Hi Hal,
Rambus will be in all those markets where a very high speed memory-to-chip interface is required. The problem is that all those markets put together, for at least the next few years, are small compared to the PC memory market.
MileHigh: The market will determine the price of DRDRAM, and therein lies the Rambus dilemma: if it is priced too high relative to other RAM, nobody will buy it; if it is priced competitively with other RAM, the royalties will be diminished.
I had been predicating my bullishness on Rambus on the statements by analysts (which can be found on this thread) about the expected size, in dollars, of the DRAM market in the year 2001. Rambus should have a very sizable share of that market by then. Calculate some conservative royalty numbers, and you could see a share price for Rambus between $80 - $200, perhaps more.
The problem is, the DRAM market, in dollars, continues to shrink. And I just don't see the DRAM market coming even close to those rosy predictions. Prices keep falling; by the end of this year, you will probably be able to put 64MB of SDRAM in a system for about $30. Anyone who thinks that DRDRAM can set it's own price, because of it's superior performance, and does not have to compete with this, is fooling themselves.
Perhaps H&Q has come to this conclusion with their earnings revision. (Interesting that they have reiterated their buy recommendation while revising estimates down; I have not researched these things on my own, just read them off the thread. Are they both true?)
You asked what kind of breakthrough Rambus could come up with to overcome this. I don't see it as a technology issue, at least from the Rambus standpoint. What Rambus needs is some stimulus that will cause people and companies to consume, in dollars, much more DRAM than they are consuming now. Some application area that is very crude now, like Virtual Reality, that will make a quantum leap with Intel's new processors and lots of DRDRAM; more internet bandwidth would certainly open up some doors to new applications needing more horsepower; video on demand, interactive TV, etc.
I just don't see the next memory hungry mass market application popping up very soon. But they always come along eventually.
Tom |
