In a meeting with Kingston this morning, the company explained that despite the fact the PC industry is not growing as fast as markets like HDTVs or smartphones, it still has a positive outlook for the future.
Kingston sells memory for PCs and notebooks, but you don’t buy memory upgrades for TVs and smartphones, although Kingston is seeing an increase in demand for memory cards – which mobile devices like tablets and smartphones do use.
On the topic of global memory capacity decreasing, Kingston let slip that Elpida’s Japanese plant has switched 100% from providing PC hardware to solely concentrating on low power mobile phone DRAM in just 12 months.
Capacity is actually going down for PC market, pushing prices even higher.
Kingston claims this is better for the firm as users buy more expensive products – even if the company pays more for the DRAM chips it makes more respective margin as the price goes up and some demands always remains as “everyone needs to upgrade”.
Laptops are now shipping with 2GB instead of 4GB because laptop makers need to hit a price-point, so Kingston also benefits from the after-market upgraders as 4GB of memory has become the norm for many.
Kingston said that business budgets are a lot higher and the cost of memory is less in respect to the whole system, so its “total server memory sales unit shipments by May 30th is already equal to the total of last year”. Nice!
So even if people are buying sealed tablets or phones, people still need to connect them to Cloud services which require servers: these have more memory slots than any PC system so demand will continue to grow.
While with light hearted intent, Kingston’s co-founder David Sun laid into other memory manufacturers, claiming “How can you make a bad module? There’s no engineering behind it. If you build a bad memory module you should be out of the business. All you do is solder memory to a PCB then sell it.”
Passionate words indeed, but he knows what he’s talking about: it’s a technique that started Kingston in David’s home back in 1987, where he employed his own son to hand-solder memory chips to SIMM modules for 50 cents a stick.
He then hand delivered them to his customers at a 200% profit margin, claiming even 10 years later in 1997 when it was “only 30-35% profit margin” that the memory manufacturing was still the “best kept secret in the industry”. “We had a monopoly because nobody else cared about DRAM”.
In his own words he and co-founder John Tu were just lucky. It must be nice to be at the right place in the right time!
Kingston is confident about its future
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