AMD: Southern Islands (7*** series) Speculation/ Rumour Thread

[Bo_Fox]

-Couldn't edit my post.. do I need like 10 or 20 posts under my belt to be able to do this?

Anyways, I wanted to add that the GPU market is already pretty much saturated with DX11 cards already in the hands of the owner.

Most people already have at least an HD 5770 or GTX 460-768. Even if somebody has an HD 4870 1GB or a GTX 260-216, that person is quite unlikely to buy an HD 7770 at $159 today, especially after looking at the specs (only 640 shaders, 128-bit bus, etc..).

It's a bit like the Nehalem (Core i7 900-series) owners not yet seeing any real reason to give Intel more business after 3 years of excellent relative performance to the current offerings.

AMD is not giving that much incentive, to be quite frank, regarding the price. The new cards might be out, but there isn't much business going on. HD 7770 is a tiny chip, about the same size as an HD 6670, so AMD should really capitalize on the maximum profitability. During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

 

[neliz]

During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

So in theory yes, your idea is right, in Theory R600 had plenty of good design ideas. In theory nobody should still be buying FX5200 in this day and age, but just guess those theories are.
For all we know, AMD is selling out their CV chips with maximum profitability. (imho a much more believable theory )

 

[Arty]

According to the chart a ~260mm² Barts XT is expensive as a full 360mm² GF114?

Obviously due to Nvidia's agreement with TSMC - price per functional chip as opposed to wafer based pricing.

In all honesty, I'm just kidding.

 

[UniversalTruth]

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

So in theory yes, your idea is right...

Yes, his idea is definitely right.
But AMD is definitely hurting because of their price strategy, plus nvidia's price strategy. This price doesn't create demand, which on the other side would create a need to improve FINALLY that poor production capacity. This has a direct impact on all PC hardware related sales and you see all those reports about less and less interest in classic PC.
The things are related and maybe it's all intentionally done. Just to have an ever rising interest in mobile devices.

And the other thing. This high price on 7770s creates the illusion that 6870s' prices are fair when they are not so.

Obviously due to Nvidia's agreement with TSMC - price per functional chip as opposed to wafer based pricing.

In all honesty, I'm just kidding.

Yeah, or maybe nvidia's yield is better.

 

[neliz]

Yes, his idea is definitely right.

From an end-user perspective. End-users don't buy GPUs, they buy finished cards from AMD's partners.

Those partners will have a hard time buying a Barts XT GPU because they're probably end-of-sale. Now the answer to this question (And death sentence for this theory) is just ask any AIB if they can buy all the 7xxx series GPUs they want (because the prices are so high nobody is buying them )

 

[leoneazzurro]

I don't understand well the chart, but it could be seen in two ways.

First, Barts GPU cost $35-$50 to AMD (Like a GF114 cost to Nvidia)

Second (and more probable) they both cost $35-$50 to AIBs.

In the first case, AMD's costs for mm^2 are worse than Nvidia. Possible? Yes. Probable? I don't think so, not in the 35-40% range.

In the second case, AMD's profitability of Barts vs. GF114 is better than Nvidia, and being the performance/mm^2 of Barts quite high, I'm quite inclined to think that the second possibility is the right one.

 

[no-X]

leoneazzurro: It's not AMD's manufacturing price, but selling price. It should be a chart od AiBs mises (I'm not saying it's correct, of course).

 

[Psycho]

it's most certainly not, as it's equipping a 6850 with the same VRM and cooler as a 6970...

 

[gkar1]

it's most certainly not, as it's equipping a 6850 with the same VRM and cooler as a 6970...

Forgot to mention the source is the Mercury Research PC Graphics report for the 3rd quarter 2011.

 

[caveman-jim]

People still believe cost + margin = price?

 

[neliz]

People still believe cost + margin = price?

Yes, the magic fairy just drops these cards off at newegg

 

[Silent_Buddha]

During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

Using the same fictitious numbers.

What if AMD is only able to produce 30,000 chips for cards? Selling for 40 USD less means they'd lose out on a ton of money.

As a business you never want to price something such that it is always sold out. Any missed sale due to product being sold out is potentially forever lost if they instead go for a competing product.

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply.

Basically...

We have no clue what demand for the 77xx is.
We have no clue what the supply for the 77xx is.
We have no clue how much it costs to manufacture.
We have no clue how much margin there is for AMD.
We have no clue how much margin there is for the AIBs.
We have no clue how much margin there is for the retailer.

When 77xx starts showing up on the Steam survey we may start to get an idea of how many cards are selling, but we still won't know if demand is just a tiny bit lower than supply or a lot lower than supply.

Occasionally you can find out the demand vs supply issue when a company reports it in their financial statements (Nvidia taking a loss to write off inventory back when GTX 28x was competing with 48xx for example). But even that is generally fairly rare. And is often used to inflate the subsequent quarters as they sell off inventory write offs for lower than the cost to manufacture. But since the writeoff was in the previous quarter, then it's almost all margins after that.

Regards,
SB

 

[Ernestds]

Why does the RAM costs almost twice for AMD on the HD 69xx?

 

[Kaotik]

Why does the RAM costs almost twice for AMD on the HD 69xx?

Faster rated chips, 2GB vs 1GB in most other cards?

 

[Zaphod]

Either AMD needs to fire the guy who does their HSF sourcing or Mercury Research needs to hire some better proof readers. No way the 560Ti thermal solution is less than that of a HD5/6450.

 

[Ernestds]

Faster rated chips, 2GB vs 1GB in most other cards?

I see.

But the 256 bits vs 384 bits doesn't make a difference? Or AMD still has to use more chips because of 33% more RAM (compared to the GTX 580)?

 

[Kaotik]

You don't need more chips for 1024MB vs 2048MB, you need more dense chips, same for 1.5 vs 3GB ofc

 

[UniversalTruth]

...Any missed sale due to product being sold out is potentially forever lost if they instead go for a competing product.

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply...

Any missed sale due to products being overpriced is as bad as the one mentioned by you.
It is interesting to observe some Juniper based 5770s still available for sale. That means their price is far from being the ideal one, and supply is significantly greater than demand. Now, AMD can rely on and use the TSMC 40 nm production capacity and they can flood the market with ultra cheap Junipers (for example at 70-90 $), thus creating nice turnover and possibly significant profit too.
Another thing is that some retailers are so weird that they prefer to keep some overpriced products as long as they can on their store shelves (thus gathering only dust) instead of to sell them immediately at reasonable prices.

 

[Entropy]

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply.

What both of you are saying is that AMD is likely setting their price so that demand doesn't outstrip supply. This may well be true.
However, this also means that AMD largely fails to capitalize on being months ahead of nVidia on the new process node. If your theory is right, AMD should be less than happy about the situation.

 

[Silent_Buddha]

It is interesting to observe some Juniper based 5770s still available for sale. That means their price is far from being the ideal one, and supply is significantly greater than demand. Now, AMD can rely on and use the TSMC 40 nm production capacity and they can flood the market with ultra cheap Junipers (for example at 70-90 $), thus creating nice turnover and possibly significant profit too.

Erm, HD 5770 (going by Steam) is the second most owned video card (regardless of DX version) for people that game. Yet if I look at Newegg, or various other sites it's still available for sale. I'd say that demand for that was quite high. Is it too high now? Possibly, but read further...

Another thing is that some retailers are so weird that they prefer to keep some overpriced products as long as they can on their store shelves (thus gathering only dust) instead of to sell them immediately at reasonable prices.

Most retailer's can't afford to sell product for negative margins. For many they consider it better to hold onto a product until it eventually sells. Warehouse space is cheap compared to display space in Brick and Mortar. There's always the chance it'll never sell and they'll eventually be forced to sell it at much much lower prices. But it isn't uncommon for a retailer to wait 4-5 years or more before doing that.

The other case they have for holding onto them long term is if they have a long term store replacement policy. They can hope that a customer requires a replacement at which time they can swap the cards for the customer and then attempt to get reimbursement from the company that made the card, often for more money than they could have gotten by selling it at a discount.

Either way, you'll see many stores that still sell Geforce 3/4 cards. And anything from then til now. It doesn't say anything about AMD or Nvidia's demand/supply situation with regards to those cards as they no longer manufacture chips for them.

I'm sure if I went looking I could probably still find someplace selling G92 based cards. Does that mean it was horribly overpriced and unsuccessful? While I personally detest all the renaming that went on with that chip, I can't put blinders on and claim it wasn't a huge success at retail.

What both of you are saying is that AMD is likely setting their price so that demand doesn't outstrip supply. This may well be true.
However, this also means that AMD largely fails to capitalize on being months ahead of nVidia on the new process node. If your theory is right, AMD should be less than happy about the situation.

I'm not sure I follow? If AMD is making as many as they can on a new node (hence limited wafer allocation I'm assuming) then pricing it such that supply is just slightly higher than demand is the best course to follow.

Since we don't know AMD's production capacity, actual retailer inventory, actual retail sales numbers, etc., it is impossible to reliably come to the conclusion that you have. Just like it's impossible for me to definitively say that their stock levels are perfect with regards to demand.

Hence, there's no evidence that they aren't capitalizing on it. If product was constantly sold out then that would be clear evidence that they aren't capitalizing on the advantage. For example, they missed out on a huge opportunity to captilize on Radeon 58xx due to pricing. It was priced way to low and hence demand was far greater than supply leading to potentially huge loss of sales, not to mention money left on the table as people likely would have payed far more for it. Then again, coming from the 48xx - GTX 280/260 price wars, it's understandable that they priced conservatively.

That was fantastic for the consumers that could buy one. Not so much for AMD.

Regards,
SB