GPU MSRP is Not Meaningless @ HardOCP.com

Aix.

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I missed the first couple of these blog posts but any return of [H] is more than welcome!

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WorldExclusive

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Nvidia's goal moving forward is to minimize profit above MSRP to retail.
They will keep raising the price until the market can't bear it.

So if an $500 extra can be made on a x80 part, they will raise the price to regain that profit so the retailers can't make a killing.
If everyone's cap to buy a x80 is $1300, Nvidia will set the MSRP at $1200 instead of $699, leaving only $100 for the AIB/Retailer if they sell over MSRP.

Nvidia has waged war against AIBs in the past, here comes the war against retailers/scalpers....but the consumer still loses in the end.
But the consumer must set a cap on how much they are willing to pay or prices will continue to go up. Stop buying $1500+ x80s. $800 needs to be the cap.
 
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Zarathustra[H]

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Yeah, I wish we had more insight into the contracted pricing that the likes of AMD and Nvidia sell these kits to the AIB's for.

We know that they must be somewhere sufficiently below MSRP that it could provide enough of a profit margin to survive on, but we don't know by how much.

Nvidia's goal moving forward is to minimize profit above MSRP to retail.
They will keep raising the price until the market can't bear it.

So if $500 extra can be made on a x80 part, they will raise the price to regain that profit so the retailers can't make a killing.
If everyone's cap to buy a x80 is $1300, Nvidia will set the MSRP at $1200 instead of $699, leaving only $100 for the AIB/Retailer if they sell over MSRP.

Nvidia has waged war against AIBs in the past, here comes the war against retailers/scalpers....but the consumer still loses in the end.
But the consumer must set a cap on how much they are willing to pay or prices will continue to go up. Stop buying $1500+ x80s. $800 needs to be the cap.

I have no doubt Nvidia will continue to try to bump up their top line based on the current market. They have been doing that for years. Remember whenthe top of the line GeForce 3 TI500 sold for $350? I had one.

With the current model it just takes them more time to do so than for the AIB's to up their pricing.

I wouldn't be surprised if we see Nvidia start trying to cut out AIB's all together in order to get more control of their product. This would be the perfect time for them to do so. They could start by prioritizing GPU's to their own branded boards (I know, they are contract manufactured, I think by Foxconn, but it is still sortof internal compared to the AIB's) and then just gradually increase the capacity of their own branded manufacturing, until over time there is less and less left for the AIB's.

That way they control the downstream supply chain all the way to the retailer for most sales, and all the way to the consumer for online Nvidia Store sales and can take full advantage of all the profit margins they have been "giving" to others all this time.

Thing 3DFX's takeover of STB, but successful.

There really is no reason for them not to. From their perspective they are leaving tremendous amounts of money on the table right now that they could control. Foxconn is relatively easy to scale up in volume, as they are HUGE.

One thing this crisis has taught us as well, is that gamers will go much further, and pay much more to get their hands on GPU's than anyone thought before. They could even cut out retailers and say "You want an Nvidia GPU, you buy from the Nvidia store" and keep all of the retail markup for themselves as well, and they'd probably be successful in doing so, because people will just keep buying....
 

causticspill

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Good, concise, helpful post. I never considered that the AIB's are just receiving essentially a bag of chips, and they need to put the work into sourcing and assembling a final board including all the little bits and the cooler (and the RGB!!).

I still don't like how expensive everything has gotten, or why, but I understand the broad retail pricing structure a little better now.
 

M76

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It was obvious that it's not Nvidia / AMD cashing in on cards sold at 3x or more MSRP but that hardly makes the MSRP more relevant to me as a consumer. I'm not even looking at GPU news / announcements anymore, because there is no point.
 

Thatguybil

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What I don’t know is how close is the MSRP is to the BOM.

One of the things we have heard is that it is “impossible” to sell at MSRP because the BoM cost is too close to the MSRP for the AIB to make their margins.

We have no way of knowing if this is true or not.
MLiD has done some reporting on this but I have not seen much on this topic from others.
 
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What I don’t know is how close is the MSRP is to the BOM.

One of the things we have heard is that it is “impossible” to sell at MSRP because the BoM cost is too close to the MSRP for the AIB to make their margins.

We have no way of knowing if this is true or not.
MLiD has done some reporting on this but I have not seen much on this topic from others.
There was a lot of BOM talk about the 20 series which turns out was mostly false, otherwise the 30 series would have been an even higher msrp, not lower.
 

LukeTbk

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According to this:
https://www.gamersnexus.net/news-pc...msrp-realism-debated-ryzen-5000-supply-pcie-6

A lot of the BOM kit is a list of part to use and not receiving actual hardware for all the parts in it, but a list of ingredient which how much to pay for it, which is not always realistic (specifically today).

It is little of the big pricing and limited and indirect but they could still be cashing in a bit, with the price of the chips sold in the kit being higher that it could be to realistic reach the expected price of it.
 

THRESHIN

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I have no doubt Nvidia will continue to try to bump up their top line based on the current market. They have been doing that for years. Remember whenthe top of the line GeForce 3 TI500 sold for $350? I had one.

I Remember those days too. I was a poor college student at the time so I kept my old voodoo 3 until it just wouldn't play a new game. Then I got a Radeon 9000 pro because it was all I could afford lol.

Interesting thing here, I got curious and looked up what the inflation adjustment would be. Around $550. Not nearly as much as a current high end GPU but still pretty significant.

In conclusion, we're getting old.
 

Zarathustra[H]

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I Remember those days too. I was a poor college student at the time so I kept my old voodoo 3 until it just wouldn't play a new game. Then I got a Radeon 9000 pro because it was all I could afford lol.

Interesting thing here, I got curious and looked up what the inflation adjustment would be. Around $550. Not nearly as much as a current high end GPU but still pretty significant.

In conclusion, we're getting old.

Yeah, I agree.

Also, spot on about inflation. It certainly has played a role here.

We also shouldn't forget that GPU's are more complex, and thus more expensive to manufacture today than they were in 2001, but still, even before the crazy market we have now, pricing was higher than it should have been.

I think of the 3080ti - for instance - as a GPU that should slot in to the $799-$899 price class. Charging more for it than that seems like a stretch.
 

HockeyJon

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Nvidia's goal moving forward is to minimize profit above MSRP to retail.
They will keep raising the price until the market can't bear it.

So if $500 extra can be made on a x80 part, they will raise the price to regain that profit so the retailers can't make a killing.
If everyone's cap to buy a x80 is $1300, Nvidia will set the MSRP at $1200 instead of $699, leaving only $100 for the AIB/Retailer if they sell over MSRP.

Nvidia has waged war against AIBs in the past, here comes the war against retailers/scalpers....but the consumer still loses in the end.
But the consumer must set a cap on how much they are willing to pay or prices will continue to go up. Stop buying $1500+ x80s. $800 needs to be the cap.

So what you're saying is Nvidia is like every other company out there, and not some sort of charity dedicated to doing gamers a solid by doing everything they can to lower the price of their product? Interesting.
 

FrgMstr

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One of the things we have heard is that it is “impossible” to sell at MSRP because the BoM cost is too close to the MSRP for the AIB to make their margins.
One of the reasons that I wrote the article because I see so many people that are confused about the video card channel and how exactly it works.
There was a lot of BOM talk about the 20 series which turns out was mostly false, otherwise the 30 series would have been an even higher msrp, not lower.
More talk and less information. Again, why I wrote the article.
A lot of the BOM kit is a list of part to use and not receiving actual hardware for all the parts in it, but a list of ingredient which how much to pay for it, which is not always realistic (specifically today).
I went into this specifically in my article. The fact that someone thinks it assigns what a company to pay on a part nowadays is idiotic.
I Remember those days too.
I paid $300 for my first 12MB Conopus Voodoo 2, and $300 for the second so I could play Quake 2 at 1024x768. $600 for video cards way back then. Rent was late that month too.
Also, spot on about inflation. It certainly has played a role here.
Surely it does. Supply chain issues and Coof issues are having more impact on AIBs than anything else. But again, AIBs are recording RECORD EVER high profit margins on GPUs.


I could have written a thesis on this topic and left a lot of things out as you can get so far into the weeds so fast, that the overall message would never get across.

The advent of NVIDIA not supplying an MSRP point on new products is very troubling. There are lot of issues with that, some I think that might be illegal for a public company. I am looking into that more. If NVIDIA gets away with it, then we can be assured AMD and subsequently Intel (if they ever produce a desktop GPU) will follow suit. I am not sure that is a good thing. Still got that one kicking around in my head a good bit.
 

LukeTbk

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We also shouldn't forget that GPU's are more complex, and thus more expensive to manufacture today than they were in 2001, but still, even before the crazy market we have now, pricing was higher than it should have been.

And we are not just buying more complex one, but also just much more of it.

A Geforce 3 Ti-500 was a 128mm chips, it is not just that we went from that to a 150-250mm with 8-7nm transistor with a better design to achieve better performance but a RTX 3080 is a
628 mm² chips, we are buying more than 4time has much GPU on the chips side.

The 276mm rtx 3050 or the 237 mm RX 6600 are maybe a closer reference (if GPUs would have grown like CPUs during that time frame) to what the Geforce 3 TI 500 was and kept that price range despite inflation, a bit like CPU achieved to do.

To make a comparison with the CPUs world

A pentium 4 HT 2.8 ghz back in the days was a 131mm chips with 55 millions transistors
A 12700k is a 215mm chips and probably under 5,000 millions transistors, less than 100 times transistors and less than twice the size.

A geforce 3 Ti500 was 128nm with 57 millions transistor (close to the P4)
A geforce 3080 has 628mm with 28,300 millions transistor, almost 500 time the amount and 5x time the size.

That the GPU / cpu price ratio changed a lot seem perfectly normal.

A lot of the gains seem to come from buying much more GPUs and not better one, it is a bit like if we were buying 3x SLI setup to play at much higher res and FPS games then we did (for little reason) and talking about that being more expensive than the past.
 
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Zarathustra[H]

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The advent of NVIDIA not supplying an MSRP point on new products is very troubling. There are lot of issues with that, some I think that might be illegal for a public company. I am looking into that more. If NVIDIA gets away with it, then we can be assured AMD and subsequently Intel (if they ever produce a desktop GPU) will follow suit. I am not sure that is a good thing. Still got that one kicking around in my head a good bit.

I am hopeful (and maybe I am hoping against hope) that they are able to get away with stuff like this right now just because of the market conditions.

Hopefully when things improve (more fab capacity for latest gen nodes) things will get a little bit better, especially since Intel has plans to enter the fray (if the Arc GPU's don't continue to get delayed and turn into vaporware).

Research shows that for a competitive market to truly benefit the consumer, there need to be 3-5 players. We've been in a duopoly between AMD and Nvidia for so long, with Nvidia owning the high end for years that I am hopeful that having another entrant might be helpful.

Time will tell.

A lot of this depends on increased FAB production capacity, such that the supply constriction shifts away from the fabs and the GPU makers start competing with each other on such things as price.

Of course, this assumes that the insatiable appetite of Crypto doesn't immediately consume all that new capacity, which it might unless something changes. SEC seems dead set on regulating cryptocurrencies as securities, and if they succeed, we may see a slowdown in the crypto market. No guarantees though.
 

Zarathustra[H]

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And we are not just buying more complex one, but also just much more of it.

A Geforce 3 Ti-500 was a 128mm chips, it is not just that we went from a 150nm to 8-7nm with a better design to achieve better performance but a RTX 3080 is a
628 mm² chips, we are buying more than 4time has much GPU on the chips side.

The 276mm rtx 3050 or the 237 mm RX 6600 are maybe a closer reference (if GPUs would have grown like CPUs during that time frame) to what the Geforce 3 TI 500 was and kept that price range despite inflation, a bit like CPU achieved to do.

To make a comparison with the CPUs world

A pentium 4 HT 2.8 ghz back in the days was a 131mm chips with 55 millions transitor
A 12700k is a 215mm chips and probably under 5,000 millions transistor

A geforce 3 Ti500 was 128nm with 57 millions transistor (close to the P4)
A geforce 3080 has 628mm with 28,300 millions transistor, almost 500 time the amount

A lot of the gains seem to come from buying much more GPUs and not better one, it is a bit like if we were buying 3x SLI setup to play at much higher res and FPS games then we did (for little reason) and talking about that being more expensive than the past.

That is true, but at the same time volumes have also gone way up. Back in 2001, while we were all crazy about GPU's here on the Hardforums, we were a relatively small minority of the marketplace. That was still an era when adults were made fun of if they played video games. (Oh how the turntables).

The market today us HUGE, and with a larger volume you split the R&D costs (which are a huge part of the cost of a GPU) over a much larger number of units, and thus have a potential for lower per unit costs. In a normal market you also get greater economies of scale when this happens, which further reduce costs (though that is all upside down right now).
 
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WorldExclusive

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So what you're saying is Nvidia is like every other company out there, and not some sort of charity dedicated to doing gamers a solid by doing everything they can to lower the price of their product? Interesting.

Consumers have the power to kill off a company if they feel that company no longer meets their needs. No company is immune.
If Nvidia continues to ignore their customer base for profits, the bottom will fall out and their competitors will fill the void.

GPU dominance varies between generations, so high prices will eventual fall with an underperforming product i.e. GTX 280.
Nvidia, AMD and Intel have all suffered after they achieved dominance and tried to charge a premium.
 

mouacyk

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Consumers have the power to kill off a company if they feel that company is no longer meets their needs. No company is immune.
If Nvidia continues to ignore their customer base for profits, the bottom will fall out and their competitors will fill the void.

Remember, GPU dominance varies between generations, so high prices will eventual fall with an underperforming product i.e. GTX 280.
Nvidia, AMD and Intel have all suffered after they tried to charge a premium.
RTX consumers hardly have any power. They're just sopping up the left overs.
 

WorldExclusive

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RTX consumers hardly have any power. They're just sopping up the left overs.
The leftovers are priced higher than first dibbs. Just don't buy it.
Anyone that really wanted a card has had the opportunity to buy one at a reasonable price by now.

This discussion is about MSRP, but more importantly Nvidia making scalping prices the new MSRP, starting with the 3080 12GB.
 

prtzlboy

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Really the only thing you as a consumer can do is just. . . not buy a new video card at the dumb prices. Last card I was able to buy at msrp was a 1070 ti. Haven’t bought any video cards since, because the prices are pants on head silly. Honestly don’t we all have like 100 older games in our steam libraries that can’t even stress a 980 that we haven’t played?

the only real downside for me right now is VR—the 1070ti does just okay. I could really use the extra horsepower, but I’ll get by just fine. Even if I have to wait years. I’m just not going to pay scalpers, whether those scalpers are AIBs, dudes with bots, or [H] forum members selling at a “great deal below market price!1!1!” Not gonna happen.
 

Dan_D

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What I don’t know is how close is the MSRP is to the BOM.

One of the things we have heard is that it is “impossible” to sell at MSRP because the BoM cost is too close to the MSRP for the AIB to make their margins.

We have no way of knowing if this is true or not.
MLiD has done some reporting on this but I have not seen much on this topic from others.
This is one of those closely guarded secrets of the industry. Very few people know the true cost of these things and even fewer (if any) would be willing to release that information. Even if you go out and try and price out the larger and more expensive components on the board, it still won't tell you what ASUS or GIGABYTE etc. paid for those components. Prices for the components vary as they are bought in massive quantities which earn discounts. Sometimes you can find out what the MSRP for a component is in certain quantities, but big companies like ASUS, MSI, etc. may be buying 10's of thousands or 100's of thousands of components at deeply discounted rates.

You'd need the actual BOM to even know what all is even on a given PCB. Those surface mount components are incredibly tiny and you can't always identify them due to their sizes. None of the information you can find would tell you how much they spend on R&D for AIB cards or marketing, sending out review samples, packaging, or any of that stuff. Essentially, no one really talks about the actual cost of computer hardware because no one outside of the companies that make it have any idea what it is. The best educated guesses are probably way off. I can tell you why a Maximus Z690 Extreme costs more than the APEX or Hero models, or tell you why an AIB RTX 3090 is more than a reference one but I can't tell you exactly how much any of them actually cost ASUS or anyone else to make.
 

UnknownSouljer

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I bought my Radeon VII used for $550 in November 2019. And at the time I thought I was a bit crazy spending that much money on a card that didn't even have the best tech (the compute/GPGPU performance was/is relevant though for my use case vs the 2080Ti). Now it feels like I was a genius. Still wouldn't mind having a 6900XT instead, but yeah, fat chance that will happen anytime soon.

I just don't see a way out of these problems until the silicon shortage flips. May there be such a glut of silicon that every business is tripping over the stuff.
 

4saken

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I am curious, at least in Nvidia's case, as they are still selling DGX's, datacenter GPU's etc, and at a higher price while their sales folks, and hence, Nvidia, ARE most definitely getting compensated better or more because of the risen prices and supply chain issues, even while their customers have to wait. Just makes me curious at the "enterprise" vs "consumer" supply and demand as we all have been. But they are still definitely benefiting. Of course the other players are to more of an extent, but at less volume.
 

Jumpem

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At this point it makes more sense to connect a PS5 and Xbox to a living room OLED than it does to build a new gaming PC. Unless money just doesn't matter.
 

Okatis

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According to this:
https://www.gamersnexus.net/news-pc...msrp-realism-debated-ryzen-5000-supply-pcie-6

A lot of the BOM kit is a list of part to use and not receiving actual hardware for all the parts in it, but a list of ingredient which how much to pay for it, which is not always realistic (specifically today).
I find it hard to judge based on this since the only Ampere card to launch close to the price range ($200-300) speculated in that article was the 3060, released months later. The remaining cards were all $500+ MSRP at the time of the initial launch. So either the original insider pricing was meant for a lower tier card or they had already adjusted pricing by the time of launch. Far cry from what they sell for now though.
 

FlawleZ

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I bought my Radeon VII used for $550 in November 2019. And at the time I thought I was a bit crazy spending that much money on a card that didn't even have the best tech (the compute/GPGPU performance was/is relevant though for my use case vs the 2080Ti). Now it feels like I was a genius. Still wouldn't mind having a 6900XT instead, but yeah, fat chance that will happen anytime soon.

I just don't see a way out of these problems until the silicon shortage flips. May there be such a glut of silicon that every business is tripping over the stuff.
You could sell the Radeon VII, buy an AIB 6900XT and still have $300+ left over.
 

UnknownSouljer

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You could sell the Radeon VII, buy an AIB 6900XT and still have $300+ left over.
I looked into it recently, and it doesn't seem that way anymore. I think at the highest levels of current inflation on cards, I could sell for around $1100-$1200, and a 6900XT would set me back $1800.
I would gladly give up that $300 on consignment if someone else sold my card and got me a 6900XT though (obviously I'd have to seriously trust that person, so that's not super likely).

EDIT: Looks like they are routinely going for $1700-$2000. So it would be dependent on being able to buy a 6900XT after selling my VII. AND not dealing with a scammer on eBay. I've sold some high priced stuff on eBay, but electronics is a whole other bag. I realize I'm throwing up a lot of 'resistant walls' or whatever, but I also think with good reason.
 

Endgame

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I looked into it recently, and it doesn't seem that way anymore. I think at the highest levels of current inflation on cards, I could sell for around $1100-$1200, and a 6900XT would set me back $1800.
I would gladly give up that $300 on consignment if someone else sold my card and got me a 6900XT though (obviously I'd have to seriously trust that person, so that's not super likely).

EDIT: Looks like they are routinely going for $1700-$2000. So it would be dependent on being able to buy a 6900XT after selling my VII. AND not dealing with a scammer on eBay. I've sold some high priced stuff on eBay, but electronics is a whole other bag. I realize I'm throwing up a lot of 'resistant walls' or whatever, but I also think with good reason.
There are several power color red Devil 6900xts at the Rockville microcenter for 1499. Probably 20 cards across different models under 1600.
 

Randall Stephens

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I looked into it recently, and it doesn't seem that way anymore. I think at the highest levels of current inflation on cards, I could sell for around $1100-$1200, and a 6900XT would set me back $1800.
I would gladly give up that $300 on consignment if someone else sold my card and got me a 6900XT though (obviously I'd have to seriously trust that person, so that's not super likely).

EDIT: Looks like they are routinely going for $1700-$2000. So it would be dependent on being able to buy a 6900XT after selling my VII. AND not dealing with a scammer on eBay. I've sold some high priced stuff on eBay, but electronics is a whole other bag. I realize I'm throwing up a lot of 'resistant walls' or whatever, but I also think with good reason.
Be prepared to get back a “doa” card with a different serial number thanks to EBay’s guarantee…
 

staknhalo

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I literally started investing and in Nvidia back in 2016 because of rising GPU prices, I was like "fuck this, make Nvidia buy me my GPUs if this is how it's gonna go" lol
Anyone that really wanted a card has had the opportunity to buy one at a reasonable price by now.

Look at what I wrote above, and I'm telling you you're dead wrong. Maybe add the caveat about "also if they don't have a life and can sit 24/7 on inventory streams" and then maybe I'll agree with you.

And reasonable is MSRP, either Nvidia/AMD or AIB MSRP, not scalper pricing.
 
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