USB flash drive prices falling -- and poised to go even lower

NAND flash production has ramped up, and 128GB USB flash drives have become the cheapest alternative for flash storage

If you decided to save the money and go for the smaller 64GB solid-state drive on that new tablet, anticipating that USB memory prices were headed south, you made a very good decision. Brand-name 128GB USB flash drives are now priced at $85, and they seem poised to go lower.

You can buy a Surface Pro with a 128GB SSD for $999 (plus the cover). Or you can buy a Surface Pro with a 64GB SSD and stick another 128GB of memory in your (only) USB slot -- a total of 192GB of storage -- for a grand total of $985.

Consider the fate of the ubiquitous SanDisk Cruzer Glide 128GB USB 2.0 drive -- not fast, but huge. It launched last June at a (perhaps fanciful) price of $170. Staples ran a year-end very-limited-time special at $51, then raised the price back up to $130. NewEgg dropped the price to $99.50 about a month ago, and it's staying there. Amazon lowered the price to $85 a few weeks ago. Tiger Direct lists it at $109. Lesser-known retailers go as low as $77.

Then there's the roughly analogous Kingston Data Traveler 128GB USB 2.0 drive. Part of the venerable DT-101 series, NewEgg has listed it at $100 for the past month. Amazon just nudged it up from $83 to $85 today (no doubt somebody noticed the price of the SanDisk); Tiger Direct has it at $85 as well.

That works out to 66 cents per gigabyte -- roughly the same price-per-gigabyte as 64GB USB drives and cheaper than 32GB drives. All of a sudden, 128GB USB flash drives have become the cheapest alternative for flash storage.

What's happening? While the market for DRAM has slowed, demand for NAND flash memory continues to increase at a heady rate.

As demand for DRAM slows, production of DRAM is also declining -- faster. The average wholesale price of DRAM increased 13 percent between January 2012 and January 2013. Agam Shah at IDG News puts it this way:

[DRAM m]emory makers have been spending less on capital equipment and the output of memory has declined to meet the slowdown in demand. As the market adjusts, it is likely that supply will fall to the point where demand is higher, resulting in price stabilization.

The situation in the NAND flash market is just the opposite:

[T]he price for nonvolatile NAND flash memory is expected to fall... The NAND flash supply currently exceeds demand, but the growing markets for smartphones and tablets could change that. So, manufacturers are ramping up on NAND flash to keep up with demand.

As manufacturers ramp up NAND flash production, the price goes down. 

Unlike DRAM prices, I don't see USB flash drive prices going up any time soon. Patience should be rewarded, if you can stand to wait.

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