An eight gigabyte USB stick cost about a hundred and fifty dollars a year ago. It is now somewhere in the fifties depending on the brand and how much you care about the brand. Sixteen gigabytes exists and is heading the same way.
Prices in this business have been falling for a while. What has changed is the rate, and the reason the rate changed is worth understanding because it has consequences well outside memory cards.
Historically, storage prices tracked the personal computer cycle. Manufacturers built capacity against forecast PC demand, PC demand moved in a fairly predictable way, and when a plant came online in a soft quarter you got a price dip that corrected within a few months.
Flash has come loose from that. The volume driving it now is phones and music players, and those ship in numbers that make the PC industry look like a niche. A single popular handset can consume more memory in a quarter than a mid-sized computer manufacturer does in a year. When Samsung and Hynix build capacity, they are building it against consumer electronics forecasts, and those forecasts have been aggressive, and the capacity has arrived faster than the demand it was built for.
So we have oversupply, and oversupply in a business with enormous fixed costs and near-zero marginal cost per chip produces a price collapse rather than a price decline. Nobody idles a fabrication plant. You run it flat out and sell at whatever the market gives you, because the alternative is worse.
The consequence I would watch for is that flash becomes cheap enough for uses nobody planned a product around.
The small hard disks used in music players and subnotebooks look most exposed. A 1.8-inch drive is a marvel of mechanical engineering, it costs real money, it has moving parts, and it exists only because flash was too expensive at the capacities people wanted. That gap is closing from both directions and I would not want to be running that product line.
Beyond that, the interesting case is replacing the drive in an ordinary computer. At today’s prices a flash disk large enough to hold an operating system and applications is still expensive, but it is expensive rather than absurd, which is a change from last year. Given another two turns of this the arithmetic starts working for people who are not enthusiasts.
The caution is that prices this soft are a symptom of oversupply, not of progress, and oversupply corrects. Somebody will cancel a plant, demand will catch up, and there will be a year where memory gets more expensive and everyone acts surprised.
Buy the storage now. Do not build a business that assumes this price holds.