OCZ accentuates the positive (SSDs) and eliminates the negative (low-margin DRAM modules)

PC add-on vendor OCZ has announced today that its future is in SSDs and high-speed DRAM. The company plans to discontinue low-margin, commodity level DRAM module products in favor of add-ons with higher margins. OCZ's commodity DRAM module products currently represent roughly 70% of the Company's overall DRAM module revenue but over the past six quarters, said the company, the commodity DRAM module product line has operated at less than 3% average gross margins so it’s readily apparent why OCZ would rather not base the company’s future on these products. OCZ plans to cease commodity DRAM module manufacturing by the end of 2010. Presumably, this decision doesn’t include OCZ’s higher-margin DRAM modules such as the company’s water-cooled Flex EX DDR3-2133 modules. Such high-end DRAM modules are still highly prized by high-end users such as gamers and still command good margins.

OCZ’s announcement shows the perpetual shift in the PC add-on market where add-ons and accessories that are initially high-end gradually (sometimes quickly) become commodities as more manufacturers jump on the bandwagon. Currently, SSDs command relatively high prices. However, with more than 200 SSD vendors already in the fray--including behemoths such as Intel, Seagate, and Western Digital as well as long-established SSD vendors such as STEC--the competition in the SSD space seems to get hotter on a daily basis.