Promotional USB Outlook – prices to increase through 2010
Johan Ellingsen of USB Company has sent us this insight in to pricing for USB memory sticks.
Those of you who regularly purchase USB memory sticks should be familiar with fluctuating prices. During 2007 and 2008 the price for USB's was relatively cheap due to a good exchange rate for the dollar and over-supply of flash memory. Today the prices are going up due to a weak pound and undersupply of flash memory in the market.
The main reason is that flash producers invested heavily in production facilities during 2006-07 which resulted in overcapacity and forced them to sell flash memory at prices below production cost to pay off their investment in production facilities.
This has made them scared to invest in more equipment and now with increased demand the prices have escalated as the supply is lower than demand. This year alone the industry has grown by 100%, even in recession, due to increased demand for flash content in devices such as SSD (solid state hard drives) and mobile phones.
It’s expected that the price will stabilise during 2010 and we also have new technology such as TLC (triple level cell) and 4LC which is aimed at the more low-tech devices, so hopefully the manufacturers will be able to offer this for the promotional market at a more attractive price. There is no word on when these might be available as yet.
Also we see that the higher capacity drives are not as affected by the price rise as the low capacity ones but of course the promotional market is very cost conscious. On the other hand we see that higher capacity becomes more mainstream and that clients are willing to pay more for 2GB and upwards.
So, to those of you in the market for branded USB memory sticks it might be wise to get your orders in sooner rather than later. For the resellers, it’s important to warn clients of price fluctuations so they are prepared.
On the upside, this is something that affects everyone in the market so the competition will struggle with the same problems of rising purchase costs.
I hope this helps explain some of the story behind the price fluctuations in the market.
Johan Ellingsen
USB Company
Do you agree or disagree? Or do you have another point to make on the subject? If so, add your comment below.
Carole Bull, Editor.
Comments
Custom Flash
Completely agreed with wat was said above.
I just was to add that price for custom usb drives will also increase due to high popularity of flash memory in smart phones.
Promotional Products
I agree to a certain extent. Hopefully we will see the introduction of USB3 reduce the price in promotional memory sticks where the high speed transfer is not always the main issue for someone buying flash drives.
Speaking to several factories at the moment and most agree that the price will start to fall over the next few months. This will be a welcome drop for us as we have seen flash drive sales plummet as the prices increase more and more each week. On the plus side new customer introductions have increased due to clients shopping around for better prices...
Phil Battison
To be fair we've seen this over the 7 years that we've been supplying branded memory sticks. The challenge for all of us is predicting the movements and forward buying both flash memory and the $ at the best prices. Wish that it were an exact science but its not but then over time you get used to taking the rough with the smooth
Promotional Products Blog
Down under in Australia and New Zealand prices of flash drives and memory storage devices have remained relatively unchanged. Overall there have been some small movements on pricing from time to time but generally unless you are buying these Promotional Items in quantities of more than several thousand at a time, the cost is quite small. These additional costs can also be passed on to the customer. We look forward to steady pricing throughout the rest of 2010.
Kyle Smith - Director
Boost Promotional Products
