Want CNET to notify you of price drops and the latest stories?

Don't bury Rambus just yet

While recent Intel decisions may be a nail in the coffin for Rambus' memory technology, Rambus the company is still alive and kicking. And it's up to no good.

3 min read
R.I.P. Rambus? Not on your life.

Certainly, business headlines suggest otherwise. Intel recently succumbed to pressure from customers and disclosed that the chipset planned for its Pentium 4 processor next year won't support Rambus memory. The chipset in question is the one that is expected to take Pentium 4 from the high-end boutique space into the volume market.

But while Intel's move is the latest nail in the coffin for "direct" Rambus--the memory technology--Rambus the company is still alive and kicking. And the company is up to no good.

Rambus lawyers are busy shaking down memory suppliers, demanding royalty payments for the use of the company's technology. But this time, they want money not for direct Rambus, but for plain-vanilla system memory as well as for Double Data Rate (DDR) memory, an alternative to direct Rambus that is quickly gaining favor in the market.

The company recently announced that Oki has agreed to pay Rambus royalties for SDRAM and DDR products. Oki is now the third memory supplier to succumb to Rambus' royalty demands.

And there undoubtedly will be more demands as Rambus knocks on more memory makers' doors.

Shows fiscal savvy, I think. Surely, Rambus executives can see that direct Rambus is not taking hold. Given that, executives were left with two options:

 find another way to make money with Rambus intellectual property, or


Some choice, huh?

To put it another way: Rambus has failed to convince the industry to pay it for the right to make direct Rambus products. So now it's trying to wrestle the industry into paying even more--for not using Rambus architecture.

Defies logic, granted. But Rambus comes into these legal negotiations in a position of strength. You can't violate someone else's patents if you don't produce anything. And Rambus doesn't actually make anything. So the memory guys can't scare the company away by rattling their own patents in retaliation.

That explains why Hitachi, a company with one of the richest patent portfolios in the world, agreed to pay Rambus royalties on non-Rambus memory.

But while Hitachi is a major patent holder, it isn't a major memory supplier. Neither are Oki and Toshiba, the other two memory suppliers that Rambus has hit up so far.

Wait until Rambus hits up Hyundai. Or Micron. Or NEC. Or Samsung, for heaven's sake--the world's largest DRAM maker and the largest direct Rambus memory supplier. Then the fur will really fly.

Rambus has to know that the big guys have a lot to lose, so they'll fight back with everything they've got. That's probably why Rambus lawyers are avoiding them just now. Collecting a few more pelts to hang on their belt first, I'll bet.

The big memory guys aren't the only ones with a lot to lose. Rambus has a $7 billion market cap--all from licenses for an expensive memory architecture that is difficult to build and doesn't yet provide any benefit for PC owners. Just imagine how much the company could be worth once it's paid a piece of the action for memory that the PC industry actually wants. Never mind that Rambus didn't actually design that memory.

Is this the free market at work?

Come to think of it, Rambus got its market foothold by playing on PC makers' growing frustrations with the pace of the memory industry's trial-by-committee methods for standards.

Memory makers agreed that there was room for improvement. But Rambus was not it, they all said. Most memory makers hated Rambus' business model, which essentially gave the company the right to dictate standards--and charge a royalty for it.

In hindsight, the memory makers were right to be wary. But now, with the company's Plan B in full view, there is no easy way of putting the genie back in the bottle.