Or 1M units with 25$ profit each?!
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** The AMD Navi Thread **
- Thread starter subbytna
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Or 1M units with 25$ profit each?!
100% agree, maybe the New 'Super' Nvidia cards will force down Navi prices?
Soldato
You mean Ray Tracing which the 2070 can barely do competently and DLSS which is very situational and disliked by most?
Soldato
Exactly
For the record I think both AMD's and Nvidia's prices are stupid. Turing seemed like a joke and I criticized them for it. At the same time, since the release of Turing nvidia's market share has increased so evidently consumers are not actually that worried about the prices. Another fact is if Nvidia were suffering terrible sales they would have lowered the prices a long time ago. They didn't even have to make an official announce but lower costs to AIBs and throw in some better games deals. With these Super cards coming out Nvidia could have simply lower prices across the board, but instead they are confident in the price points and instead will release new faster GPUs at the same prices levels as before.
There is simply zero evidence that Turing's prices are having a major impact on sales. Yes, gaming revenue is down but that is a general market condition. Nvidia's market share is increasing, people aren't dropping Nvidia's to buy AMD, they just aren't buying
.
There is simply zero evidence that Turing's prices are having a major impact on sales. Yes, gaming revenue is down but that is a general market condition. Nvidia's market share is increasing, people aren't dropping Nvidia's to buy AMD, they just aren't buying
.
Soldato
That's far too simplistic an example. How much is each unit?
Let's say each 5700 XT costs Navi £200 to produce. Option A is to slap £250 profit on it, option B is to slap £120 profit on it. £450 price tag has clearly put a lot of people off. Based on the (very small) sample here, I've seen 5 people say they're not buying a 5700 XT at £450, but would at about £370.
So that's 5:1
£200 profit per unit for 100K units is £20M
£120 profit per unit for 500K units is £60M
And added to that, AMD would win over significant mindshare too in offering RTX 2070 (or more) performance without taking the **** out of the market and charging an acceptable price. Win-win to me.
I'm not saying AMD should give their cards away, but there is a fine line between charging for a premium product and outright taking the ****.
Soldato
You speak sense for the most part but the fundimentals of your argument are based entirely on an assumed cost of production therefore renders everything else moot.
Soldato
And AMD are therefore losing a golden opportunity to gain back market share by matching Nvidia's prices.
Ryzen's design, release and pricing is clear evidence of a focussed, forward thinking approach and implementation of that plan.
Maximising profits off a 1-year late graphics card is ridiculously short-sighted and will bite them.
You'd need to capture about 3% of the worldwide desktop GPU sales to meet that sales volume
Soldato
It's like AMD are working with nvidia at this point, maybe AMD should just sell Radeon to nvidia or intel and call it a day
Radvideon
Soldato
It's illustrative.
But then, based on a few assumptions about yields from a wafer, known metrics like die sizes, wafer sizes and wafer costs and also component prices elsewhere you can fairly accurately determine what the manufacturing cost of a 5700 XT is.
Soldato
Nah, look at the bigger picture here. AMD are single-handedly boxing their competition into increasingly niche market spaces. Look at the technology wins they've been making as of late. AMD will always need a GPU division because of the compute work and the semi-custom business for consoles and smartphones (that Samsung deal is immense), but PC gaming? It's a small portion of their tech which - for better or worse for many reasons - is becoming more niche.
Maybe that's why RX 5700 costs stupid money. AMD don't actually care about the PC gaming space any more. That was ATI's game, and ATI are long since gone.
Soldato
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Yea maybe they should destroy there business in the process. AMD without the gpu division would be giving up console, apu and the mobile division all in one go. The big picture is desktop is only a small part and they know it.
Which is why I pitched the 5700 XT at around £80 less than the RTX 2070
Yes but I've seen some cheapo 2070s around, and I'm adding also that 2070 will have superior cooling & noise levels which also have value. To say nothing of how easily a few £20-30 changes will happen once they Super it up. That's why I say £350 to start, but more like, it's still not super appealing even then. Remember, got a sick V64 Nitro with an insane game bundle for <£400, and that was months ago.
It does it very competently & I'm not talking for others, only myself.
Soldato
I was just joking really.
It still doesn'tt make any sense though. I remember sainburys and tesco baked beans price war where they ended up at 5p a can, why can't that happen with gpu's (undercutting the prices i mean, not 5p gpu's that would be stupid)
You talk about being too simplistic and then produce the most simplistic set of nonsense numbers with wild estimates.
You still think you know more than AMD's experts.
Soldato
Yeah OK. I flesh out and give a little more context to your initial, incomplete example and yet I'm the one spouting nonsense 
Within my little corner of the world, yes. Yes I do. Because I don't give a rat's ass about R&D costs, I don't give a rat's ass about bankruptcy (as you yourself say a consumer should not), and yet I sure as **** am not buying a 5700 XT at £450. Nor are people on this forum. Nor are other commenters and consumers elsewhere on the interwebs. So if AMD's experts think that £450 is a good price yet the consumer base think it's not, pray tell who's wrong here? Unless of course you think not letting AMD butt*** us like Nvidia and Intel have done somehow makes us wrong?
The risk is if one of the components increases in cost be $25, now you make zero profits without increases prices.
Or forex shifts and now that $25 profit is a $10 loss.
Selling more units also has logistical problems in the supply chain. What if you can't physically produce 1m units? Could your AIB's handle that volume? Let alone whether there is the market for that many. What if the market cap is 300K units even if you made zero profit. But you can make $100 profit and still sell 250K.
There are host of other reasons why healthier margins are better. E.g, any miscalculation or overhead in R&D, media, manufacturing issues can be overcome. It is always easier to start at a high price and lower prices later than the inverse.
market share is useful, profits are more useful
Soldato
Well despite all the doom and gloom I think there is actually something brewing. I find it quite funny that AdoredTV Jim has flipped and gotten really grumpy about Navi when he's usually pretty good at analysis and seeing the bigger picture, and he did a rough price up of Navi cards based on information we do know. I roughly determined that the 5700 XT at $449 is carrying $230 markup. Obviously that's not pure profit because R&D and whatnot needs to be considered, but it's certainly higher than the 45% Lisa Su stated she wanted to put on her kit.
Then I watched a video from Moore's Law Is Dead who posited an interesting idea: AMD are goading Nvidia into a price war, because without some kind of shift in existing prices where exactly do Nvidia pitch the Supers? There's not that much of a gap between the existing tiers to squeeze more cards in, and if (for example) a 2070 Super is almost a 2080 then there's a risk of one cannibalising sales of the other. And if the non-Supers get a price drop, where do they drop to if AMD does have a chunk of wiggle room on their Navi cards to respond? $230 markup on a 5700 XT is quite the potential war chest.
I can see 5700 XT dropping to about $370-400 by August-ish if the 2070 non-Super comes down to $430 or so. And in a silly sort of way, that is a little bit of the market correction we all wanted to see with an aggressively priced Navi.
Let's see what happens.
Yeah OK. I flesh out and give a little more context to your initial, incomplete example and yet I'm the one spouting nonsense
Within my little corner of the world, yes. Yes I do. Because I don't give a rat's ass about R&D costs, I don't give a rat's ass about bankruptcy (as you yourself say a consumer should not), and yet I sure as **** am not buying a 5700 XT at £450. Nor are people on this forum. Nor are other commenters and consumers elsewhere on the interwebs.
You have pulled a 5:1 ratio out of your backside.
You pulled a $200 BoM out of your backside.
And yet you expect me to take your simplistic example seriously?
I know full well the price elasticity of demand, a don't need a 5 year old's interpretation. You are just showing your complete naivety about how companies like AMD derive pricing models. It is far more complex, far more variables.
here is something that will completely throw you. Stella increased their price considerably and enjoyed far greater sales volume at massively increased profit margins.