The economics behind GFX cards?

[Tommy B]

I take it we have ATI to thank for Nvidia dropping the prices of their GTX. Did they honsetly think that most users would be willing to pay £450 for the 7900GTX?

Is that the reason for the sudden price drops of the 7900GTX?

I've never understood why Nvidia charged so much more when most reviewers state the X1900XTX is better in terms of performance?

 

[Tommy B]

A hefty price is usually charged in the beginning because there may be limited supply and early adopters will still pay the price almost regardless, also graphics cards(more than almost any other component) have a limited lifespan so a high entry price makes sense when looking to re-coup investment and then lower the price to help gain more market share.

That would be the basics as I see them, ATI this time around came into the market with a very low price on their graphics cards which is a little unusual.

Yes, and now my respect for ATI has substantially risen. They've also sold huge quantities of the card due to the low price.

 

[Tommy B]

There is no graphics card monopoly!

I don't understand why it doesn't just follow the laws of economic competition. Nvidia release the X card for £300, ATI then release the equivalent Y card for £250 and thus Nvidia drop the price of their X card to £249 etc.

As Elmo says, the producer surplus is HUGE and unfortunately people are so in love with their PCs they will go out and pay the big bucks. I'd expect that ATI and Nvidia have suffered due to the release of the Xbox 360. Last Xmas, I know a lot of you put your foot down and said you were fed up.

To conclude, IMO, the fate of the PC gaming industry (which effectively keeps OCUK a thriving business) is controlled by the GFX industry. If prices of new cards begin to exceed ridiculous prices, I think Nvidia & ATI will both find their high prices not only have an adverse effect, but also completely destroy the PC gaming industry.

At Xmas, Nvidia could be clever and decide to sell their new cards for £270 or something. They'd see a surge in sales, and thus both consumer and producer would be happy. This is what ATI did this time round, according to you guys.

Do you agree?

 

[Tommy B]

And lower prices effectively create extra buyers; people who are willing to upgrade because of the low price incentive.

 

[Tommy B]

Its basic supply and demand.

High demand, limited supply= High prices.

Its that simple.

300 quid gets you a 7900 GTX now.

when the new cards come this will drop further.

Because when the new cards come demand falls.