I mean you’re considering buying a GPU every generation it seems you shouldn’t be that price sensitive, you’d probably be better off just buying the best card in the stack and riding it out for a few gens.
Market behaviour and pricing strategies for consumer GPUs
- Thread starter Seanspeed
- Start date
Thank you for saying this, I get rather annoyed when people try to ascribe human emotions to companies. They operate in a market and price accordingly, if people will buy Nvidia without even considering a competing brand then there’s no reason they wouldnt raise prices.
Except Nvidia doesn't just operate in one market.. they operate in multiple markets.. and the expense of one for the other is ABSOLUTELY going to affect the less lucrative market negatively. It can make all the sense in the world... but people don't have to like it. Just make no mistake... it's greed.
To be fair, that's the current market. It can be operated differently, in the past has been in various ways, and companies could choose to operate with different priorities. So the sentiment against 'too much profit' is a sociological one and not a complete nonsense. However, that's a discussion for a completely different corner of the internet.
I have no problem with people being up in arms about profit margins deemed too large, but the arguments from those never seem to be that logical.
Unless they price fix. Which is where we have regulation. Without regulation in a completely free market, you might well find everyone hiking prices and refusing to undercut each other. nVidia finds itself with a monopoly and no regulation.
Technically it only needs to break even. You want some degree of profitability to have a reserve for a rainy day. Above that, how does it get justified? Why does nV need $60 billion profit a year and not be happy to get by on $6 billion? Or even $0.6B?
I'm not entering that discussion. As I say it's for other corners of the internet. I'm just presenting it as a fair consideration and why people do challenge that current status quo of the richest trying to get all the money and whether that's actually in humanity's best interests or not. In short, it's not a stupid argument, but one you disagree with.
EDIT: To prevent derailing, the topic of corporate greed is now taboo. Subsequent posts on this matter will be removed. We all know how the market operates. What level of ethics we ascribe to that isn't relevant to this thread or this sub.
There’s no contradiction in my argument at all. It’s really not black and white but more a gradient. There’s a lot of gray area between I’m happy to buy and I like the price to I will not buy at all because it’s ridiculous. I don’t I need to explain why goodwill with your customer base is important to business.
Even Nvidia recognizes this and priced the 30 series accordingly. Jensen even came out with his “it is safe to upgrade now” schtick. The only thing that happened was that a lot of “free” money got thrown around leading to excessive inflation. This of course fooled Nvidia to erroneously believing that the pricing by third party resellers was the correct pricing for their products. The problem is that, lots of people paid for that with money they didn’t work for, ie stimulus checks. The pricing will correct itself in due course.
I’m not sure where you’re getting your information from but Apple’s gross margin has never exceeded 50% ever since 05. Not sure why you’d remove R&D as that’s a cost to creating the product in the first place.
Finally, in a natural free market, the idea of companies with excessive gross margins cannot ever occur for an extended period of time because a high gross margin attracts competition. It signals to the market that there’s lots of money to be made by undercutting.
As someone who sits on lots of quarterly financial calls, I can tell you that most investors are not privy to what the optimal price of a product should be. As for the examples you use, those markets have high levels of competition and substitutes.
Nvidia is not really operating in a free market at all. You do not have government funding in a free market and you certainly don’t have patent protection in a free market. If it was a “free market”, many companies would have already cloned Nvidia’s designs and driven the price of the product down rapidly. The GPU market which once had many competitors has now become a duopoly. Two companies working hand in hand to drive prices as high as possible.
The final thing I will say on pricing is that the customer base is not rational at all. We have seen lots of instances where anger from the customer base leading to significant drops in expected revenue. The key I think for all business is to look to keep the customer base mostly happy while extracting as much revenue as possible. This way, they’re always eager to buy. Nvidia is doing a bad job of that at the moment.
Where’s the evidence for this though? A handful of vocal people complaining on forums isn’t representative of the customer base.
I don’t see any long term negative effects to Nvidia of the current online grumbling. If Intel or AMD get their act together and start offering more competition then prices will come down. However Intel/AMD won’t gain any advantage because people think they’re more charitable or any such nonsense. People will still make purchase decisions based on performance, features and price seasoned with a healthy dose of whoever has the best marketing.
I mean most DIY PC gamers buy prebuilts which not only exclusively stock Nvidia, but are also generally poor value. Most people don't really care about value and Nvidia knows this, they just have to price it somewhat sanely and it will fly off shelves.
Bleak for tinkerers and whatnot but to the average guy this is all noise. Most just want to play games on PC smoothly and don't care if they are paying more per frame or whatever.
It's more than a handful of people. There are tens of thousands of youtube comments echoing the sentiment. Lots of other bigger forums like reddit, etc. The evidence I'd argue would be in unit sales. However, we're not privy to that information. Revenue has gone up for gaming but so have the prices by a significant amount. If we had the unit sales, then we could easily calculate how much prices affect the unit sold.
Lets be serious, most buyers aren't out there making decisions based on price, performance and features. If they were, the market would not be so skewed in favor of Nvidia.
DavidGraham
Veteran
Tens of thousands is a stretch, they are just thousands echoing each others. The 4060 and 4060Ti were among the most hated products online, especially in YouTube reviews, yet they lead the charge in Steam Hardware Survey and marketshare surveys by massive massive differences. Talk about a huge disconnect between these "comments" and the real world.
Unit sales are provided each quarter, NVIDIA sold 7.2 million units in Q3 2024, It was 8.5 million units in Q2, and 7.7 million in Q1. Thousands of comments are a mere drop in the bucket compared to these numbers.
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DegustatoR
Legend
No, it needs to be profitable. Nobody goes to build a business to break even. We can debate on how good it is for the market to have profits as large as Nvidia has right now but then we also have to account for where these come from - and it's not the gaming market, they are making bank on their own bet on AI which they've made a long time ago - and won. It's not something which was just given to them because of "greed" or price fixing or anything of the sorts. Of all the companies on the planet Nvidia is the last one who doesn't deserve the success they have right now.
I fully agree here.
In short term, There's no effect on nVidia's Gaming side income if people are grumbling in forums. And that will not change few generations even if the competition would do miracles on half price. It will need several generations and very serious work from competition to change this. (in which I think AMD has troubles. Their hardware and drivers seems to be ok, but the branding with half a dozen naming changes and image building is not consistent.)
Most likely nVidia sees the market space as their playground and that gives them rights to manipulate it as they please. Especially now when AMD has stated clearly that they are not going to challenge nVidia in High end. Which again is open door to nVidia redefine the high end: It is not just 5090 anymore, but 5080 as well. It is like classic finnish joke about guy in restaurant asking where he can see that he just ate in five star restaurant and the waitress says "From here" giving him the bill.
right now it seems to be fact that if you are guy like me, living in ~30 000 euros two room apartment with family of two others and having yearly income of 33K euros (after taxes), High end gaming with PC is not anymore your hobby. There's no way you (or your wife) could justify putting one of 15th of current apartment price to one part of the computer. There's a lot cheaper and a lot more meaningful things in life than this.
So if you cannot afford it, don't do it. However, it is ok to tell via public channels that you cannot tolerate the prices and you are having break to think where to invest your free time.
In long term? well at least they make the road easier for potential competition, which seems to lurk in the shadows already. So, in short "Computers for the masses, not for the classes" Is the thing people are waiting with their moaning in forums. It does not effect nVidia directly nor their profits, but it does give a clear signal that there might be space for 3rd competitor in market.
EDIT: fixed the division math. Unfortunately the error was not big enough to make this post non-valid for my finances.
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I think he meant retail unit sales. It doesn’t matter though. They have increased market share during this period of price hikes. Which means if people are mad at them they’re even more mad at the competition. If there was a mass exodus away from Nvidia in retail it would show up in the numbers.
If this was reply to my post...
I did not talk about flagships.
I was talking 5080 series. 4080 Super costs here 1300-1400 euros and based on diffrence to US pricing and rumor, the 5080 is going to cost 1700-1800 euros here. My hard limit goes around 650-700 euros. (as I stated in older posts, I own now 3070Ti which costed me 799 euros and that was quite bit of streching the budget. Aftewards thinking I feel that I would probably been fine with 3070, but back then it was chip shortage so you had to buy what you had available.)I did mistake in division there though, thanks for notice. I will fix that. Unfortunately it does not change the situation.
EDIT: as long as the xx90 series have existed, they have been out of my reach.
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I've moved a good chunk of the tail end of the Blackwell architecture and product speculation thread out to here, since the discussion branched off heavily into everyone's favourite topic: the economics of consumer GPUs. It's a discussion I'd like to see play out, but it's not an architecture or product-level discussion of Blackwell-based GeForces any more.
Shifty's note about staying away from framing any of it as simple unethical corporate greed still applies. There's loads of room for an interesting and fruitful discussion without reducing it down to "x is being greedy". If that's how you feel any company is behaving then try and dig in to the details of the why to explain your position, and try and keep the discussion respectful and address the points being made, not the individuals posting. The whole site guidelines are clear about that part.
Shifty's note about staying away from framing any of it as simple unethical corporate greed still applies. There's loads of room for an interesting and fruitful discussion without reducing it down to "x is being greedy". If that's how you feel any company is behaving then try and dig in to the details of the why to explain your position, and try and keep the discussion respectful and address the points being made, not the individuals posting. The whole site guidelines are clear about that part.
One thing that's probably worth digging into, if folks have the energy to, is the effect that various tariffs and trade deals have had on consumer product pricing in the last 4-5 years. The impact from geopolitics (not just Taiwan's either) is non-zero and should be factored in alongside rising semiconductor manufacturing costs, the rest of a product BOM outside of the main chip, retail sales channel margins, chip vendor gross margin targets, general business performance, and the other main themes that discussions like these usually touch on.
This is excellent point.
In light of statements made by U.S. upcoming president, tariffs, tolls and taxes might effect the pricing and also change the price balance between europe and U.S.
Thing that I noticed in B580 launch that while it was undercutting 3060 in U.S. about $50, in northern europe 3060 cards were (relatively) cheaper than in states and B580 ended up battling against it in exactly same price. It's first time I noticed some GFX cards being cheaper in finland than in U.S. No idea what causes that though.
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How do we know that any of those commenters are actually in the market for a GPU and aren’t just joining the mob for entertainment?
This is just basic economics though. Higher prices lower demand. It would not be evidence that people are angry. It also doesn’t explain why Nvidia is gaining and not losing market share.
Well we’re quickly running out of reasons for why people are buying GPUs. They’re mad at the company, the products are overpriced and there’s no performance or feature advantage. Are they being held at gunpoint?
One angle we haven’t explored is whether AMD manufactures enough volume to make a dent in market share. Do they even have the wafers to spare for Navi?
DavidGraham
Veteran
Retail DIY marketshare for the whole Korean market is provided in my post above, it mirrors EXACTLY the numbers from AIBs/Steam/financial calls.
neckthrough
Regular
30 series was affordable because the Samsung 8nm node was cheap.
40 series on TSMC5 was a huge increase in price per wafer, to the point where cost/xtor was likely unchanged at best (3x more density for 3x the price).
Think about it -- if $/xtor stayed about the same then a 4070Ti (100% of a 36B-xtor AD104 die) likely has a higher BOM cost than a 3080 (80% of a 28B-xtor GA102 die) did. The sticker prices track very closely. Other products along the stack were shuffled but on average the prices we see reflect the reality of the underlying component costs.
What some people on these forums are demanding is for NVIDIA and AMD to charitably swallow these costs in order to provide an illusion of continued perf/$ scaling when in fact Moore's Law is utterly dead.
Going forward we'll still see incremental scaling from higher clocks, and possibly dramatic scaling from algorithmic innovations (or alg/hw co-design). We may still see raw perf increases at the top end -- for a price.