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Nvidia price-cut on 460/470 not permanent

It doesn't matter how a company decides they want to make a profit on a card or not, and if they decide to factor in R&D, the fact is R&D costs money, and selling cards is their return on that investment, if one doesn't cover the other, they lose money, they are losing money, thats really as plain as it gets.

I've actually forgotten the figues but in Q1 they basically had a 50mil profit on around a 900-950billion revenue, that included a one off payment of 100mil, so really that had a 950billion revenue and 150mil profit, the next quarter they had a 100mil loss, which is a 250mil turn around which is huge in and of itself, thats after Fermi launched. They also lost some 10-15% market share, the revenue was also down from almost a billion to around 750-800mil its been a few months so the figures aren't fresh in my head.

But basically they had a quarter of a billion turn around in a single quarter on profitability, on top of a pretty significant drop in revenue.

The fact is we do know a lot of the costs, a wafer is $5k, you can get x amount of cores of size Y off the same wafer, after yields are factored in that gives you a cost per core.

Nvidia were selling a 386mm2 core for 15-20% less than AMD were selling 336mm2 5850's for, and the 5850 was signiifcantly faster, they were selling them for not far off half of what 5870's went for, though they sell significantly less than 5850's.

The new cards are 255mm2 iirc, the wafer cost is the same, that means they've quite significantly increased yields per wafer and therefore dropped cost per core down.

End of the day a pcb costs around the same for each of them, power circuitry a similar amount, 1gb memory costs what 1gb memory costs though again AMD are selling in FAR higher quantities right now which probably offers them some slight advantages, only talking a few pennies on a chip but over a couple million chips, that adds up.

IF Nvidia/AMD made their stuff in different fabs with different quality materials and unknown yield comparison, you couldn't compare them easily.

They are both made on the same process, at the same fab, smaller = cheaper, way smaller = way cheaper.

Nvidia can keep selling them at a loss to maintain some market share, though doing so has gained them only 1.5% market share back after MASSIVE losses in the past year, and lost money to do that. Its also ofset by the fact bulk orders reduce before a new generation is out, so both Nvidia and AMD will sell more in the first 3 months of any given cards lifecycle than the last 3 months. AMD 5xxx sales were wrapping up last quarter while Nvidia were ramping up and releasing new parts, 1.5% by fireselling cards cheaper than you can make them is horrible.


DOn't forget, Gibbo told us when the ridiculous 768mb version pricing started a month ago, that these prices were ONLY for 6-8 weeks.
 
You have no idea of the commercial aspects (like the rest of us) that will be affecting the specifics of what they will and won't do, can and can't do. Seriously you cannot take anything from a set of published accounts like that. I am an accountant I know that, with big businesses often profits come and go dramatically due to other factors. Eg writing off R&D as its been deemed now defunct unexpectedly say due to lower volumes or a speeding up of next generation. Reducing valuation of stock due to lower average selling prices. 1000s of things can be done voluntarily or forced by audit etc.

Nvidia may have a contract that specifies minimum levels of chips they MUST buy, purely speculation but its highly likely thay have committed volumes they must purchase.
They will be trying to balance supply and demand and minimise their loss whilst balancing not permanently losing market share etc.
No one outside Nvidia really knows their situation, maybe they vastly over estimated their volume of sales and vastly under estimated AMDs sustained sales. If you did this you would have a choice to hold stock or dump it. With something like graphics cards holding is almost always going to be worse since the tech will render chips out of date faster than lots of techs. Really they are FMCG, although they wouldn't necessarily meet the exact definition.
If supply is limited you match supply to demand, simples. If supply isn't limited you maximise profit by finding the point where revenue - costs is maximised. If you have very high fixed costs (as i suspect this line would) you will almost definately make a smaller loss by still producing and selling at a loss than stopping production, or selling much lower volumes at a higher price but not optimising the profit (or minimising the loss).

Then you need to look at cash and stuff, Nvidia may have needed cash, who knows, its just impossible to say outside Nvidia why they are doing what they are. To anyone outside its pure speculation and guess work.

You say its a fact, I say from my commercial experience it sounds like a smokescreen, who knows, things change daily, hourly in that type of commercial environment. A few sole source supply agreements can make a vast over supply to an under supply or vice versa.

Only time will tell, but I would still be very very surprised if other than a few short term spikes Nvidia cards were not cheaper come xmas.
 
I would expect nv prices to go up, historically they have been able to charge more than AMD and still keep sales up. They seem to be struggling now, but AMD have also had their expensive mistakes, the 2900's were pretty horrible. NV's biggest issues seem to be getting die sizes down somewhere to compete with AMD's advantage there as smaller die's make it easier for price flexibility going forward, yields, tweaks and so forth. Also, don't forget that GloFlo *should* be coming on stream shortly with 28nm and they will sureley allocate huge amounts for AMD to play with...
On the whole I'd guess and say that currently AMD have some huge advantages, but this could change very, very quickly
 
Don't forget that overclocked 460's can match or exceed overclocked 6870's. It is only when both models are at stock that the 68xx series wins by a good margin. 460's have much more OC headroom than the 6870. A 460 @ 800-850core will match a 6870 and my 460 can do 950core..

£150 is a bargain, and 2x £150 should comfortably beat the more expensive 69xx series when they arrive.
 
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