Rambus Claims It Was Price-Fixing Target

conq writes "BusinessWeek reports on the latest developments in the Rambus/Micron saga over pricefixing." From the article: "One e-mail, dated June 5, 2001, from Micron Vice-President Linda Turner to other Micron employees was in response to worries about prices on DDR-DRAM that had been falling. 'No problem!,' Turner wrote. 'We want DDR to explode in the marketplace so have actually been requesting Infineon, Samsung, and Hynix to lower their DDR pricing to help it become a standard (and drive Rambus away completely).'"

Or more likely...

[LordKazan]

... it was the fact that Rambus is SHIT

"PC800 RDRAM, which operated at 800 MHz and delivered 1600 MB/s of bandwidth over a 16 bit bus using a 184 pin RIMM form factor"

"Compared to other current standards, Rambus shows significantly increased latency, heat output, manufacturing complexity, and cost.[citation needed] PC800 RDRAM operated with a latency of 45ns, compared to only 7.5ns for PC133 SDRAM."

then squashed by

"DDR SDRAM, introduced in 2000, operated at an effective clockspeed of 266 MHz and delivered 2100 MB/s over a 64-bit bus using a 184 pin DIMM form factor."

not to mention needing CRIMMS or whatever they called the terminators

http://en.wikipedia.org/wiki/RDRAM [wikipedia.org]
http://en.wikipedia.org/wiki/DDR_SDRAM [wikipedia.org]

Re:Where's the problem?

[MeanMF]

"Dumping" is illegal.. That's when you sell something at an artificially low price for a period of time in order to gain market share or drive a competitor out of business.

Re:Where's the problem?

[nickname225]

I am a lawyer - although antitrust is not my area of practice. The general rule is that any sort of collusion between nominal competitors is illegal. So- it doesn't matter if they are colluding to raise the price - or to lower it. Competitors can't coordinate their pricing.

Re:Price fixing...technically?

[nickname225]

I am a lawyer - and yes you are wrong. Colluding with a nominal competitor to lower prices to force a 3rd competitor out of business or to drop a product line is anti-competitive, both legally and actually. The concern is that once the colluding parties have succeeded in driving the competitor out of the market - they can divide it up between them and price as they please. Like many laws - some portions of the antitrust laws are designed to avoid the creation of potentially abusive situations. So while on the surface colluding to lower prices seems like a public good - in fact it is potentially a large public evil. This was a tactic used to great effect by John D. Rockefeller - Standard Oil would open a gas station across the street from an independent station - and lower prices untilt he other station went out of business and then raise prices. This sourt of actual abuse shows the logic behind the antitrust laws.

Re:Rambus was overpriced and underperformed.

[MrAnnoyanceToYou]

I remember that fight as well. In fact, I remember asking in an interview at Intel when I'd be able to get a motherboard with normal DDR instead of Rambus crud. (yes, I was young and stupid)

In reality, I think the entire fiasco which involved Rambus giving Intel a huge chunk of stock and Intel not producing (for a while) a chipset which worked with normal DDR SDRAM hurt Intel tremendously in the end. There's no way AMD would have gotten a foothold in a market where you didn't have to pay almost double for RAM that was not as good. I know I put off building a new computer for an extra two or three years because I didn't trust AMD quality at the time (probably wrongly) and I didn't want to pay for the huge extra cost of Rambus RAM.

The whole thing seems to me to imply price fixing towards the high direction instead of the low - seeing as at the time Intel had a pretty solid lock on the Windows market. Tom's Hardware gave AMD a great shot at breaking into that, I guess...

I wonder how much they paid for that.

Re:Collusion Not Always An Antirust Violation

[NutscrapeSucks]

why a government entity is the one who generally prosecutes antitrust cases "for the people"

Dude, the government did procecute them, and the RAM companies have already admitted guilt in price-fixing. This story is filled with very ignorant commenters.

http://arstechnica.com/news.ars/post/20051013-5429 .html [arstechnica.com]
http://arstechnica.com/news.ars/post/20040915-4189 .html [arstechnica.com]

Re:Price fixing...technically?

[jambarama]

IANAL but this isn't exclusively lawywer territory - I'm an economist and this is bogus.

First - what they are claiming isn't price fixing, it is predatory pricing. And this isn't what Standard Oil did. Standard oil bought out competitors, their lower prices were the effect of huge economies of scale - NOT predatory pricing. There are dozens of books on this.

Second - predatory pricing is a myth. The conditions requisite for predatory pricing to work are so stringent it is silly to beleive it exists in any but the most extreme circumstances. First you must be able to lower prices long enough to bankrupt your competitors while not going bankrupt yourself. Then you need to be able to raise the price high enough to cover - your losses and opportunity costs - all while keeping new competitors out and old competitors from re-entering. There are other conditions too, but these two alone are enough to disqualify 99% of the cases.

Third - if they did predatorily price to get rid of rambus - where are the super high prices that these evil price cutting companies would have to charge to recoup losses? Ram is cheaper than ever. Besides, why couldn't the 4 or 5 other ram producers undercut these two conspiring firms?

Fourth - when a business is stupid enough to try predatory pricing we shouldn't care. What we should care about is the barriers to entry that inhibit competition to such a degree that these businesses can charge artificially high costs in the future.

Predatory pricing is laughed out of court nowadays - it is almost ALWAYS an issue of lower costs not predatory pricing - which is why Rambus is calling this "price fixing."

Re:Collusion and rights

[Anonymous Coward]

Of course Rambus' patent validity has survived court cases - that's why they hid their patents from the DDR-DRAM group while nevertheless sharing their patented technology with the group to use in DDR-DRAM designs.

Rambus had a damn good clue that RDRAM would never take off, so they made sure this ace in the hole was available so they'd still have cashflow, courtesy of DDR manufacturers, if DDR took off.

Rambus isn't owed crap from the DDR manufacturers. Rambus shared their patented technology with the group even after stipulating that they weren't patented. Every last Rambus employee who was involved in their DDR group machinations needs to be taken out to a field and bitch-slapped. Repeatedly.

Re:Collusion and rights

[Just Some Guy]

Then just a short while later, really expensive DDR SDRAM with data rates in multiple gigabits per second hits the market and we've been paying for memory in a new higher price range than the old pre-RDRAM high price range ever since.

Correct - sort of. There was a temporary glut of RAM as fabs came online and started churning like made, but when a third of them went offline simultaneously (fire? earthquake? I forget) prices spiked immediately. There weren't any more parts in the pipeline to feed those empty sockets that people just learned how to fill.

RDRAM had a lot of technical problems with it.

Chief among them was that its performance sucked, and sucked hard. It was very good at streaming a huge contiguous block to the processor, but beyond horrible at switching to another block. Imagine a CPU that was excellent at applying a single operation to a large chunk of memory but awful at everything else. Voila! You've invented P4+RDRAM!

I can imagine applications where it would've rocked, like encoding video using an instruction block small enough to fit entirely in cache so that the only memory fetches were to the input data. You definitely wouldn't have wanted to run a busy multipurpose server off it, though.

Rambus developed DDR and holds the patent on it, among other things that have shown up in modern commodity RAM.

That's also partially true, and the reason that everyone in the know hates Rambus. They took part in the DDR development process, but lied to JEDEC by "forgetting" to mention that the methods they were proposing as part of that process were already patented - by them. Had they mentioned that minor fact, modern DDR would've had a different design, but one that was less convenient for Rambus's patent portfolio.