIMM Dual Rank, x4 (7.236W operating)	$396.00	$433.00	$433.00 (promo)	$550.00 (Promo price, retail $625)

Benchmark Server (Spot) Memory Pricing - Dual Rank DDR3 Only
DDR3 Reg. ECC Series (1.5V)	Price Jun '09	Price Sep '09	Price Dec '09	Price Mar '10
KVR1333D3D4R9S/4G 4GB 1333MHz DDR3 ECC Reg w/Parity CL9 DIMM Dual Rank, x4 w/Therm Sen (3.960W operating)	$138.00	$151.00 up 10%	$135.99 down 10%	$150.74 ($170 retail)
KVR1066D3D4R7S/4G 4GB 1066MHz DDR3 ECC Reg w/Parity CL7 DIMM Dual Rank, x4 w/Therm Sen (5.085W operating)	$132.00	$151.00 up 15%	$137.59 down 9% (promo)	$150.74 ($170 retail)
KVR1066D3D4R7S/8G 8GB 1066MHz DDR3 ECC Reg w/Parity CL7 DIMM Dual Rank, x4 w/Therm Sen (4.110W operating)	$1035.00	$917.00 down 11.5%	$667.00 down 28%	$506.59 (retail $584, avail. 3/15)
KVR1333D3D4R9S/8GHA 8GB 1333MHz DDR3 ECC Reg CL9 DIMM 2R x4 w/TS Server Hynix A (4.635W operating)				$584.00

SOLORI's Take: With strong DDR3 demand and short-falls in DDR2 supply (according to DRAMeXchange), the only thing keeping DDR3 prices above DDR2 at this point is demand and inventory. As Q2/2010 introduces a rush of new workstation and server products based on DDR3 systems, the DRAM production ramp will eventually stabilize demand somewhere towards the end of Q3/2010. Meanwhile, technology companies like VMware, Microsoft, Intel and AMD are betting on new infrastructure spending on operating systems, virtualization and hardware refresh to drive-up economic market factors. If the global economic crisis deepens, this anticipated spending spree could be short-lived and its impact shallow.

Quick Take: DRAM Price Follow-Up

As anticipated, global DRAM prices have continued their upward trend through September, 2009. We reported on August 4, 2009 about the DDR3 and DDR2 price increases that - coupled with a short-fall in DDR3 production - have caused a temporary shift of the consumer market towards DDR2-based designs.

Last week, the Inquirer also reported that DRAM prices were on the rise and that the trend will result in parity between DDR2 and DDR3 prices. MaximumPC ran the Inquirer's story urging its readers to buy now as the tide rises on both fronts. DRAMeXchange is reporting a significant revenue gain to the major players in the DRAM market as a result of this well orchestrated ballet of supply and demand. The net result for consumers is higher prices across the board as the DDR2/DDR3 production cross-over point is reached.

SOLORI's Take: DDR2 is a fading bargain in the server markets, and DIMM vendors like Kingston are working to maintain a stable source of DDR2 components through the end of 2009. While still Looking at our benchmark tracking components, we project 8GB DIMMs to average $565/DIMM by the end of 2009. In the new year, expect 8GB/DDR2 to hit $600/DIMM by the end of H2/2010 with lower pricing on 8GB/DDR3-1066 - in the $500/DIMM range (if supply can keep up with new system demands created by continued growth in the virtualization market.)

Benchmark Server Memory Pricing
DDR2 Series (1.8V)	Price Jun '09	Price Sep '09	DDR3 Series (1.5V)	Price Jun '09	Price Sep '09
4GB 800MHz DDR2 ECC Reg with Parity CL6 DIMM Dual Rank, x4 (5.4W)	$100.00	$117.00 up 17%	4GB 1333MHz DDR3 ECC Reg w/Parity CL9 DIMM Dual Rank, x4 w/Therm Sen (3.96W)	$138.00	$151.00 up 10%
4GB 667MHz DDR2 ECC Reg with Parity CL5 DIMM Dual Rank, x4 (5.94W)	$80.00	$103.00 up 29%	4GB 1066MHz DDR3 ECC Reg w/Parity CL7 DIMM Dual Rank, x4 w/Therm Sen (5.09W)	$132.00	$151.00 up 15%
8GB 667MHz DDR2 ECC Reg with Parity CL5 DIMM Dual Rank, x4 (7.236W)	$396.00	$433.00 up 9%	8GB 1066MHz DDR3 ECC Reg w/Parity CL7 DIMM Dual Rank, x4 w/Therm Sen (6.36W)	$1035.00	$917.00 down 11.5%

SOLORI's 2nd Take: Samsung has been driving the DRAM roller coaster in an effort to dominate the market. With Samsung's 40-nm 2Gb DRAM production ramping by year end, the chip maker's infulence could create a disruptive position in the PC and server markets by driving 8GB/DDR3 prices into the sub-$250/DIMM range by 2H/2010. Meanwhile Hynix, the #2 market leader, chases with 40-nm 1Gb DDR3 giving Samsung the opportunity to repeat its 2008/2009 gambit in 2010 making it increasingly harder for competitors to get a foot-hold in the DDR3 market.

Samsung has their eye on the future with 16GB and 32GB DIMMs already exhibited with 50-nm 2Gb parts claiming a 20% power savings over the current line of memory. With 40-nm 2Gb parts, Samsung is claiming up to 30% additional power savings. To put this into perspective, eight 32GB DIMMs would could about 60% of the power consumed by 32 8GB DIMMs (requiring a 4P+ server). In a virtualization context, this is enough memory to enable 100 virtual machines with 2.5GB of memory each without over subscription. Realistically, we expect to see 16GB DDR3 DIMMs at $1,200/DIMM by 2H/2010 - if everything goes according to plan.