Why Are AMD and NVIDIA INCREASING GPU Prices?

[Saracen999]

Well I was going to build a new system and put a 4080FE into it, but at the price Nvidia want to charge for the generational increase? They jumped from £649 to £1200. Nope, not happening and a lost sale.

...

I hear you. But the point of them shipping less units at higher prices (and therefore margins) is that they don't see it as a lost sale.

I mean, if it was £649 and we assume the cost was (for argument's sake) 50% of that, then selling at that price they make £325. But if they sell it at £1200, they make £875 instead of £325. i.e. nearly 3x the profit, so they can afford to sell (roughly) one in every three units that they would have at the original price. If theyy make the same profit on one that they would have on three they can "lose" two in three sales without losing any profit.

Tha's a hypothetical example, obviously, as I have no idea what their margins are. If they make only 10% margin at that £650, then they can "lose" 9 out of 10 "sales" at £1200 without dropping profit. Or sell 20% of the volume, and still double their profit.

My point was that if that's how their numbers work (and nobody except top management is likely to know), why wouldn't they? It's bad for gamers, but great for their profits ... as long as enough people keep buying at that higher price. So far, it seems they are.

[kompukare]

I hear you. But the point of them shipping less units at higher prices (and therefore margins) is that they don't see it as a lost sale.

I mean, if it was £649 and we assume the cost was (for argument's sake) 50% of that, then selling at that price they make £325. But if they sell it at £1200, they make £875 instead of £325. i.e. nearly 3x the profit, so they can afford to sell (roughly) one in every three units that they would have at the original price. If theyy make the same profit on one that they would have on three they can "lose" two in three sales without losing any profit.

Tha's a hypothetical example, obviously, as I have no idea what their margins are. If they make only 10% margin at that £650, then they can "lose" 9 out of 10 "sales" at £1200 without dropping profit. Or sell 20% of the volume, and still double their profit.

My point was that if that's how their numbers work (and nobody except top management is likely to know), why wouldn't they? It's bad for gamers, but great for their profits ... as long as enough people keep buying at that higher price. So far, it seems they are.

Of course, the obvious caveat to the last bit is that they are thereby killing the golden PC gaming goose.

While PCMR might believe that they are so special, in the end a far smaller PC gaming market affects those who spend £2000+ on GPUs as well. At the end of the day, volume is super important even if does mean having lower-end stuff GPUs for the peasants to buy. Games simply cost far to much to make and even to port to PC that reducing the total PC market to only those who spend over a grand on GPUs will mean that studios will either not bother with PC releases or put in even less effort. Even more than PC hardware, software and games rely on volume. Even if the mega spender PCMR buyer wants to pay £200 for each PC port, it may not be worth a studios time catering for 10,000s of over-spenders compared to selling to millions at "only" £40 or so.

[Saracen999]

Of course, the obvious caveat to the last bit is that they are thereby killing the golden PC gaming goose.

While PCMR might believe that they are so special, in the end a far smaller PC gaming market affects those who spend £2000+ on GPUs as well. At the end of the day, volume is super important even if does mean having lower-end stuff GPUs for the peasants to buy. Games simply cost far to much to make and even to port to PC that reducing the total PC market to only those who spend over a grand on GPUs will mean that studios will either not bother with PC releases or put in even less effort. Even more than PC hardware, software and games rely on volume. Even if the mega spender PCMR buyer wants to pay £200 for each PC port, it may not be worth a studios time catering for 10,000s of over-spenders compared to selling to millions at "only" £40 or so.

Up to a point, I agree.

Certainly on lower-end GPUs, absolutely. Arc may open the door a bit there, and it'll be interesting to see if/how Green and Red respond.

Also, the goose-killing thing - kinda depends how long they keep it up. What we don't know is what stocks are like of older 30xx GPUs in nVidia's inventory. Especially if they, as opposed to OEM board manufacturers are sitting on a lot, they may well be artificially liniting 4080/4090 supply to, first, shift that stock to their OEMs, and second, coin it on artificially high 40xx prices while they do. But, when that stock runs low/out ...?

The same argument applies to launching lower-end 40xx cards, though the 4070 seems to be getting close.

If they keep card prices silly-high indefinitely, then yeah, maybe the PC-gaming goose will be cooked. But let's face it, mostly, those that want to go console gaming instead probably already have, and not a few PC gamers have consoles too. I certainly think they're safe for a while on that score, and who knows what 6, 12 or 18 months will see?

As for studios, I'd guess they'll primarily target what the installed userbase is, and that certainly isn't in the super-high end even now. So they might (always have) pushed at the boundaries a bit, and new high-end games tend to go up in hardware demands, they will also have settings aimed directy at where the mass of installed cards currently is, and seems to be going. IMHO, of course.

[Iota]

Also, the goose-killing thing - kinda depends how long they keep it up. What we don't know is what stocks are like of older 30xx GPUs in nVidia's inventory. Especially if they, as opposed to OEM board manufacturers are sitting on a lot, they may well be artificially liniting 4080/4090 supply to, first, shift that stock to their OEMs, and second, coin it on artificially high 40xx prices while they do. But, when that stock runs low/out ...?

I actually haven't seen any real lack of the 4080FE availability, it's certainly been available every time I've looked on the team green site (4090FE less so). Even aftermarket oems have plenty of 4080 / 4090 available. It's not just team green though, team red card availability on the 7900XT / XTX are readily available as well.

Personally I see it as a pricing issue, they've gone down the scalper pricing route for the new generation. I guess only time will tell if it backfires on them. It'll be interesting to see the financials when they're released, from both of them. It'll also be interesting to see where Intel go with the Arc cards, at the lower end of the spectrum the A750 actually looks in a good place pricing / performance wise compared to the RX 6600 / RTX 3050. They just need to sort out their drivers tbh.

[Saracen999]

Firstly, I absolutely agree it's not just Team Green. Red are a smidge more competitively priced than Green but, IMHO, that merely reflects some domination by Green, and an attempt buy Red to buy some market share. Red are no more acting in our best interests than Green (IMHO), merely their own.

While certainly true that OEMs have plenty of 40xx cards around, it is also usually (if not always) the case, at least since the mining crash, that they're at a premium over FE's, and that's justified (usually) by cooling solutions, the overclocking that said cooling supports, and the non-core board design and componentry that they implement, also often with OC in mind. Also often, of course, design visuals like fancy RGB, etc.

OEMs typically have 30xx in stock too, at least in most variants, to varying degrees. For instance, as of 5 mins ago, I could order any of 3070, 3070Ti, 3080, 3080 12GB (albeit refurbed), or 3090 and I didn't have to look beyond Scan to do it. BTW, I didn't even bother to look at 3090, or anything below 3070.

The point, as I said earlier, is we don't know what stocks of silicon nVidia (and to a degree AMD) still have. Nor do we know what contractual commitments OEMs have to take such chipsets from nVidia. At some point, we'll see those stocks start to run down, then out. Until then, I don't see why nVida would want to release too much of the lower end 40xx, or drop the prices on the higher end 40xx, because if they do, the case for 30xx cards, based on price, becomes less and less compelling and rices of 30xx would have to drop comensurately. And that clbbers both them, and OEMs. There must be some serious smirking going on at EVGA over their timing ove their exit from nVidia GPUs.

It's really classic monopolistic/duopolistic behaviour. They don't (IMHO) need to have any explicit price-fixing (especially as it's way illegal). All they have to do is act in their own vested interest, provided they're turning in good results for investors, especially the big institutional ones. They sure don't answer to customers. Their attitude to us seems to be "don't like it? Buy something else". The problem is .... like what, exactly. Monopoly/duopoly.


NOTE: I'm hedging between monopoly and duopoly 'cos it's kinda a blend of the two. They both have significant market share, though one much more than the other, and there's beggar-all else in the market. It rather reminds me of two vicious predators circling each other on the plains: one is bigger, stronger and nastier but the other is faster and more nimble, so it can still cause nasty injuries. And they're keeping one eye very warily on what the other is up to. It'd make a great case study for an economics class.