Market behaviour and pricing strategies for consumer GPUs

[DegustatoR]

Gamers have ALL the leverage and they’re refusing to use it. If people refuse to buy overpriced gaming cards Nvidia will just lower prices.

It's not about refusal at least not in a sense of an conscious act of refusing to buy something because of its price. The market works differently - it's about what you get for the money you're spending.
So for gamers to stop buying expensive GPUs these must stop provide something which make them worth buying.
The examples which failed which I know of failed because they weren't providing enough of performance uplift from a cheaper alternative.
Nvidia has obviously learned that very well which is why we don't have a 4080Ti on AD102 and are unlikely to have a 5080Ti on GB202 either. Also TU102 never left the 2080Ti SKU.

Everyone can bitch about it but these expensive cards sell because they provide value to those who buy them. Simply "refusing" to buy them won't work since you won't be able to coordinate a worldwide refusal of buying some product which seems like a good deal for the value it provides. So for everyone to stop buying these cards - which would in fact lead to Nvidia making changes in the lineup, not necessarily making these products cheaper mind you but making other products at lower price points - they have to miss with their value when designing the lineup. It's not impossible to do but so far they haven't and thus they continue to sell.

 

[trinibwoy]

It's not about refusal at least not in a sense of an conscious act of refusing to buy something because of its price. The market works differently - it's about what you get for the money you're spending.
So for gamers to stop buying expensive GPUs these must stop provide something which make them worth buying.
The examples which failed which I know of failed because they weren't providing enough of performance uplift from a cheaper alternative.
Nvidia has obviously learned that very well which is why we don't have a 4080Ti on AD102 and are unlikely to have a 5080Ti on GB202 either. Also TU102 never left the 2080Ti SKU.

Everyone can bitch about it but these expensive cards sell because they provide value to those who buy them. Simply "refusing" to buy them won't work since you won't be able to coordinate a worldwide refusal of buying some product which seems like a good deal for the value it provides. So for everyone to stop buying these cards - which would in fact lead to Nvidia making changes in the lineup, not necessarily making these products cheaper mind you but making other products at lower price points - they have to miss with their value when designing the lineup. It's not impossible to do but so far they haven't and thus they continue to sell.

Yep, that’s exactly right. Clearly the broader market (OEM and retail) thinks these things are worth the price otherwise they wouldn’t sell. That’s how this works. Anyone who is out of sync with broader market sentiment gets to be pissed off and claim everyone else is dumb for paying but in the end those people don’t matter. For prices to change there needs to a broad refusal to pay either because the competition is offering better value or because people just outright refuse to pay for poor value.

HWUB’s latest GPU recommendation video has AMD cards in every price segment. Yet actual sales trends don’t reflect that at all. So clearly there’s a disconnect between what the online gaming community is saying and what people are actually buying.

 

[Scott_Arm]

Couple things going on here:

1. the top tier gpu should be more affordable for everyone.
2. the professional and gamer oriented products must be different segments.

I'm not sure why either of these things are true. If Nvidia called the 4090 the 4090 Professional, would that make the pricing okay? Gamers can skip generations. No one HAS to upgrade, buy on launch day or buy new. If you have a 4080 and the 5080 is too expensive, skip a generation and buy a 6070 or something. I feel like some of this is FOMO-driven, but I don't know. The 3080 was the first time I've ever bought a near top-end gpu, so the idea that there's something else out there that's better and financially irresponsible is normal to me.

Edit: It's very possible the 5080 launches at a price I'm not willing to pay, which just means I keep my 3080 another two years, or hope AMD has something surprising in store. That's all there is to it. Lots of people bought 4090s for gaming and love them, so who am I to judge?

 

[DegustatoR]

Yep, 4090 is the first top end gaming GPU I've bought since 980Ti, and that's fine. I'm about 90% sure that I'll skip Blackwell generation either completely or until 5080 will get 24GBs of VRAM - this latter option would still be a "sidegrade" from a 4090 probably but I can entertain the idea if the new features would be interesting enough. Otherwise I'm fine with waiting and buying some 6070Ti in 2027.

 

[Remij]

Oh yes.. why be mad about prices of things when you can simply not buy them! Why didn't I think of that?...

Guys... it's ok to be annoyed and pissed off about what's happening here. You're not telling anyone anything they don't already know.. such as "Nvidia is just pricing them at what people will pay for them" and "It's been working for them so far"... No shit.

Edit: It's very possible the 5080 launches at a price I'm not willing to pay, which just means I keep my 3080 another two years, or hope AMD has something surprising in store. That's all there is to it. Lots of people bought 4090s for gaming and love them, so who am I to judge?

Yeah, I'm sure the prices will be better 2 years from now!

 

[pcchen]

It seems to me that what people are mainly arguing here is whether NVIDIA is "gouging" gamers because they are in a dominant position.
Obviously I believe it's not the case, and I think it's just a market reality. Everything is more expensive, especially after COVID-19. High end fab process are overbooked for the AI mania, not unlike the crypto mania a few years ago. This along with the fact that high end process now have somehow a bit slowed down in performance progression, led to people thinking new products are not as attractive as <insert previous favorite products here>.

Now what can NVIDIA do? I certainly don't want them to abandon this market. People have been speculating this because "AI" has been much more profitable than gaming. Fortunately right now it does not seem to be the case, nor is it better for gamers if NVIDIA abandoned high end gaming market. AMD already did it. If NVIDIA does the same, we won't have a high end GPU for years and the effect would be felt for even longer.

For people who think it's "easy" or NVIDIA "should" produce cheaper products to not alienate gamers, the question would be is it possible? If it's so easy or even possible, AMD would just already did it. Apparently it's not. In a way, competing the gaming GPU market is somewhat easier than, say, entering the desktop CPU market, because you'd need to negotiate a license (from both Intel and AMD) to product a new x86 CPU, and Windows' support for ARM is still in the early stages. On the other hand, both DirectX and Vulcan are public standards where everyone can implement. There are of course many details but there are no obvious blockers out there. But now other than the big two the only one brave enough to enter this market is Intel (I support them being in this market and I hope they keep doing this despite recent turmoils). There are some Chinese companies trying but they don't have viable products yet.

So I don't think the situation is going to get better. In a way it's going to get better if what you are going after is some absolute performance (e.g. I can imagine that you should be able to get something at current 4090 performance at a very reasonable price 5 years later), but if what you want is the best or second best product tier, then unfortunately I don't think it's going to be cheaper anytime soon, not even after AMD eventually back in the high end market.

What can "ordinary" gamers do? Since GPU should still getting better and absolute performance per dollar should improve in at least lower end products, people wanting to upgrade their lower end cards should be able to do so eventually. Therefore, it's important that games keep lower end settings for these products to be viable. I don't think this is going to be a huge problem because (ironically) the consoles are becoming an anchor for these lower end settings. As long as game companies are developing games for PS5 and Xbox, lower end PC GPU should be fine playing them.

 

[Nappe1]

There is People that buys only every second or third generation. I myself for instance ended up buying 3070ti because 1070 needed replacement and could not justify 3080 prices back then. Now it is close to time for update, but even 5070ti seems to be escalating wayy over my reach. 4080 is already double what I paid for 3070ti which was on sale and still was extremely expensive.

If Intel really is holding G31 to see next gen defined by nVidia and AMD, this potential pricing 50 series leaves definetely more room them to price fiddle and as my upgrade window is around Q2/2025, it Will be interesting to see what happens.

 

[IQandHDR]

Again with a 90% marketshare (and a 92% marketsahre in A.I.) NVIDIA is doing right.
Their responsibilities are to the stockholders, not a vocal minority on forums

The 4090 was actually cheap when looking at what they did from GA102 -> AD102 (~3x the transistors)

 

[Scott_Arm]

Im hoping the 5080 is about 75-80% faster than a 3080 and then really it just comes down to whether the price is worth it to me. I doubt the 5070 will hit that target but maybe. If there are significant features I could potentially upgrade for a 50% increase in performance, but anything less than that I’m not interested in, even if it’s cheap. I can easily live with a 3080 for a few more years.

I’m really hoping for some interesting ray tracing news. DXR needs a bump or a 2.0

 

[Nappe1]

Again with a 90% marketshare (and a 92% marketsahre in A.I.) NVIDIA is doing right.
Their responsibilities are to the stockholders, not a vocal minority on forums

And unless you own nVidia stock, your own responsibility is your own and close ones well being. And that's the reasoning for buying or not buying something. Not some company value.

Edit: and that's the reason why I am willing to see all other offerings as well and then making judgement about is the investment returning me enough well being compared to price needed.

 

[IQandHDR]

And unless you own nVidia stock, your own responsibility is your own and close ones well being. And that's the reasoning for buying or not buying something. Not some company value.

And thus I am buying a 5090, no matter how angry it makes some people at a forum

 

[pcchen]

And unless you own nVidia stock, your own responsibility is your own and close ones well being. And that's the reasoning for buying or not buying something. Not some company value.

Edit: and that's the reason why I am willing to see all other offerings as well and then making judgement about is the investment returning me enough well being compared to price needed.

Even if you own NVIDIA stock you should make your purchase decisions independently. After all, if you are a shareholder, it's NVIDIA's duty to make money for you, not the reverse
The reason why people talking about NVIDIA's market share is to point out that if NVIDIA is just abusing its market dominance there should be more competition instead of less. Generally when a company did that, they tend to have more profit but less market share. This is not evident right now.

 

[troyan]

Couple things going on here:

1. the top tier gpu should be more affordable for everyone.
2. the professional and gamer oriented products must be different segments.

I'm not sure why either of these things are true. If Nvidia called the 4090 the 4090 Professional, would that make the pricing okay? Gamers can skip generations. No one HAS to upgrade, buy on launch day or buy new. If you have a 4080 and the 5080 is too expensive, skip a generation and buy a 6070 or something. I feel like some of this is FOMO-driven, but I don't know. The 3080 was the first time I've ever bought a near top-end gpu, so the idea that there's something else out there that's better and financially irresponsible is normal to me.

Edit: It's very possible the 5080 launches at a price I'm not willing to pay, which just means I keep my 3080 another two years, or hope AMD has something surprising in store. That's all there is to it. Lots of people bought 4090s for gaming and love them, so who am I to judge?

The problem is that most gamer ignore how hard it is to create a "top tier gpu" in these days. There are 50+ billions transistor in these GPUs, process technologies with multiple production steps and high speed memory. GB202 is a product which is nearly impossible to produce, providing over 100 TFLOPs of compute performance and will have 1.8 TB/s bandwidth. This is not a normal consumer product.

And yet this product will suffer in these outdated rasterizing games. What is the point of spending so many ressources when it isnt really used in games? We need better software before we need better GPUs. Rasterizing games do not allow to brute force better performance like in these old days. A 4090 is over 2x faster in Indiana Jones with Pathtracing, but barely 60% faster in rasterizing games than a 3090TI.

 

[DavidGraham]

Rasterizing games do not allow to brute force better performance like in these old days. A 4090 is over 2x faster in Indiana Jones with Pathtracing, but barely 60% faster in rasterizing games than a 3090TI.

Raster graphics is currently rendered at 1/4 resolution for most of it's effects (shadows/reflections/illumination, post process, ... etc), not to mention the effects that run at 1/2 or 1/3 fps, or the visuals that rely on temporal accumulation ... I suspect that these things don't scale up well in using resources and have an inherent low GPU utilization problem.

Add to that the copious amount of CPU limited code in current engines and the net result is games not using GPU hardware optimally.

I noticed that most of the time power consumption doesn't actually increase when enabling frame generation in many games, sometimes power consumption actually decreases, despite the GPU pumping up more frames. This doesn't change whether frame gen is running on shader or tensor cores. This suggests that there are many spare GPU resources left untapped when running raster graphics.

 

[troyan]

UE5 games run with ~60FPS in 4K on a 4090 and yet the 4090 is only <=60% faster.

Indiana Jones is a great example. With Rasterizing and standard RTGI the 4090 is between 1.38x and 1.48x faster. Despite the 4x increase in resolution (nativ 1080p -> 4K) the gap only widens by 7.2%.
By switching to Pathtracing the difference is 1.95x and 2.27x (720p -> 1440p): https://www.pcgameshardware.de/Indi...s-Raytracing-Benchmarks-Test-Release-1461366/

Same game, different software stack and there is an improvement in throughput.

 

[Shifty Geezer]

Because there is no competition in the GPU space? They’re option is buy nvidia who offers the best performance and features or save $50 and buy an amd GPU which has worse features and worse performance. If you amortize the price difference over the length of ownership, the price difference is basically irrelevant? It’s not surprising that 90 percent would choose the better option?

Nope but I think it’s key to highlight a vast difference in pricing strategies.

Why? I don't really understand the argument. You were saying pricing too high will backfire. Yet here you're saying people will grumble but still pay. So surely that's no downside in business terms to offending your consumers so long as they are paying? You're after their cash, not their friendship.

The way Nvidia operates is not the way the world operates at all. Most companies do not operate with a gross margin in excess of 60%. When you compare the price gouging from Nvidia compared to Apple for example, the difference is quite noticeable. Apple is often derided for their excessive pricing and Nvidia makes their pricing strategy look like child’s play.

Huge disagree. Every company would charge 60+% profit margins if they could. They operate the same way with the same objectives, constrained by market forces. nVidia finds itself above most of those market forces so is able to hike the margins. Not sure what you mean by Apple as they have enjoyed 60+% profit margins (BOM, not R&D). Nintendo has been happy to charge more than they needed for their hardware because consumers were willing to pay that.

Sony would happily charge $700 for a new console if consumers would pay that. Starbucks would happily charge $20 a coffee if people were willing to pay that. No-one is choosing lower margins than they can get away with; how do you explain that to your shareholders, "we choose to sell under the ideal price-point and forgo an extra 13% net profits because..."?

What you're seeing in nVidia is that same business thinking operating without decent competition, and in a free market that means a license to print money. They aren't anything different in mentality or attitude, no more or less evil. They're just learning how much their product is worth in the current market and are pushing the profit envelope. If their target audiences weren't willing to pay above $800, they wouldn't create and sell products above that price.

 

[trinibwoy]

Why? I don't really understand the argument. You were saying pricing too high will backfire. Yet here you're saying people will grumble but still pay. So surely that's no downside in business terms to offending your consumers so long as they are paying? You're after their cash, not their friendship.

Bingo. The only feedback these companies get is whether they see your money in their coffers or not. They’re not following your online grievances. If you want to send a message there’s only one option - don’t buy.

 

[iroboto]

Oh yes.. why be mad about prices of things when you can simply not buy them! Why didn't I think of that?...

Guys... it's ok to be annoyed and pissed off about what's happening here. You're not telling anyone anything they don't already know.. such as "Nvidia is just pricing them at what people will pay for them" and "It's been working for them so far"... No shit.


Yeah, I'm sure the prices will be better 2 years from now!

I don’t think this is what is happening. I don’t believe nvidia is gouging here.
Silicon wafer costs are not coming down, the bigger the chip gets, the less chips per wafer.

We can’t math our way around that. Bigger chips, with higher clocks with more memory and bandwidth requirements drive the cost up.

Theres a reason why consoles haven’t seen a price drop. It’s not necessarily greed.

 

[DegustatoR]

The "greed" argument is the stupidest one I've heard in awhile really.
The market doesn't operate on "greed", it operates on competition.
If some company would be selling products at very high prices because of "greed" then other companies would easily undercut them and launch better and cheaper products.
The fact that this isn't happening alone is enough to stop thinking in terms of "greed", even before we look at costs of production - and the fact that any business does in fact needs to be profitable to exist.

 

[Sega_Model_4]

We talking about Vex? When the video goes private there's no way to even see who uploaded it.

Normalized to USD, are these things typically more expensive in Australia? IDK what prices are like outside the US.

In this case, he has already deducted Australian taxes and reached around 1500 dollars. Then he thought that as the American market is bigger, the price might have a slightly lower margin, reaching around 1400.
Only the direct conversion would cost 1700 dollars.

Couple things. How reliable is this guy? How reliable is his source? What are all of the other products on the price sheet and how do they track with prices in the USA?

His source is a guy from a store, pointing out that they already have 5080 in stock in their internal system and he showed a screen that shows the cost price and MSRP.