Uh-oh! Sony part of DoJ's inquiry into SRAM sales
by Christopher Grant 
{ Oct 31st 2006 at 6:55PM }
It's not just the bloggers, the journalists, the Wall Street suits, and the battery burn victims that are down on Sony these days ... Alberto Gonzalez and the legal eagles down at the Department of Justice have decided to pile on. What are they mad about? Hint: it's not exploding batteries or a hefty price tag.Nope, apparently Sony is part of an industry-wide inquiry into sales of SRAM. According to a Sony spokesman, even though they don't manufacture the SRAM themselves, they sold $27.7 million worth of it in 2005. Sony responded to the inquiry simply, stating, "Sony intends to cooperate fully with the DoJ in what appears to be an industry-wide inquiry." How else could this be ugly? Well, according to Howstuffworks.com, "The [PS3's] SPEs each come loaded with 256 KB SRAM. This high-speed memory helps each SPE crunch numbers quickly."
It's unclear what the inquiry is related to, but the AP reports that, "a separate Justice Department investigation into price-fixing among DRAM companies has so far resulted in more than a dozen charges against individuals and more than $731 million in fines against" various RAM manufacturers. According to the website for a pending class action lawsuit, "several marketers and sellers of SRAM formed a cartel and conspired to reverse the steady decline of SRAM prices that occurred from 1994-97. The conspiracy was successful. Beginning in 1998, SRAM prices increased dramatically and continued to increase through 2001. Even when SRAM prices dipped in 2002, the cartel's conspiracy was still able to keep SRAM prices at an artificially high level. By engaging in its illegal, anti-competitive activity, the cartel caused purchasers of SRAM to pay supra-competitive prices."
Uh-oh.
[Thanks to everyone that sent this in!]
Reader Comments (Page 1 of 1)
Tim @ Oct 31st 2006 6:58PM
I don't see what the actual problem is.
Optimus Prime @ Oct 31st 2006 7:04PM
Before the xbots and wiitards jump on the bandwagon, the market for SRAM in 2005 was $2.8 billion; of which Sony owned about 1%.
http://www.metrics2.com/blog/tech_metrics/semiconductors/
Optimus Prime @ Oct 31st 2006 7:06PM
In other words... Sony was hardly in the position to leverage their 1% share of the market to pull prices up.
ConstyXIV @ Oct 31st 2006 7:14PM
@1:
Because it's an article that shows Sony in a mildly negative light, which is bound to incite inflammatory posts against Sony from the MS Green Berets and Nintendo SWiiT, with the SDF rushing to defend their beloved Sony, and racking up hits for Joystiq, and thus ad revenue.
That's the reasoning.
otakucode @ Oct 31st 2006 7:15PM
I'm not surprised. You can get a 2GB SD card for $20 - $40. So why is a few KB of SRAM so much more? Sure, it's loads faster, but it is the same underlying technology on the semiconductor level. Price fixing is pretty clear.
Now where are the suits against everyone selling LCDs? LCD panels are everywhere. Computer monitors, watches, TVs, and countless other devices all sport LCD panels. Production costs have to be damn near negligible by now. Without price fixing, when something becomes as ubiquitous as LCDs have become, prices drop through the floor. But with LCDs, prices have remained pretty stagnant. Someone is making that happen against market pressures.
nick @ Oct 31st 2006 7:15PM
Yeah, but Sony is a major corporation with a recognizable brand name. Anything they do, even on a small scale, is bound to get noticed and may influence perception.
Psaakyrn @ Oct 31st 2006 7:17PM
Inversely, this could actually be a good thing. IF Sony is found innocent, but the rest guilty, not only would Sony get to "reclaim fees", but the average production cost of a PS3 would go down. Stop being so negative and look on the bright side, eh?
ShockWave @ Oct 31st 2006 7:25PM
Die SONY fucking DIE! , Im gonna kill you all SONY fanboys , youre dead!!
Wii60 FTW!!!!
Scott @ Oct 31st 2006 7:34PM
Shockwave forgot his Adderall this morning
NoHitHair @ Oct 31st 2006 7:36PM
otakucode:
You could throw in CDs and DVDs into that mix as well - the production cost of those 100 spindels are negligible to the manufacturer even with tacked on retailer profit. But that's hardly the point of this article.
Price fixing is illegal because it eliminates the benefit of corporate competition (i.e., competitive pricing). Though us as consumers should've recieved our memory at much lower costs, the main companies producing this conspired to inflate the prices so that they would have incredibly high profit and we're left to wonder why we're paying so much.
Optimus Prime:
You apparantly missed the point as well. Are you implying that Sony is less guilty for price fixing because they didn't make as much money from the deal? If you believe that, there are a bunch of drug mules, fraudulent accountants and getaway drivers that would love to have you as their judge. Fortunately, we live in a moderately just society where even the smallest participation in a crime, if intentional, is still illegal. So get off your high horse.
Joystiq was right to print this. They're a gaming blog, Sony is a gaming company and Sony allegedly committed a fairly severe crime against their customers.
I wonder if I can still find that shirt that said "Suck Fony."
Optimus Prime @ Oct 31st 2006 7:44PM
NoHit...
..so you're saying that when the big boys who own 50+ percent of the SRAM market got together they said:
hey, lets get Sony in on this.. their 1% is gonna really make a big difference in our scheme ..you know, because 1 peeercent is a REALLY REALLY BIG NUMBER ..gosh, i should have stayed in school to learn to count ..
Get real. The entire industry benefited regardless if they participated or not... in the same way that the whole oil industry benefits when OPEC cuts production.
Steve @ Oct 31st 2006 7:59PM
Optimus Prime, Why didn't sony sell their sram for a fraction of the price of the competitors then? If they really weren't part of the problem, they should have sold their ram at a much lower level and cornered the market, or forced their competitors to sell cheaper to compete. But they didn't.
Holden Dapen0r @ Oct 31st 2006 8:07PM
Yeah I get what #3 and #11 are saying:
Sony only owns 1% of the market of SRAM and thus most likely didn't collaborate with the companies that price fixed. They, however, may have just been copying everyone else and setting the same high prices. Sony just likes to go with the flow. They were not in on the conspiracy but became part of it.
Wii for the win, Sony fucked up everything since the PS2
Ibrahim @ Oct 31st 2006 8:21PM
Wow, you people are oversimplifying so much it's scary. SRAM is extremely fast RAM, found in all processors (L1 &L2 caches, some have L3) and it has 6 times as many transistors as regular (DDR) RAM so it costs way more, and that's why you don't see processors with 512MB of SRAM or even 8MB, the most you'll find on consumer grade processors is 2MB per core (Intels) and I'm not sure how much it costs now, but about 3 years ago when Intel first came out with the P4 Extreme the only difference it had was that it had 2MB of L3 cache which raised the price about $200 from a P4 of similar speed. Although now I guess it's much lower, because a lot of the newer Core (2) Duos have 2MB of L2 cache, and I think some might have 2MB per core for 4MB total, although AMD chips still hover around 1MB per core.
Psaakyrn @ Oct 31st 2006 8:23PM
to #14 Holden Dapen0r
Not necessarily true. If Sony was misinformed of the right prices, Sony is not at fault. And Sony did not mess up the PSP that much; Unlike ALL OTHER competitors, Sony at least took a non-negligible share of the market, and is still in the game, so to speak.
Again, stop looking at the bad side. As Optimus said, Sony's only a minor player, and might not even be guilty. And if Sony is innocent, Sony stands to benifit from this mess.
Daniel @ Oct 31st 2006 8:41PM
I don't see how the SRAM in the Cell's SPEs have anything to do with this. It's integrated into the SPE, like a bus controller or cache or a floating point unit, not a separate component in any way. This inquiry is likely more about discrete SRAM chips..
Schpyder @ Oct 31st 2006 8:46PM
otakucode:
What rock have you been living under? LCD prices have dropped like a rock. When I got my 20" widescreen monitor a couple years ago, $600 was a hell of a bargain. Now you can get them for (less than) half that. Simlarly, LCD TVs have come way down in price over the last couple years.
And despite what you might think, TFT LCD panels don't cost next-to-nothing to manufacture, unlike calculator displays, which require nothing in terms of color quality, response time, contrast, or brightness levels.
otakucode @ Oct 31st 2006 9:27PM
NoHitHair: OK, throw in CDs and DVDs. 5 years ago, a spindle of the highest quality blank DVDs would have set me back $3 or $4 per disc. Now I can get them for $.34 each (Taiyo Yuden 100 spindle of 16x DVD-R discs from rima). Sure, if I go to a retail store I pay way more and get absolute rotgut media, but the prices fell precipitously fast in the past 5 years, and blank DVDs only have 2 markets - PCs and set-top boxes. Large corporations don't use DVD-R discs for professional productions, only consumers use them. So why haven't LCDs dropped to 1/10th of their price when they're dominating dozens of markets?
Ibrahim: Actually, the reason chips with a 2MB cache are more expensive has nothing to do with the cost of SRAM, but the market. Processors with large L2 caches are marketed squarely at businesses, it has always been this way. Servers are the only application under which a large L2 cache is beneficial. Because of the way L2 cache works on a processor, too much of it can seriously degrade performance in general use. If the processor is running things which can be very easily cached and used over and over again (like the HTTP transfer functions in a web server or bits of query execution code in a database server) then performance goes up a great deal. If, on the other hand, you're tooling around in Windows, your L2 cache doesn't do much good. Switching from one application to another (not when you do it but when the OS does) entails blowing out the cache for one thread and loading it up for another. This can get expensive if the cache is large and thread changes are extremely common, as they are for general users. ANYTHING targetted at businesses gets an enormous price hike, no matter what the quality of the product it.
Schpyder: Yes, LCD panel prices HAVE fallen. But they've not fallen nearly as greatly as their demand has risen. LCD panels are taking over the computer monitor market from CRTs. They are making huge inroads into the television market. They're being used in notebooks everywhere. They're in cell phones in everyones pocket. They're in portable gaming devices that sell millions of units. LCD is absolutely dominating dozens of markets. The way LCDs are manufactured, they make a very large panel and then split it up for the purpose, so they might get 50 PSP screens and 10 cell phone screens out of a single big panel. The demands for panels is astonishing, and there are many manufacturers of panels.
Jason @ Nov 1st 2006 12:14AM
Didn't Samsung get busted for RAM price fixing as well, or is this a different investigation?
Ritz @ Nov 1st 2006 12:48AM
There is a reason for the huge cost for LCD panels. They are incredibly complex to make, or at least get so once you start dealing with 30"+ color screens, and even less than that. And the parts are general expensive. You know why manufactures don't want to cover > 6 dead pixels under warranty? Because they already throw out a huge portion of screens they make because the screen quality just isn't there. They still need to make money off of the faulty screens, so part of the cost is passed onto working devices. The demand is huge for LCDs regardless due to how nice they look, when they work. But they are just very expensive to make. =(
Leto @ Nov 1st 2006 2:09AM
The PS3 has nothing to do with this, by selling the PS3 they are selling a PS3, not sram. The fact that the PS3 has sram has nothing to do with the inquiry.
Copperhead @ Nov 1st 2006 6:28AM
I think it's amusing anyone is surprised or outraged by price fixing 'scandals' anymore.
They all do it, most of the time.
Not that it's bad to see Sony take it on the chin again, I was looking forward to the PS3 till they cocked it up whoring their Blu-Ray junk.
Martin @ Nov 1st 2006 7:24AM
And you all don't see how Sony has started doing this to console prices too? Since Sony came about... Mass produced console prices have been on the rise! This even caused retailers to have Nintendo raise the price of the Wii to $249.99 instead of the usual $199.99.
> @ Nov 1st 2006 8:56AM
Looks like joystiq jazzed up the story when there was none (see picture)?
mrfreezie @ Nov 1st 2006 9:12AM
@ 2
"Xbots...Wiitards."
Ha, that was clever..(end sarcasm)
About as clever as PS3= Piece of Sh** .... 3! $599
Sony fanboys are in full force today, I think that alone proves that even they think that Sony is dying a cruel death.
crono141 @ Nov 1st 2006 9:37AM
"Schpyder: Yes, LCD panel prices HAVE fallen. But they've not fallen nearly as greatly as their demand has risen"
Don't keep up with the news much have you? LCD prices have fallen as much as they have because LCD makers have super-saturated the market with them, outstripping demand. They have to lower the prices to get them off the shelves, or face huge losses.
lothar @ Nov 1st 2006 9:44AM
I cant see the US Department of Justice going after Sony for only having a 1% stake in this. There has to be something else going on with this that we dont know about.
Too bad the DoJ wont use the same legal tactics that Sony used against Lik-Sang. Who knows it might be Karma that this is happening to Sony.
SuicideNinja @ Nov 1st 2006 11:47AM
"Price fixing is illegal because it eliminates the benefit of corporate competition (i.e., competitive pricing)."
At least someone knows what they are talking about.
Um, hey Sony Defense force guys/gals (read fanboys/girls). Sony gets bad news because they deserve it. Bias has nothing to do with it. They make undeniably poor choices, as most large corporations tend to do.
When Microsoft pulls equally bad things with the PC world, they get just as much slack, so stop feeling like your precious Sony is being soley "fingered" all the time.
Truth is, Sony is handling their side of the industry that's important to us the most poorly. If you don't like the negative news, pick a different brand, or just accept that it comes with the territory (the latter is in your best interest). Nintendo and Microsoft will have (and have had) plenty of bad news of their own over the years. All these corporations will play musical chairs with the hotseats of "who's the bad guy this day/week/year/decade".
m3mnoch @ Nov 1st 2006 12:16PM
"The PS3 has nothing to do with this, by selling the PS3 they are selling a PS3, not sram. The fact that the PS3 has sram has nothing to do with the inquiry."
so, the question that begs answering, seeing as sram is SOOOOOOOO damned expensive, how much did sony pay for the sram in the millions of ps3's they plan on making? remember that cell processor guys? remember how it's "the shizz?" remember how there's 2 mb of sram on each board?
is that $200 worth of sram what's bloating the price of the ps3? or, is sony getting a killer "collusion" deal on it?
for the sony defense force:
does the ps3 actually cost sony more than current estimates because of the sram and thus are taking a bigger loss than any of us think on each console?
OR
is sony part of a cartel because they got the sram for below market prices?
...pick one.
m3mnoch.
trackde @ Nov 1st 2006 1:23PM
It's sad to see Sony Fanboys in this thread. Let me break it down for you. Big companies when they almost always join a cartel. Nintendo did that in the 90s. Sony is doing it today. It's bad for us. ALL OF US!
SRAM (Don't confuse it with the other one we are talking about Static not SDRAM) is much faster then DRAM. Which is why Nintendo is using a Variant of it. Because it offers good good speed. The kind that is needed for gaming.
You don't NEED to have 10%,50% or 100% of a market share to join a cartel. What you need is to join with other companies (unless you have 100% market then you can do it your self). You pressure the SRAM manufacturers to sell it higher. If not you don't do business with them.
This kind of shady tactics isn't new. Intel has been doing it for Years to stop companies from using AMD CPUs.
I'm glad that Sony has been prosucted for this. After breaking the RAM cartel I hope the DoJ leaves innocent muslims alone enough to stop other cartels that are making our lives more expensive.
Btw about LCD. There has been 730 patents for low cost LCD in Korea alone. The applications each years rises. I'm hoping to see a price reduction of HD Panels.