After watching its profit margins shrink to wafer-thin proportions, US memory maker OCZ has announced plans to abandon the budget memory market. The company says it's now only going to focus on enthusiast memory modules and solid state drives.
But hold on, doesn't budget memory account for most of the sales of RAM modules? Yep. In fact, OCZ reckons standard-speed value DIMMs represent around 70 per cent of its overall DRAM module revenue.
However, it looks as though cost-conscious customers aren't willing to pay the extra money for budget memory when the price of DRAM goes up. OCZ says its revenue from budget modules over the last six quarters has operated with average gross margins of less than three per cent.
Basically, OCZ might be selling a lot of budget modules, but the profit margins are so slim that it might as well not bother.
Action to discontinue the cheap RAM starts immediately, with products being taken off the production lines during the second and third fiscal quarters, which end in August and November 2010 respectively.
The company says it's now going to focus on its solid state drive business, as well as the premium memory market that made the company famous in the first place.
"Our R&D driven SSD business is performing well and is anticipated to be the majority of our revenue going forward," explained OCZ's CEO Ryan Peterson. He also said that while the enthusiast memory segment is "limited," it's also a "more profitable market in which we have traditionally excelled."