…do not exist! Time after time, we continue to receive calls about unrealistically priced USB drives ($1, $2, $3, someone even asked for $0.25). Everyone, I understand you have budgetary constraints, and limited resources, and don’t want to spend a lot on “just giveaways,” but consider this: would you drive a $100 car or wear an $80 suit to an interview? The bottom line is, if these drives existed, you wouldn’t want them (see image at the top).

To set the record straight, here’s a breakdown of components that comprise a USB drive.

NAND Flash (memory chips only) - this is sort of like lobster which carries the “market price” tag on the menu. To see what the market price is, go to DRAMeXchange and view the table on the home page titled Flash Spot Price (see image below). The capacity is shown in gigabits so you have to divide it by 8 to get the actual size (64Gb is 8GB, 16Gb is 2GB, and so on).

Case, PC Board, LED, Controller, and other hardware components – all add on to the cost. Final price is based on quality.

Freight, duties, and other landing costs – cost for these depends on origin, size, weight, and quantity.

Labor, QC, and production costs- depending on what sort of failure rates you want when your drives arrive, these factors are just as important. It is hard to put a price tag on these, however the main factors in determining cost for such services are personnel training, salaries or wages of the employees doing the QC, complexity of production, and overall time spent.

Next, we have to add printing. If printing is done overseas, cost is minimal. If we are doing a rush order and have to print in US, there is a significant increase for printing.

Next, add markup – nobody works for free. If you like your vendor you must pay for their work or you’ll have no vendor to work with.

In conclusion, if you want to give out a quality product I suggest going with a reputable supplier, one who takes the time to confirm all the details and provide suggestions based on your project. If you don’t have the budget for this, consider an alternative – a less expensive product (but not a cheap one). Just don’t settle for crap.

Ran across a Chinese “competitor” and saw the following in the specifications under one of the USB models. Pretty funny. In any case, if you want a cheaper price, I would be happy to refer you to these guys.

1. Adopt USB1.1/2.0 connect, support is hot to put to pull out, plug-and-play. DO not need to circumscribe power supply, the direct USB connected a statement electricity.
2. Read and write speed quickly: 2.0 connect to write in speed: 11 MBs/s / Read Speed:12 MBs/s (install with computer relevant)
3. Use various operation terrace WIN98/SE/ME/2000/XPs, MAC OS8s.6; HIGHERs, UNIXs, LINUX2s.4. Or renewal edition (WIN98 beard the gearing drive procedure).
4. Supporting the software encrypts, the double starts function. The electronics is saving to lie quality.Have no machine parts, the anti- vibrates, anti- electromagnetism interference.
5. The adoption possesses singly super stability technique, the data is saving more safe. Support (not) managing person’s encrypting under the WIN2000/XP, the combination encrypt, double area space, can adjust to encrypt area capacity freely, measure a body to make to order a personal space.

 

Repost from ExtremeTech.com

The claim is that Apple uses its iPod and iPhone clout to order a large amount of flash memory, then actually purchasing a smaller amount, the Times article charges.

“Apple has asked Korean semiconductor makers to produce a certain amount of chips for its digital products, only to actually purchase a smaller volume eventually,” according to a senior industry official quoted by the Times. “The company doesn’t make immediate purchases, but waits until chip prices to fall to the level the company has internally targeted.”

Unfortunately for the flash industry, Apple may be treating the flash market unfairly, but not illegally. The behavior that the article describes doesn’t seem to violate any U.S. antitrust laws (I can’t speak for Korea). If anything, Apple could be characterized as a bad business partner, if you’re a flash supplier. But if I were an Apple shareholder, I would cheer Apple’s allegedly heavy-handed negotiating tactics as just good business.

There’s a reason why flash memory and DRAM are both commodities: Everyone needs them, but no one is willing to pay for them. All Apple does is bundle 8GB of flash together with a slick operating system and a visually and tactilely appealing industrial design, and sells them like hotcakes. MP3 players aren’t that hard to design, even by a chip company—just ask SanDisk.

So far, Korean antitrust agencies haven’t stepped in. If they do, Apple’s business practices will be heavily scrutinized. Until then, however, I’m afraid Apple’s partners will simply have to knuckle under.

So prices are going up again. Here’s an explanation.

NAND Flash, the memory component used inside USB drives is a commodity product, like gold or oil. Its price is controlled by supply, demand and various market conditions. In the beginning of the year, costs were at an all time low so to equalize the market, Samsung and Toshiba reduced output of flash which is now causing a shortage. In the last three months, costs doubled which caused the price to the end user to go up as well. Think of it as a commodity stock market; if you do not buy today, tomorrow you may have a different price.

The lesson – stop procrastinating, place your order today.

When I received an email this morning about Microsoft using USB drives to release Windows 7, I thought I’d wait a while before posting it on the blog, but by now, I already 4 people break the news, so it’s going up.

As long as Microsoft can justify the cost of flash drives (which they can easily do by increasing the price of their software  by a few dollars), selling Windows 7 on USB drives is a great idea. Here is how they ought to do it (properly).

• Create a custom shaped USB drive (possibly in the shape of the new Windows 7 logo) and put some novelty aspect into it. The free PR alone should cover the extra cost.
• Make the USB drive an authentication tool (in addition to being the software delivery device). Have Windows 7 installation files reference a serial number on the USB drive. This will prevent piracy.
• Do the USB drives as a limited edition release. Don’t sell all versions on USB drives, just the premium one (with all the add-ons FREE, to justify higher price).

Here is the link to CNET who, I think, posted about this first.

Prices have been steadily rising since late January and now we (everyone in the flash market) are facing another increase. Apple recently announced that it’s starting development on a 32GB iPhone. It also made a bulk purchase of 100 million 8GB flash chips, which pretty much drained the market, causing a significant shortage. It is still too early to tell how long prices will stay up, or how high they will go. I’ll keep posting updates.

See additional links below.

http://www.networkworld.com/news/2009/032409-flash-memory-vendors-slashing-production.html

http://www.neowin.net/news/main/09/04/09/apple-orders-100-millions-8gb-flash-memory-chips

http://blogs.zdnet.com/Apple/?p=3655

http://www.techradar.com/news/computing-components/storage/apple-buying-up-the-world-s-flash-memory-536327

Earlier this week, I received an email from a Chinese USB drive manufacturer asking us if we wanted to use him as a vendor. While the answer was “no, thank you,” his email still got my attention. It contained an attachment – a PDF document titled “Truth for Crazy Low Price in Market.” I was curious enough to open it and read through the broken English. Here are the contents of the document (with proper English).

Present Situation

• Samsung, Toshiba, and most other NAND Flash manufacturers lost a lot of money in flash production in 2008, due to an oversupply of chips into the open market.
• This resulted in lowest prices of all times for USB drives sold in November, December, and January. During this time, a fully assembled USB Drive (PCBA, USB connector, controller chip, flash chip, and casing) cost less than a pre-sliced wafer used to create flash ships. This is unheard of. Think of it as buying a car for less than what an engine costs you.
• The oversupply of chips (or wafers used for making chips) resulted in what is called “downgraded” flash.

What is Downgraded Flash?

• Downgraded flash chips are scraps from NAND Flash wafers that did not pass quality standards. Think of it as McDonald’s chicken nuggets – leftovers of old chicken meat blended together and deep fried (mmm, tasty).
• Downgraded flash chips have a very high failure rate. They may also corrupt your files and freeze your operating system.

Controller Chips

• Controller chip is the smaller chip (compared to the larger chip – NAND Flash) on a USB PC board. It is responsible for formatting, partitioning, auto-run, and many other functions associated with USB Drive use. NAND Flash chip is simply storage memory.
• There are 4 main brands of controllers – Chipsbank, USBest, SMI (Silicon Motion), and Alcor Micro.
• SMI is the largest supplier of controller chips. They are nice quality chips, yet, in our experience, have not worked properly for specialized applications (medical devices, exercise machine data storage, audio streaming machines).
• USBest has consistently been the best quality chipset. It has performed well across the board, with very low failure rate, as well as worked for specific applications I described above. If you need something quality – BUY USBEST.
• Alcor Micro is very similar to SMI – quality made, low failure rate, may not work for specialized applications.
• Chipsbank has proven to be the worst. They are the least expensive, have the highest failure rate and are constantly showing up as downgraded flash. If you are getting a price that seems too good to be true, you are probably being sold on Chipsbank.

To Review

• Stay away from Chipsbank.
• Buy from qualified, preferably US based suppliers.
• Ask about warranty, RMA processes, QC processes, and get references.
• Don’t search for the cheapest price, search for the best value.