Stop asking me if I can match your ridiculously cheap prices for Flash Drives

Stop asking me if I can match your ridiculously cheap prices for Flash Drives.......Pass this along to customers and co-workers.

Every day......I mean every day I get the same phone call from a distributor saying “my customer/competitor found a 1 GB for $5.95 ea. on a 100 piece order. Stop calling and wasting my time or get educated as to why this is not possible! I DO NOT CARE if you buy your flash drives from us (FlashDriveDirect.com), go ahead and buy them from ANYONE......BUT if you are going to buy flash drives.....READ THIS and figure out how to pass this info along to your customer or to your fellow distributors. Here are some Facts: 1) The cost for a 1 GB (or any size) chip is the same if you buy 100 or 20,000. There are about 5 major chip manufactures (Samsung, Intel, Hynix etc) and they CANNOT produce enough chips to meet demand. THEREFORE....they will sell all the chips they can make at a set price...they DO NOT VOLUME DISCOUNT!

2) The cost of housings (the outsides) DO VARY......However when you add the cost of memory of Grade A Tier 1 USB 2.0 chips to any housing (even the cheapest), logo it and get it to North America it COSTS us more than $6 bucks!!! 3) Can Tier 1 USB 2.0 get lower in price.....YES.....but only on orders of 5000 plus...Why? Because we can beat up the manufacturer of the housings to sell them for a lot less.........ALSO we take a far smaller profit and look at making a reasonable amount of money for the WHOLE order vs. a margin of 20% on small orders. 4) SO WHAT ARE THESE CHEAP FLASH DRIVE (i.e. $6 for a 1GB for 100 units)..? 5) This is where it gets a little techy and I don’t want to confuse anyone. I will try and explain this simply plus add information from the chip manufacturers themselves to make it easy to understand.

6) ALL wafer/chip manufacturers have a FAILURE RATE around 25%. These wafer “cast-offs” contain some usable memory plus recoverable electronics. ALL OF THIS FAILED memory is sold on a “grey market”. It is bought by the pound and used in cheap toys, cheap watches etc, where a failure is really not a big deal. HOWEVER...a large number of these are making it into the Flash Drive marketplace. WHY IS THIS A PROBLEM? It is a problem because you are not buying 1 of them, your are buying 100, 200 or more of them. If 25% fail you will have a VERY PEAVED customer. Do you really want to return 25% of your order and your money?

INTEL internal memo Oct 2007. “Since the cost of wafers and wafer processing is mostly fixed, fewer larger chips means each must be priced higher than when many small chips can be cut from a wafer. Those defective chips lead to even higher prices. Worse, and the more subtle aspect of the dilemma, is that the occurrence of defects is often random (frequently caused by dust particles). That 25% I mentioned might be true for one chip size, but wildly low for some other chip size. The way to think of it is in terms of "defects per wafer" and not defects per chip. If that number of defects can be held constant, then when there are a lot of chips cut from a wafer, the percentage of bad chips is low, while when few chips are cut from a wafer, the percentage of bad chips is high. It often takes only one defect to ruin a chip”.

So......How is it that you can get 100 units of 1 GB Flash Drives for $5.95...? You can get them, but a large % WILL FAIL..........If that’s what you want.....then that’s what you will get! DO NOT LET THE TERMS TIER 1 AND USB 2.0 FOOL YOU INTO A FALSE SENSE OF SECURITY! 1) USB 2.0 refers to the most recent SPEED of transfer of data (we will soon be at USB 3.0 btw). It also refers to the fact that REAL USB 2.0 will run on Windows Vista and Mac Leopard Operating systems. Just because it says USB 2.0 does not mean it WILL NOT FAIL......it just means that if it works it will work at a faster speed. 2) YOU WILL NOT know if you have USB 2.0 until you get the flash drives. If you trust every web site you are being a fool. If you cannot speak with someone who can explain this and offer a lifetime warranty then you are not sure until you get them......simple. 3) Tier 1. Tier 1 means top quality, best of show, the crème de la crème......these are the best chips from the wafer. THERE IS TIER 1 scrap memory as seen above....but it fails 25% of the time.

So.....how do you protect your customer and yourself from buying crap? 1) Buy from a reputable dealer. Shop and compare. If a reputable company like Flash Drive Direct, USB Custom, I-Click, USB Source and others prices are all about the same than you are getting the “REAL McCOY!” 2) Price does mean safety! If it seems too good to be true, it is! Unless you are buying 2000, 5000 or more drives the prices will all be the same....as I said earlier in this article ...if we can make a profit on a large order then we do not worry about per unit margins, however on smaller orders (100-500) pieces we make a small margin that allows for some profit and covering the costs of providing you the best.

In conclusion…….if you want to buy safely and with dignity……buy flash drives using common sense……..If you want to get stung, go with the cheapest.

If you want to call me about this…….I will talk and help walk you through it………I want you to buy the right thing…..Why? Because it reflects on all of us……….

John Graham