The $1000 question...

JoshMST

Regular
Ok, so this article I wrote is not anything ground breaking, but I think it is an interesting question for most users. While we will someday see $1000 graphics cards (due to things like inflation), will we see them as a common commodity in the next two years?

I would certainly like to hear comments and suggestions from all you knowledgable folks here.

http://www.penstarsys.com/editor/tech/graphics/cost/index.html
 
i'd pay $1000 if it was for some feature(s)/architecture (nontrivial features mind you) budget minded people wouldn't get for years down the road. not for the same architecture, double RAM though and overclocked. i don't see that as justifiable.

that to me is clearly a marketing ploy aimed at the 'enthusiast' with extra cash.

but then i'd pay $500 for a game that thouroughly suspended my disbelief and practically puts reality in a nutshell for my in game persona's choices and senses.

but not for a game that was like GTA (today) only 10 times longer, or more difficult to win.
 
I already went over this, here
http://www.beyond3d.com/forum/showthread.php?p=629794#post629794
and here
http://www.beyond3d.com/forum/showthread.php?p=626238#post626238

Though I do not claim to be an "expert"

Basically huge margins prove that ATI and Nvidia has decided either explicityly, or implicitly to refrain from a price war. Thus they are showing they are both relatively comfortable with the other in the market and just want to make lots of money. There is nothing terrible about this except that for the consumer it raises prices and has the ability to impact future innovation (though I do not see any evidence of that or believe it will happen anytime soon).

If the companies use the extra $ to invest in R&D then the consumer will win in the end anyway (which is burke's argument), but if they buy yachts then it is a loss for video card enthusiats.

The truth is that it may be in NV/ATI interest to keep the other around so they do not end up in anti trust litigation like MS.
 
Have I said "blame SLI" on this issue enuf yet? Well, one more time at least. . . :cool:
 
Heh, but if you were a businessman and you made a product that sold like hotcakes, don't you think you would feel that you deserved that yacht? I mean, it was your time/effort/thought/original idea that brought this product into reality. Don't get me wrong, there are rewards and then there is greed. Just makes you wonder where that fine line is? Do you think the folks at ATI and NVIDIA have crossed that yet?
 
I don't have a problem with the margins --if you don't want to buy, don't. I think SLI proved the market is there at that price point, so it got filled and will continue to edge up until resistance is hit. Our own fault, so to speak.
 
Cartoon Corpse said:
i'd pay $1000 if it was for some feature(s)/architecture (nontrivial features mind you) budget minded people wouldn't get for years down the road.
But if budget minded people don't get those features until a few years later, said features won't show up in games until the same point.
 
geo said:
I don't have a problem with the margins --if you don't want to buy, don't. I think SLI proved the market is there at that price point, so it got filled and will continue to edge up until resistance is hit. Our own fault, so to speak.

I think they tread a dangerous line, if market perception is that gaming on pc is too expensive they may impact their long term profitability. Some people have a line they will not cross on price and developers have to keep that segment happy, while enthusiasts also insist they push the envelope to make use of their monster machines. I imagine that as the margin between top and bottom grows the difficulty in keeping both segments happy increases.

I see the same thing with aegia, there are people who simply will not pay for it, so the question for the developer is how much effort do they put into implementation of its support.

If developers get it to a point where the perception is that you need a super high performance machine to game on pc they are going to lose gamers to consoles. I think it's already happening.
 
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I haven't come to a conclusion on that whole console/pc thing, tho I think I'm familiar with the arguments --and I do think consoles have gotten significantly more attractive this time around. But then it prolly always feels that way just about now in their life-cycle, y'know?

Another way to look at it tho is that the higher margins there are at the top-end, the more attractive the top-end is as a market. The more attractive the top-end is as a market, the more money will go into R&D to capture that market. The faster stuff gets into the top end, the faster it will come down to the mid-range and then low-end (with some exceptions, like 256-bit due to physical limitations).
 
JoshMST said:
Heh, but if you were a businessman and you made a product that sold like hotcakes, don't you think you would feel that you deserved that yacht? I mean, it was your time/effort/thought/original idea that brought this product into reality. Don't get me wrong, there are rewards and then there is greed. Just makes you wonder where that fine line is? Do you think the folks at ATI and NVIDIA have crossed that yet?

I am saying if they are using monopoly tactics and fixing prices very high through either implicit, or explicit understandings (which btw it could only be implicit) then I would be especially upset if they were buying yachts, b/c it is basically distorting the market.

If they are distorting the market but the benifits return to the consumer I would not be as upset. If on the other hand we had a free for all with 3-4 makers of GPUs fighting it out and one company just dominated b/c it was so much better, of course I would not care what they did with the money, b/c it would come back to bite them in the ass if they just bought "yachts" (meaning any trivial waste of money with the funds)
 
Didn't read the article but :
JoshMST said:
While we will someday see $1000 graphics cards (due to things like inflation), will we see them as a common commodity in the next two years?
IMO, no, not in the next 2 years.
 
ANova said:
Good luck to them on selling more then a couple hundred cards at that price.

How many 6800Ultra and 7800GT/X SLI have they sold? More than a couple hundred, clearly. . .
 
Well, there always seem to be plenty of people out there with more money than sense. EVGA is already offering the 7800 GTX 512 Black Pearl edition for $1K, and there will be people who order two of them. I don't pretend to understand having that much money... it must be nice.
 
Look at the current situation. The 7800GTX with a MSRP of $649 and an Instock-street price of $749 are selling as quickly as nvidia can produce them.

This gives retailers an easy $50-100 margin above their wholesale costs. The 7800GTX 512, while the fastest card, is not revolutionary. You're just paying for more horsepower with the same feature set.

Ati and nvidia will clearly see that $699+ is an OK price for high end consumers who are obivously the prime target for this card. This practically ensures that the next flagship model for either company can MSRP at $699 without much backlash from the potential buyers. Now, If one card is quite dominant over the other, expect that card to MSRP at $749 with a street price of $799+ Once the MSRP is raised on the flaghship products, it will NOT go down for future cards. Sure, they can drop the MSRP later on but upon initial releases of future cards, the MSRP will be set that high since it has evolved (due to consumer acceptance) to this level. When a consumer is willing to pay a mark-up, it does not directly effect the parent company since the margin belongs to the resellers. To retain this markup, they adjust the MSRP accordingly and absorb the floating margin.

The high end consumers willingness to pay markups on flagship products will determine how quickly the MSRP escalates. Seeing the current trend, I don't see why a next get Flagship model with new features and raw horsepower couldn't be in the $800+ range. I'd expect the $1000 barrier to be broken around 2008 or late 2007.
 
geo said:
How many 6800Ultra and 7800GT/X SLI have they sold? More than a couple hundred, clearly. . .
Still a very small fraction compared to how many sell in the low and mid range areas. Plus we're talking about $1000 for one card, not for two.
 
RobertR1 said:
Ati and nvidia will clearly see that $699+ is an OK price for high end consumers who are obivously the prime target for this card. This practically ensures that the next flagship model for either company can MSRP at $699 without much backlash from the potential buyers. Now, If one card is quite dominant over the other, expect that card to MSRP at $749 with a street price of $799+ Once the MSRP is raised on the flaghship products, it will NOT go down for future cards.
That is only true if they are implicitly agreeing not to compete on prices, if they decided to engage in true competition and lets say the ATI r600 trumped the nv60/90 then ATI could sell if for $50.00 less than Nvidia and kill them in sales no one would buy the Nv card. That means that in a competitive world the prices can and indeed will see a downward pressure even on the MSRP of launch. Especially for the second out the gate.
 
but if they can only produce a few hundred of those overclocked bastards than selling them for £ 1000 is the best they can do, as even at those prices there will be more than enough buyers for the number of cards available on the market.

That gives them exclusivity and makes the 1000$ card buyer feel as if he bought the PC equivalent to a ferrari. I mean what else is the PIV EE version for (except that it is a poor performer matched by 200 dollar CPUs)

I am actually suprised it didnt happen already.
 
I don't think they are implicitly agreeing on price. While I think that both keep a pretty close eye on market conditions, there is no collusion between these guys. If there was, you would think that ATI would have lowered their prices on the X850 XT and PE when NVIDIA released the 7800 GTX. You would think that if ATI knew that the 7800 was about to be released, they would have lowered the prices on those cards to be able to drain inventory, and keep a similar price/performance between their top cards and what was available from NV. Instead, ATI kept their prices high, and how many consumers would prefer to buy a X850 XT/PE over a 7800 GTX for the same price? Well... other than those that complain about the image quality. But for the majority of users out there that are going to spend that kind of money, they want the fastest.

I also think we are seeing some very good competition from the midrange. Remember when the X800 Pro and 6800 GT were duking it out? It took a long time before either of those cards dipped below $400. The big reason for that was both NV and ATI just couldn't produce enough chips, so they were priced very high. Look at the situation now with the 7800 GT and the X1800 XL. They were both introduced at the $449 price point, but you can pick either of them up for around $320 right now. I think that is pure competition in a very lucrative marketspace. If there were collusion going on, then both would still be priced above $400 and shareholders would really be dancing in the streets.

We also do not have a gun pointed at our head to buy a $750 or $1000 card. Just as we saw with the failure that was the 6800 Ultra 512 MB, if the market does not see a solid reason for a card to be priced that high, it simply will not sell. If users get tired of paying the premium for the top end parts, they will go to another level and the manufacturer will have to readjust their strategy to sell cards at the top end. We as consumers have a great amount of power (since it is our money). While we all may not use that power wisely, the majority of us have quite a bit of common sense. If these companies find that they don't sell enough product at these high levels, they will find that it is not worth the effort put into those product to reach that price.

It is unfortunate though that the price of entering the graphics race is now incredibly high, I certainly hope S3 will provide solid products at the low end and start to work their way up. Having a 3rd supplier of chips is good for the industry, and it will put more of an edge on competition.

Oh, and the buying yachts with your hard earned money is kinda silly. NV is a public company, and as such Jen-Hsun's salary is well documented. He can buy fun stuff with his stock options, and they increase that stock value by working hard and keeping ahead of the competition. If he wants to spend his stock options that way, then more power to him. The amount of work these people have done to take NVIDIA from a garage to where they are now is simply astounding. They have sacrificed a lot to get here, and I for one feel they probably deserve some of the rewards coming their way. I don't feel that I have been trod upon for them to reap these awards, and it is my decision to either buy or pass up a video card.

BTW, I have no stock in NVIDIA, nor does any of my immediate family. I also do not get paid by NVIDIA, nor do they advertise with me, nor do they send me cards out of the blue for simple charity. The last card I received from them was the XFX 6600 DDR-2, and for the amount of work I did on that review I basically received about $2 an hour to get that review out (yes, they allowed me to keep the card).
 
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