Pricing Discussions around AMD VEGA *over-flow*

With the benefit of doubt gone: What did keep AMD from saying straightforward: Yes, we are fully enabling our retail partners to keep the same pricing as for the launch SKUs.

 

Because they can't enforce prices on retailers, and probably never could?

They probably set up a MSRP that includes a typical profit for distributors and retailers (what Gibbo sais about profits being small has been true for all graphics cards until the mining craze), but the final price can't be dictated by AMD.

The same way retailers/distributors traditionally got to offer prices lower than MSRP in the past, they can also do the same to increase them if demand overwhelms the offer.

I'm pretty sure AMD isn't very happy with the RX580 going for >300€, nowadays. They're probably getting the same amount per-chip as they were back when the 8GB card was introduced at 240€ otherwise their Q2 results had seen considerable gains in the GPU department.
Same with Vega, they're charging the same from distributors, but they can't legally control the final price. At least with Vega they're getting a larger ASP on their side.

 

Since you refer to Gibbo, you're probably aware that AMD enabled their retail partners to hit a certain, desired price point. You might notice, that it is you who talked about enforcing, while I merely wrote enabling. Do you need me to provide a link for you or is your memory sufficient?

edit:

On the contrary, they must be VERY happy even if they don't get their share from the inflated RX470-580 prices. For two reasons.

First, imagine a regular devaluation round and RX 570/4G readily available for 150 €, 8G versions for 200 €. GTX 1070 was half on it's way to 350 € (and by that I mean 370-380ish with short dips into 360ish area - half way to 350). AMD would probably not be able to command a 400ish price point for V56 (and yes, I count 399 towards 400ish), as well as a 599 non-rebated price for V64. This way, they make more money.

Additionally, they can justify slim margins on launch quantities better, when they can point their partners to how they reap all the profits they can think of in the mid-range section already.

 

Yes, they made a deal with retailers by paying them $100 per card for them to not to overcharge for the cards during launch. This is most probably not sustainable on the long run, and it was a deal that greatly favored retailers, not an enforcement.

I really don't want to badmouth Gibbo because he's been doing very good things to his gamer brethren in the forums (literally losing money on forum-only deals and helping a lot of people getting cards at affordable prices), but all facts considered he just chose his words poorly.
AMD paid him to sell hundreds of cards at MSRP and then said after that it would be Black Packs. But then it was him who chose to fragment those black packs into game-only SKUs and game+discount SKUs, not AMD.


Paying retailers a fee to ensure MSRP at launch was the best AMD could do in this age of overpriced GPUs everywhere.
Yet somehow AMD is getting flack for it.

What an era of entitlement we live in...

I don't think that's an entirely wrong line of thought, but it's quite a detour when we have so many official statements about the mining craze from both AMD and AIBs alike..
Their opinion is consistent among them all: sales are good, but large scale professional miners don't take up brand loyalty, the sales have zero influence on the gamers' marketshare resulting in zero developer efforts and when the current hardware becomes obsolete for mining they'll flood the market with so many dirt cheap used cards that they'll break the market for new cards, creating a period of drought for IHVs and AIBs alike.

 

Gibbo stated that without the rebate from AMD, the cards would sell at a loss at the launch MSRP. That doesn't sound like retailers wanting to over charge, more like just not wanting to lose money? Doesn't bode well for the cards going back to $499 either.

So you're saying that Newegg and Amazon decided to make game only black packs because some reseller in UK did?

 

I need good spanking. I don't understand a word this whole argument is about.

 

Source for them selling at a loss, please?
All he says is they have low margins on graphics cards. Retailers have always had low margins on graphics cards. I remember some 15 years ago that some stores in my country didn't even take certain credit cards (American Express I believe, at the time) because their commission was above most of the percentage they took from PC hardware.
They get nice margins on pre-built systems with custom cooling and/or RGB bling, plus warranty extensions. But on components it's always been a very competitive market and margins have always been very low.

I'm saying Gibbo decided on making sub-SKUs out of the Black Packs. Who said anything about Newegg or Amazon?

 

So, you know how the real deal went behind the scenes? Please tell us more.

From what you wrote, I conclude, AMD bribed e-tailers to keep prices in line with the official narrative for the very limited quantities of SEP-conformat standalone cards, yes? Those lucky few gamers.

Frankly and from my experience, official statements and real opinions can diverge quite substiantially.

 

Would this suffice for your need of sources?
https://forums.overclockers.co.uk/posts/31071902

„This is explained in the OP!
$499 launch price only, NO FREE games! Limited to launch stock volume of several hundred as AMD had to fund as such a price makes quite a substantial loss.
$599 with games for black and silver.
$699 with games for aqua.“​

[my bolding/underlining]
Happy to help.

 

It's right there in all the news articles! The stores got a $100 rebate per Vega to ask for the Suggested Etail Price. I don't know any more than you do.

Yet AMD already stated they're bringing additional cards with and without packs.
I guess we'll see how much more these stores will charge when the packless cards arrive again. Right now the prices are for Black Packs and even OCUK has changed their names accordingly.

Yup.
Sounds fishy as hell though. A product that retailers sell at a loss by default? Is there even a precedent for such a thing?
Not to mention possibly illegal by some anti-monopoly wars that exist in the EU.

Yes, they can.
Which is why Gamers Nexus put out some rep's opinions with their identities hidden:



And it's a match with what I stated above.

 

This whole launch screams fiasco and diaster. Never before have we seen an official SKU hidden behind the wall of a bundle, liquid Vega can only be purchased through a very propitive bundle, despite not being a target of miners. its a niche card for enthusiasts and consumes more power for little performance over the air Vega. That's why the claim of protecting the card from miners is bullshit, the bundle is there to grap more money from customers. the card is sold literally at a loss even at 700$, given the cooler complexity.

And then AMD releases drivers which enhances mining capabilities, gives an official statement that they will focus even more efforts to improve mining through driver updates. And the whole thing screams hypocricy.

The icing on the cake really is the last 100$ rebate scandal, the official statement means squat, it's ambiguous and shady, and far from direct or frank, meaning the standing situation is still in effect, prices are 100$ higher, and they will not improve in the future.

 

You made it sound as though AMD did bribe shops not to overprice instead of AMD subsidizing uneconomically low SEPs (for packless, standalone cards).

In any case, it makes me wonder:
When retailers tell AMD those prices are not economical for them and they'd operate at a loss, it is a matter or margin, i.e. difference between price for buying and selling. And instead of reducing the buy-part of this equation, AMD seems to keep their prices as they were, only subsidizing a certain (unkown but apparently limited) amount of stock. How does that make sense? How can they set an SEP knowing that their partners would have to sell at a loss?

Yep, but they did not state whether or not they will take action in order to enable their partner e-tailers to keep the respectice launch SEPs. And that's the whole question: Will they or won't they. And if not: why?

Definitely fishy. Maybe that's the reason for all those statements without meaning?

Yeah, and it's still on record - on YT even. Talk to people behind the scenes.

 

AMD has only sold the "pack"-SKU. Retailers can only buy the "pack"-SKU. It is not possible to sell them at $499 without making a loss.

The $499 SKU doesnt exist. We have to wait and see when first "stand alone" cards will be available.

 

Do you have a source for that - AMD only selling Radeon-Pack SKUs?

 

As I understand it. VEGA is too expensive to make and AMD had to sell their first cards at a loss to get reviews with better comparative to Nvidia because performance wise there is no contest between how much it cost Nvidia to get to that lvl or performance vs how much it does AMD.

Unless AMD release how much it cost them to make VEGA I think thats the better explanation. the whole bundle thing is to try not to lose too much money. Sad tbh...coming from such a success that was ryzen to this fiasco that is VEGA.

 

https://forums.overclockers.co.uk/posts/31060189

Why do you have to give a reduction to hit the official $499 price point when the $499 SKU is the only product in your RX Vega 64 portfolio?!

 

Because it happened across many sellers, not just Gibbo. He didn't just "create" them. Both Newegg and Amazon ended up with game-only SKUs after only an hour after all the card-only SKUs sold out.

 

HBM2 is probably somewhat expensive, but Vega 10 isn't much larger than Hawaii, and it's much smaller than Fiji. There's no reason it should be all that expensive to make.

 

Impossible. We know from Tots that HBM2 is actually really quite cheap.

The Vega core die is much larger than gp104, but we've had GK110 was much larger than Hawaii as well. It should give a survivable margin hit.

But there have been quite a bit of articles lately about memory. Hynix in their conf call about HBM2 being more expensive than HBM, GDDR prices going up 30%, some pretty strong claims about absolute HBM2 pricing, not enough supply for HBM, clock speed issues, ...

It's possible that all of that is just empty talk, but at the end of the day, the volumes of HBM2 are pathetic, thanks to Nvidia not using them for consumer products. And if Hynix or Samsung can't deliver 2Gbps components for Vega, the lower speed SKUs may very have supply issues as well.

All of that can't be helpful for component cost.