Is Ati a kind of firms which fears there own success?

Discussion in 'Graphics and Semiconductor Industry' started by volkodav, Mar 12, 2003.

  1. volkodav

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    I red it somewhere:
    “ATi has a huge problems with R300 chip supply for there partners. Gigabyte lines engaged only on 40%, Sapphire on 50%. Some vendors wanted to switch on the ATi chips lately, but being looking on the current delivery problems of ATi’s major AIBs, changed there mind. Deficit on R300 chips holds prices high. Market share of ATi wasn’t grow despite of Radeon 9700’s popularity among customers and OEM.”

    And this a red today from Tom in the and of his 5600’s reveiw:
    “The only thing that can save NVIDIA from more serious damage is the poor delivery situation that is typical with ATi.”

    Then I looked at the prices on the Radeon 9700 in my local stores, and was unpleasantly surprised, that tags even grew during last three months!

    So, what is a situation with ATi? It looks like they are not ready to be number one, us they are crying in all there interviews (“We want to be first, second place for others” – Richard Hardy.) Each time when ATi releases new chip on the market, they thinks it will NOT be popular, and so makes tiny orders on TSMC. They are ALWAYS pessimistic to there own product! And when chip becomes popular, deficit arises. 8500, 9700, all repeats again and again! It looks like ATi is a loosers in mind, and NVIDIA is a winner. That’s why, I’m sure, NVIDIA sells much more NV3x, though they all sucks, then ATi R3xx, though they rocks!

    No, it’s really a something wrong with ATi. Are they forget a number one rule of business – “Grow or die”? They produced a million of chips and happy as a kids that they sold them all, when market could eat MUCH MORE! Delivery problems, delivery problems, ALWAYS delivery problems for ATi! They better should change there name from ATi to ADP==Always Delivery Problems, because it’s clearly a essence of ATi…

    :evil:

    p.s. If someone will be on the ATi’s conference call on 21 mart, please say only two words to Dave Orton: Don't defend, Attack!
     
  2. Joe DeFuria

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    I don't think you could be more wrong.

    ATI was stuck with MUCH overstock of the R200 chip, which forced a re-branding to the 9100 and a lower price...undoubetdly not making much profit on that one.

    It is much more logical to me that ATI is purposely limiting supply of the R300 chips, because they are REPLACING them with the RV350/R350. In particular, the 9500/9500 Pro are likely extremely poor in terms of margins (which is exactly why they are extremely good bang-for-buck cards for consumers).

    The last thing ATI wants is a large supply of low margin 9500 Pro products sitting on the shelves next to the 9600 / 9600 Pro.

    You want to talk about poor supply? According to nVidia...EVERY SINGLE desktop product from nVidia, except the GeForce4MX, was on ALLOCATION from nVidia the past quarter. And likely, it's for similar reasons. The last thing nVidia wants is to see lots of GeForce4 Tis on the shelf at a similar price point to the NV31/NV34.

    Are you kidding me? There's more ways to grow your business than to ship more desktop products at unacceptable margins. How many times lately has ATI said that they don't EXPECT very large growth in the PC Market (and I tend to believe them). That's exactly why ATI is going into other markets like set-top boxes, TVs, handhelds, consoles....
     
  3. John Reynolds

    John Reynolds Ecce homo
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    I think if ATi is having delivery problems it could be phrased a bit more constructively than telling their CEO to "stop sucking".

    I'm tempted to just outright delete this thread, but it could very well be true that ATi is having problems keeping their supply channels full. But let's keep this thread fairly noise-free.
     
  4. volkodav

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    John Reynolds:
    agree
    Ok, please don't delete.

    The 1st quotation was from very reliable source, the second is Tomshardware.

    I don't understand why prices for 9700 are frozen and even grow, when Ti4600 constantly fall (in Russia). ATi made a exellant conference in Moscow, named our market "booming market", but what about real things? Prices didn't fall at all since december!
     
  5. Tokelil

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    I think Joe just gave a good answer to that:
    If Ati is able to sell Radeon 9500 Pro and 9700 (Pro) at a higher price when they are trying to empty thier stocks, they make more money!

    Hopefully it will be another situation with 9600 and 9800 cards!

    (I haven't seen any retailer that have a Radeon 9500 Pro in stock for like 2 months! :( )
     
  6. Dave Baumann

    Dave Baumann Gamerscore Wh...
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    A couple of other things to consider is that ATI is an OEM focused company - in reality thats their primary concern, and if they have strong OEM demand they probably would rather ensure they have enough allocation.

    Another reason for keeping a slim supply, beyond those already mentioned, could also to ensure that margins are kept high on the chips - another thing which has bitten them on the butt.

    However, it could be the case that they just aren't getting allocation with TSMC. K. Y. Ho has strong relations with TSMC so that might not be the case.

    BTW - this should be in the GFX companies forum.
     
  7. Hellbinder

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    Being that they have sold 1 million Chips.. It hardly seems realistic.

    I would not trust one word coming from Lars at Toms. How can in one breath you do a Review of the still not Shipping 6 month late GFFX which has only seen EXTREMELY limited prduction. And in the next say "The only thing that can save NVIDIA from more serious damage is the poor delivery situation that is typical with ATi.â€￾

    Typical with ATi??? :roll:
     
  8. volkodav

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    Joe DeFuria:
    I remember vary well the end of 2002 - Radeon 8500 275/275 was in big deficit, and a lot of people on rage3d was angry because there orders was suspended, especcially DELL's offers. If now ATi has overstock of R200 chips, it is another example of mismanagement - they didn't produce enouth R200 when market was eager for them, and produce a lot when market wanted another chips. After GF4 Ti4200 release, R200 was not very wanted chip, its time was before 02's crismas.

    And with R9700 situation a little bit differ: they was planned 9700 (non pro) and 9500pro lounch in octomber, but because of underestimant demand on 9700Pro they threw all avaiable R300 chips on most profitable part, but can't fight against Ti4200/4600 in mainstream until crismas.

    And from the same source I red that 9700Pro card cost ATi no more than 120$, 9500Pro must be much cheaper, because of 128bit, lower frequencies and 6-layer design. So it must be quite profitable for ATi, they simply can't produce them enouth.

    Maybe it is not ATi fault, they are fabless, but I simmply want to change my current 8500LE on 9700, but prices are grow! It was on 250$ before new year and 268$ now... I don't understand such things at all.
     
  9. Joe DeFuria

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    It's just supply and demand.

    Ti4600's are falling in price because they won't SELL at higher prices. Or more accurately, they won't sell the target quantity at higher prices.

    At the moment, there basically is no competition for the 9500 Pro and 9700/9700. The price remains higher, because enough people are willing to pay those prices to get those boards. The first real competition to those products won't be seen until the 9600, 9800 and nVidia's FX cards start shipping.
     
  10. Joe DeFuria

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    Of course, DELL was offering 8500's at a "ridiculoulsy low" price.
    (I should know, I got one of those Dell deals.)

    Obviously, demand increases as the price drops. That doesn't mean it makes more sense for a company to meet the demand. They can be shooting themselves in the foot by selling more chips at a lower margin.

    I think ATI had plenty of R200s. Maybe DELL didn't have enough, but that's an entirely different thing.

    The Ti4200 was only created in direct response to the Radeon 8500 and its pricing. I can assure you that had the 8500 not been selling in the $200 price bracket, the nVdia card in the price bracket would have been the GeForceMX 460. I'm quite sure nVidia was not happy with having to sell a lower margin 4200 in that price bracket.

    Why do you insist that they underestimated demand, rather than simply wanted to keep margins within reason?

    No offense, this line of thinking just shows ignorance of the concept of margins. You also seem to forget that the initial 9500 boards shipped using the same 9700 PCB, in order to shorten time to market. The cost reduced PCBs didn't show up until rather recently, actually.

    You're right...you don't understand it. :) ATI is not in business to give you lower prices on older products. They are in business to make money. ATI is not going to keep on cranking out 9700 boards, and give them heavy discounts, when there are 9800's on the shelf next to them. Who is going to buy a 9800 that costs maybe twice as much, when there are 9700's that are only a "few percentatge points slower" readily available?

    My advice...buy a 9500 Pro or 9700 non-pro NOW, if you can find one, before they are all gone....
     
  11. kyleb

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    good to see a thread where i can agree with Joe. :D

    prices only take big drops when competition drives them to do so, until that is the case it is only natural for the prices to fluctuate with supply and demand. you may not like this, but it is none the less completely fair. :wink:
     
  12. volkodav

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    Joe DeFuria:
    Thank you for your reply, I have to agree with you in mojority. But if you don't see any Radeon9600 on the market until summer, don't be suprised - ADP ;)
    No, I don't think they go away, at least here in Russia. There are currently 41 offers of old 8500's Radeons in my city, so 9500/9700 should be avaiable for a long time.

    And what it changes for R200 popularity after Ti4200 release? Nvidia killed it, despite of low margins from there own product.

    because shortly after the lounch of Radeon9700Pro there was a message on the "digitimes" that ATi made a additional wafer orders on TSMC to meet request of there major AIBs. And because I heard from russian Sapphire's worker in august that 9700 non pro and 9500Pro was planned for sale on octomber 2002.

    And I agree with you about margins, but how about interviews in which Dave Orton said that there aim - 40% of desktop market to the and of 2002? And that they must take market share from others companies? With such price politics they never achieve 40%, IMO. And partners? I don't think Gigabyte is very happy to have 40% of requested R300 chips. It can go from ATi back to NVIDIA.
     
  13. RussSchultz

    RussSchultz Professional Malcontent
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    TSMC had "everybody" on allocation this past fall. Too many companies put off buying their wafers for the Christmas season until the last moment, and they all hit at once.
     
  14. Joe DeFuria

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    volkodav,

    Yeah, thanks for the conversation! :D b

    Agree for the most part. nVidia decided market share was more important than margins.

    ATI did the same thing to nVidia with the Radeon 9500/Pro. They basically killed the GeForce4Ti series by taking a low margin on their own product.

    Note that, this has some very interesting consequences, which we are just starting to see appear in reviews with the FX mainstream chips, and the same will likely happen with the NV350 chips....they don't seem to offer much (and in some cases worse) performance than the "old" mainstream chips.

    The 4200 and the 9500 / Pro are (we all pretty much assume, anyway), much lower margin products than ATI and nVidia would like to have. They were both forced into that position due to competition with each other. Good for consumers, not so good for the companies.

    The FX 5600 and Radeon 9600 chips represent the attempt for nVidia and ATI to get margins more back in line with where they want them to be in the $100-$200 price market. And this poses a dilemma for consumers, they don't understand how these "new chips" that are replacing "older chips" are actually inferior in many ways.

    This can have interesting reprocussions with respect in inventory and allocation. If consumers "demand" the 9500 Pro product, will they buy a 9600 Pro instead if they can't find a 9500? Will they just wait until 9600 prices drop more? (This is all assuming the 9600 Pro is preceived to be generally a little worse than the 9500 Pro...)

    Ok, but again, I'm not sure that those products were not intentionally delayed a little bit to give most partners time to sell-off more older products first. (In other words, I'm not sure if it's because ATI underestimated demand, vs. simply managing inventory overstock of older parts)

    True! (Though do you have a link to that interview? I don't recall that particular comment).

    Perhaps, but that's what competition does to you! You either have to take a hit on margins, or you take a hit on market share. There are different risks for the company associated with either approach. Market share impact is sometimes less tangible, but can be a greater hit to the bottom line in the long run.

    Assuming that's true, no, they wouldn't be happy with that. ;) I'm also pretty sure though, that the OEMS are not happy about whatever supply of FX chips in any price bracket they are getting though.
     
  15. kyleb

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    i think there was a lanuguage barrer thing there on the gigabyte comment, market share and meeting chip demands are not the same thing. :wink:
     
  16. volkodav

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    Joe DeFuria:
    Uhh, it's look like you a great connoisseur in marging, market shares and firm's marketing! I red you comment with pleasure ;)

    Only one thing, IMO, you didn't count: ATi and NVIDIA don't sell chips directly to customers, they sell them to partners. And if Gigabyte wonts to buy 60% more chips for the same price as first 40%, it is not a ATi business will it drop prices (and margins) for boards. We saw in the past as some NVIDIA partners (Visiontek, ELSA) overestimated demands and went into bankruptcy. But this didn't hurt NVIDIA and there market share! From this point of view, I'm still thinking that ATi didn't make a good job lately with R300...

    I'm buying ATi cards from 1998 and this is 1st time when they definitely had a better hardware, both in speed and features. But what they gained? Only two things: better brand recognition and rather high average
    chips price. But this is not forever! NV30 - the 1st failure of NVIDIA since riva128, they next could be after another 5 years. So, ATi maybe lost there last chance to become a real market leader (in terms of market share). And, as ATi relyes on high margins vs. big volumes, they a need a better hardware. How long ATi be able to hold technology leadership?

    ATi is still have an advantage:
    NVIDIA made a lot of mistakes in NV30,31,34 design, thats why PS2.0 & VS2.0 is very slow in comparison to R300. If it were ATi, NVIDIA would cry on any site, any magazine thats rival's hardware sucks in future games (which, as they always says, coming "very soon"). They would sponsor developers for PS2.0 and VS2.0 demos which would show advantage of there hardware. But what ATi is doing for promotion? Almost nothing!
    I have a filling that ATi is wasting this propitious moment.

    Though maybe not all things so bad: I heard from the same source, that now Sapphire has a 70% of lines engaged (50% was before new year). So lets hope that delivery problems are a TSMC fault, not ATi (As RussSchultz wrote).
    sorry, I don't collect such URL's :(

    p.s. Sorry for a long reply. I think here we could make a last point ;)

    kyleb: ehh, english definetly is not my favorite language.
     
  17. kyleb

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    well my Russian is nowhere close to your abilities in English, so don't think i am knocking you by any means. ;)


    i do want to point out though that ati do sell their own cards here in America, just not overseas at this time. also, i don't know what you have against the r300 but i think they did a great job with the one i have. as for promotion, they have not turned into product pimps on us, and i respect that. however, i have seen some good adds from them lately and i imagine we will be seeing more promotion soon.
     
  18. Nagorak

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    Wah? Isn't that good advice? :wink:
     
  19. chavvdarrr

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    IMHO

    ATi lost the moment when they could enlarge their market-share.
    Instead of selling 1.5 mln R300-based cards, with margin of say 100$ (i have no idea of real margins), they could try to sell 3 mln cards with margins of 50$ (or 40$...)
    AFAIK mlns of NV31/NV34 cards are heading to the market and soon FX-compatible harwdare will be mainstream. And games will be optimised for which hardware? For faster one or for best-selled? Answer is evident... :(
     
  20. Nil Einne

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    I'm not going to say that ATI didn't make a few mistakes or that they shouldn't have been willing to sell at reduced margins in exchange for an increased market share however I don't agree:

    You seem a little confused. I'm not an expert on the graphics card or any market for that matter but this seems just plain wrong to me. Let's say GB order 60% instead of 40% for the same price. They want to increase their market share. But is there enough demand? Perhaps not but they knew that. They decided to sell the boards at a reduced margin. And it works... But then what happens? This market share doesn't come out of thin air. There's a good chance it at least partially comes from other ATi board vendors and from the ATi board market as well. So now what? ATi have to reduce the price of their boards. But this makes things even worse for the other OEMs. And let's say these OEMs decide they cannot operate at the GB margin. So they ask for lower prices. If ATi is lucky, perhaps GB is still willing to buy at the higher price. If they are not, GB is now asking for a lower price as well. Now what? If all your OEMs are asking for a lower price and you yourself have dropped the price of your boards you're probably going to have to cave in. Even Nvidia won't be able to strong arm all their OEMs in this way let alone ATi. So you have to sell your chips at a lower price. Now all your boards sell at a lower price then before. Perhaps you gain market share and IMHO, it might be worth it. But you can at least see that selling GB (or anyone) a lot of chips, even at a high price doesn't mean your boards and in the end, your chipset margin won't fall.

    Having said that, while ATi did IMHO make some mistakes, I think it's fair to point out that they do have to be careful. Confidence is one thing. Being fool hardy is another. The trouble with brave moves is if they work out, everyones happy (except Nvidia) but if not, your ass is on the line. The shareholders are not going to forgive you just because if you're move had worked out, it would have been very good... And the simple fact is, I don't think it was easy for ATi. They couldn't know Nvidia was going to screw up so badly with the FX in August/Sept... No one did. And clearly, if Nvidia did no screw up so badly, things wouldn't have been as good for ATi...
     
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