The end of an era?

What could potentially be one of the biggest stories of the year for the technology industry broke today, as Toshiba signed agreements with Rambus, Inc to pay Rambus royalties on SDRAM and DDR RAM based products. This development has the potential to seriously shake up the memory market. Toshiba has just set a precedent, and basically sold out the rest of the world's memory manufacturers.

Toshiba is basically acknowledging that Rambus holds patents that cover SDRAM and DDR technologies. With this "approval" from Toshiba, Rambus now has additional firepower to use in lawsuits against other memory component manufacturers. If other manufacturers buckle to pressure from Rambus and start paying royalties for all of their SDRAM and DDR RAM technologies, Rambus will have brought the industry to its knees.

Think I'm exaggerating the impact this could have on the industry—and on the consumer, as well? I'm sure some of you out there remember the days when it cost an arm and a leg to have even 16 or 32MB of memory in your computers. Back when video cards only had 512k or maybe 1 or 2MB of memory, and most computers cost more than $1,500 or $2,000. This development could turn back the clock quite a bit.

For those of you who don't know, right now it costs just over $100 for 128MB of PC100 SDRAM and about $150 for 128MB of PC133 SDRAM. That same 128MB would cost you upwards of $700 if it were a Rambus RDRAM module. This type of price discrepancy has made it extremely difficult for Rambus to "sell" its technology to the consumer. However, Rambus's newfound leverage could change all that. Here's a quotation from the Rambus press release:

Under the licensing agreement, the royalty rates for DDR SDRAM and the controllers, which directly interface with DDR SDRAM, are greater than the RDRAM compatible rates. The agreement also includes royalties for SDRAM and for controllers that directly interface with SDRAM, as well as a license fee for the entire agreement.
For every component with SDRAM or DDR SDRAM technology in it that Toshiba sells, it pays a royalty to Rambus—a royalty that's higher than what Toshiba pays on RDRAM-based components. Effectively, Rambus is trying to increase the price it costs to produce SDRAM and DDR SDRAM based components. So the manufacturer has to charge more for the components, and in the end, the consumer has to pay an inflated price for memory.

This is nothing but a ploy by Rambus to try and make their RDRAM technology more widely accepted. Can't sell your product because it costs to damn much to make and there is a competing technology that's cheaper? No problem! Just make all the other companies out there pay you royalties on their products to raise the price, and now your own technology doesn't look as expensive!

These kinds of tactics make me sick. The only people who will benefit from this development are Rambus's (RMBS) stockholders. The rest of us are just left out in the cold, potentially having to pay outrageous prices for tech that currently costs very little.

If these predictions hold true, there goes the entire sub-$1,000 PC market. And if you thought it was a bit steep to have to shell out $300 for the latest and greatest graphics card with 32MB of DDR memory, just wait till these royalties make the memory alone for these cards cost that much.

Have we seen the end of an era in the PC and tech industries? The end of cheap memory? How many different products will this affect if it spreads to the rest of the memory manufacturers? Motherboard prices could go up because of royalties that have to be paid to Rambus for the memory controllers. Portable devices that make use of SDRAM and SDRAM controllers may increase in price. Video card prices may skyrocket, or we may just see the end of 32MB and 64MB cards all together.

I'm begging... No, I'm pleading for the other memory manufacturers to stand up to this. Don't fold to Rambus like Toshiba did. If you do... I don't even want to think of what will happen to the state of the high-tech industry.

Oh, and for those of you who don't know already, earlier this year Rambus filed a lawsuit against Hitachi as well regarding the same supposed patent violations that made Toshiba buckle. I managed to dig up an interesting piece of information from what supposedly is one of Rambus's annual meetings. Check it out here. Here's a quotation:

Rambus and Hitachi signed an agreement in 1992. To date, Hitachi has not produced a single IC supporting Rambus technology, nor have they met a single milestone. They chose to file the lawsuit in Delaware as things move more quickly there, and they expect that if it goes to a jury trial, it will take 12-18 months. The objective of the suit is to gain an injunction against the import, sale, manufacture, and use of Hitachi products that use the Rambus technologies. Specifically, these include Hitachi SDRAM, DDR DRAM, and the SH microprocessor line. They are not planning to let Hitachi just do what they would have done if they had licensed the product. In other words, Rambus is not going to spend $M just to get them to pay royalties - they expect to stop Hitachi from producing these products.
So if Rambus wins this lawsuit against Hitachi, Hitachi may no longer be able to sell its SDRAM and DDR SDRAM based products in the US. Hitachi currently is one of the major DRAM suppliers, if they are removed from the market by force, it will further increase prices on SDRAM and DDR SDRAM technologies. Well, I don't know about the rest of you, but I'm going to go buy another 128MB DIMM right now.
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