Why are GPUs so expensive?

silvagti · 21 Dec 2019 at 19:17

Rock_n_Roll said:
It wouldn't surprise me if Nvidia released a fire breathing whore of a GPU just to undermine next gen console releases.

I agree. Right now if feels like the only thing that will bring competition and some sensible pricing to the GPU market is the release of some next generation consoles. This should provide incentive to Nvidia to release a GPU which will be competitive against them at a reasonable price point!

CuriousTomCat · 22 Dec 2019 at 00:59

NZXT30 said:
Where are you getting the profit margins from? AMD is far from free from any blame. Their prices have also gone up and the only reason they didn't charge even more was because of the supers announcement, the 5500 is also the joke of the year price wise. Don't forget AMD is now making good money from ever increasing in price cpus while providing 12tf gpu and 8 core cpu for the next xbox for peanuts.

Here's one source:

https://finbox.com/NASDAQGS:NVDA/explorer/gross_profit_margin

Nvidia's current profit margin: 59.5%
Intel's current profit margin: 58.9%
AMD's current profit margin: 41.5%

Radeon's profit margin is lower than 41.5% but this figure is offset by AMD's successful Ryzen processors.

So many people in this thread are moaning about the extortionate prices Nvidia are charging but they're only charging an extra 2.4% profit vs GeForce 10 series. The reason RTX is so expensive is because they're expensive to make. Not even Nvidia's board partners added much extra. Asus for example are now making an extra 0.5% for their entire product line compared with 2 years ago.

Nvidia's profit margin during GeForce 900 series (from 18/09/2014) - 55.5%
Nvidia's profit margin during GeForce 10 series (from 27/05/2016) - 58.8%
Nvidia's profit margin during GeForce RTX 20 series (20/09/2018) - 61.2%

2012 was when Nvidia increased their prices. Prior to that, they were only making 39.8%. Nvidia increased their prices the exact year that AMD took a nose dive.

Twinz · 22 Dec 2019 at 01:11

Nvidia is responsible for their costs.

Part of a good design includes production cost considerations. From a price/performance perspective, they failed to inovate this generation.

TNA · 22 Dec 2019 at 04:51

D.P. will be along soon to tell us Nvidia’s profit margin is under 20%

Grim5 · 22 Dec 2019 at 06:13

Twinz said:
Nvidia is responsible for their costs.

Part of a good design includes production cost considerations. From a price/performance perspective, they failed to inovate this generation.

Reminds me of the GTX900 cards. Little performance bump but high price

what happened with GTX900 though - it was replaced by the incredible 16nm GTx1000 series.

will history repeat will the 7nm rtx3000 series be incredible

BigBANGtheory · 22 Dec 2019 at 10:14

CuriousTomCat said:
Here's one source:
So many people in this thread are moaning about the extortionate prices Nvidia are charging but they're only charging an extra 2.4% profit vs GeForce 10 series. The reason RTX is so expensive is because they're expensive to make. Not even Nvidia's board partners added much extra. Asus for example are now making an extra 0.5% for their entire product line compared with 2 years ago.

Nvidia's profit margin during GeForce 900 series (from 18/09/2014) - 55.5%
Nvidia's profit margin during GeForce 10 series (from 27/05/2016) - 58.8%
Nvidia's profit margin during GeForce RTX 20 series (20/09/2018) - 61.2%

2012 was when Nvidia increased their prices. Prior to that, they were only making 39.8%. Nvidia increased their prices the exact year that AMD took a nose dive.

There is no way the profit margin on a 2080Ti is 61% and that is the perf bracket where the pain is, even if you take an analysts figures to be true (market buyer beware).

Not the 'special, binned, watercooled & painted in any colour you want editions' just literally any graphics card that runs faster than last generations 1080Ti, a card that's coming up for 3yrs old.

Yes RTX is probably more expensive to produce, but its not that more expensive and its done 3/5ths of bugger all for general raster perf.

Lack of competition can lead to inflated pricing and Nvidia has literally belly flopped onto its price calculator to squeeze the market for all its worth. Good for shareholders, terrible for customers.

BigBANGtheory · 22 Dec 2019 at 10:20

McGraw said:
Very poor comparisons.

For £100k ish you can get a ridiculously fast car...too fast even for normal use.

You can buy a house that does the job for a lot less than £2/3m.

A cheap bottle of wine will still do the job at the same ABV.

Jewellery is really pointless to compare. It doesn’t really do anything and tends to be priced around the rarity of the materials.

Anything less than a 2080ti won’t really cut the mustard for the latest titles at high res/high refresh.

Exactly, the GPU is for most people a box within a box there to do a job. The luxury versions painted white with Tron like lighting and 5% addition speed with elaborate after market addons are not the issue, it is literally anything faster than a 1080Ti anything capable of driving 4k, VR or ultrawide at high settings and framerate.

Psycho Sonny · 22 Dec 2019 at 10:22

BigBANGtheory said:
There is no way the profit margin on a 2080Ti is 61% and that is the perf bracket where the pain is, even if you take an analysts figures to be true (market buyer beware).

Not the 'special, binned, watercooled & painted in any colour you want editions' just literally any graphics card that runs faster than last generations 1080Ti, a card that's coming up for 3yrs old.

Yes RTX is probably more expensive to produce, but its not that more expensive and its done 3/5ths of bugger all for general raster perf.

Lack of competition can lead to inflated pricing and Nvidia has literally belly flopped onto its price calculator to squeeze the market for all its worth. Good for shareholders, terrible for customers.

you are confusing retailers, thirdy party companies and manufacturers here.

Nvidia is the manufacturer - they sell onto third parties.

Third parties like ASUS then add their own cooling, etc. - They sell onto retailers or distributors.

Retailers like Ocuk then sell direct to customers.

All of them need to make a profit to stay in business.

So yes Nvidia don't make as much as you think they do.

McGraw · 22 Dec 2019 at 12:26

Psycho Sonny said:
you are confusing retailers, thirdy party companies and manufacturers here.

Nvidia is the manufacturer - they sell onto third parties.

Third parties like ASUS then add their own cooling, etc. - They sell onto retailers or distributors.

Retailers like Ocuk then sell direct to customers.

All of them need to make a profit to stay in business.

So yes Nvidia don't make as much as you think they do.

Are you sure that NVidia are a manufacturer?

Gregster · 22 Dec 2019 at 12:27

Twinz said:
There seems to be two different groups in this discussion:

One group views GPU's as a symbol of status and thus appear to like higher prices in that higher prices seperate them from the peasants.

The other group views GPU's as a means to an end rather than an end unto itself.

I waste money on some fun hobbies, but I tend to get a little embarrassed when people ask how much money I spent on some of it. I understand that to people who don't share my enthusiasm for my chosen money pits, I might as well be explaining how much money I spent on a "pet rock."

I get the impression some people here would spend whatever amount of money they could on a pet rock as long as it was considered to be a "top tier" rock.

What a daft way of thinking!

Nobody wants to spend a lot of money on a 'pet rock' and people buy what they think will work best for them. Might be a 2080Ti or might be a 7970 second hand. I seriously don't see anyone buying as a status symbol and it is a bit pathetic to think they do. Why do people spend a lot of money on water cooling parts? Why do people spend a lot of money on a case? Because they enjoy what they are doing is the answer.

Spook187 · 22 Dec 2019 at 12:29

Roll on the 3080ti, will be a stealth upgrade to hide it from the Mrs

melmac · 22 Dec 2019 at 14:54

Twinz said:
Nvidia is responsible for their costs.

Part of a good design includes production cost considerations. From a price/performance perspective, they failed to inovate this generation.

You talk a load of waffle really.

Twinz · 22 Dec 2019 at 15:05

Gregster said:
What a daft way of thinking!

Nobody wants to spend a lot of money on a 'pet rock' and people buy what they think will work best for them. Might be a 2080Ti or might be a 7970 second hand. I seriously don't see anyone buying as a status symbol and it is a bit pathetic to think they do.

You may have missed some of the "People are just complaining because they can't afford the top tier stuff." because some posts were removed but this example, while more subtle, still makes my point:

Psycho Sonny said:
Have you looked at the items purchased thread in GD.

It's full of £1K mobiles, £200 keyboards and £50 light bulbs.

it's a willy waving contest. the fact is a lot of people are still buying them. but a vocal few are unhappy. they don't care if poor people can't afford their products. they have budget models to accommodate them.

you have GPU's to cater to every budget. people now need to consider all GPU's over £300 are luxury and premium products. they aren't supposed to owned by the majority.

look at the steam hardware below

https://store.steampowered.com/hwsurvey/videocard/

1060 - 15%
1050ti
1050
1070
1080
960
970
750ti
2060 - 2%

people need to realise the majority should never be able to afford top end products in a capitalist world. they shouldn't even be able to afford mid-end.

if you look at cars - most people are driving low or low to mid end. most are driving second hand. hardly anyone is buying bugattis.

do people complain they cannot afford a bugatti?

melmac · 22 Dec 2019 at 15:12

Grim5 said:
Reminds me of the GTX900 cards. Little performance bump but high price

what happened with GTX900 though - it was replaced by the incredible 16nm GTx1000 series.

will history repeat will the 7nm rtx3000 series be incredible

You forget that the Maxwell cards were on the same 28nm process as Kepler, just a different architecture. Pascal skipped 20nm and went straight to 16nm. So it was basically like a double die shrink. I am not sure that will be repeated because the performance per die shrink is decreasing.

You aren't really correct about price or performance either. The Maxwell cards were a fantastic price for the performance. The GTX 970 was as good as the 780Ti for half the price. It launched at $329 which was cheaper than the 770 at launch. The 980Ti launched at $649 which was cheaper than what the 780Ti launched at ($699) The 980 launched at the same price as the 780. The Titan X was released at the same price as the Titan Blacks were.

The reason they could offer the same prices as Kepler, and cheaper in some cases, was because 28nm was a fully mature process. Less waste and better binned dies.

Twinz · 22 Dec 2019 at 15:12

melmac said:
You talk a load of waffle really.

They produced the 2080 that performed the same as a card made years ago and sold for the same money. There's no way around it. I think RTX is a fig leaf insufficient to cover that lack of innovation.

bru · 22 Dec 2019 at 16:11

TNA said:
Why is it incredible though? For about 2 decades everyone has got used to being able to buy the top end GPU for x amount. It is only with Turing now that has changed where we have to pay A LOT more for this. The kind of money that would get you top tier now buys you mid tier. Surely you can see why some might be not happy about this sudden change?

I get why it is happening, but does not mean I have to be happy about it. Believe me, if it ends up getting to a point where your £1200 is buying you only the 5th best performing card of that generation, you won’t be feeling good about it either.

I don't know about 2 decades, but there has been $1000 GPU's for the last decade at least without taking inflation into account. I quite understand why people are annoyed at it, but we certainly don't have a right to have GPU's at a certain price.
If Mars suddenly decided that mars bars were going to cost £3 each only you could decide if you wanted one enough to justify the price.

And for the record I do think that GPU prices are too high, but it still doesn't mean we have a right to cheaper GPU's and I myself held off until the 2070 super came down to £469, even that was £20 over my expected max spend.

BigBANGtheory · 22 Dec 2019 at 17:03

bru said:
I don't know about 2 decades, but there has been $1000 GPU's for the last decade at least without taking inflation into account. I quite understand why people are annoyed at it, but we certainly don't have a right to have GPU's at a certain price.

No we don't have a right to that I agree with you there, but it is fair to call it out when consumers are being ripped off and the gaming/hardware press are doing so little to expose it with useless comments like "Feels a bit expensive" for fear of embargo.

tbh time would be better spent making a complaint the Competition and Markets Authority on the grounds of 'problems in a market sector' and 'businesses abusing their dominant position'

I'll even link it for those that can be bothered to do anything about it:
https://www.gov.uk/guidance/tell-the-cma-about-a-competition-or-market-problem

TNA · 22 Dec 2019 at 18:57

bru said:
I don't know about 2 decades, but there has been $1000 GPU's for the last decade at least without taking inflation into account. I quite understand why people are annoyed at it, but we certainly don't have a right to have GPU's at a certain price.
If Mars suddenly decided that mars bars were going to cost £3 each only you could decide if you wanted one enough to justify the price.

And for the record I do think that GPU prices are too high, but it still doesn't mean we have a right to cheaper GPU's and I myself held off until the 2070 super came down to £469, even that was £20 over my expected max spend.

No one said anything about having the right though did they? Not sure where you are getting that from. I replied to Gregster and said I can see why people would be annoyed at the sudden price change with Turing. Regarding the $1000 GPU's I assume you mean the Titan's? Those may have started a while back granted, but the xx80Ti variant for much cheaper was never far away behind it. I never had an issue with Titan's anyway. I actually think they are a clever idea to help milk early adopters.

V F · 22 Dec 2019 at 20:02

Twinz said:
There seems to be two different groups in this discussion:

One group views GPU's as a symbol of status and thus appear to like higher prices in that higher prices seperate them from the peasants.

The other group views GPU's as a means to an end rather than an end unto itself.

I waste money on some fun hobbies, but I tend to get a little embarrassed when people ask how much money I spent on some of it. I understand that to people who don't share my enthusiasm for my chosen money pits, I might as well be explaining how much money I spent on a "pet rock."

I get the impression some people here would spend whatever amount of money they could on a pet rock as long as it was considered to be a "top tier" rock.

I find it quite amusing reading the first page. You've got some posting "because idiots paying for it" and "epeen" yet the cards they have from those users. I love it when people diss others for what they do with their money yet they followed the same path while condemning it. Now that is funny.

DELETED_195422 · 22 Dec 2019 at 20:23

silvagti said:
I agree. Right now if feels like the only thing that will bring competition and some sensible pricing to the GPU market is the release of some next generation consoles. This should provide incentive to Nvidia to release a GPU which will be competitive against them at a reasonable price point!

Definitely. There are many that aren't happy with the current market situation and ready to bail on the platform. Can't blame them. As a competitor AMD have been absolutely useless, so a third player is more than welcome in my book. More competition the better.

On another matter, the amount of GPUs needs to be reduced. It really is a cluster-****.

Talk about confusing the customer. :confused: