Originally Posted by ZealotKi11er
Same thing with HD 7970. No completion from Nvidia.
Not the same thing.
It's 100% up to the underdog to keep pricing in check. If the market leader did it, they would put the underdog out of business within a year. Below is another post I did on another forum.
You need to look at this from an economic and business perspective.
You base launch pricing on initial performance, not future performance and upon launch the 7970 only beat the gtx 580 by 15%. Basing it on future performance requires hindsight so pricing a card based on future performance is just plain stupid.
Additionally, AMD is the value brand and with this comes certain expectation with launches from consumers, or they will wait and not buy your product. What is universally expected for the value brand is they offer superior price to performance. When the brand recognized for their value discards this characteristic and launches their product at a high price. What do you think is likely to happen when the brand with more prestige launches a product with better performance and generally all around better characteristics, particularly in a duopoly?
And this is why much of the price increases are atleast half AMD fault. Launching their product at 550 when it was only performing 15% better than the competition while being the value brand was an incredibly dumb move on their part. There was little possibility, that Nvidia was not going to do better than that at launch. So when this came true, it was not unexpected for Nvidia to start charging more for their midrange. Thus following AMD leads and increasing their price for their midrange is what is expected and is simply business. This is because Nvidia is the more prestigious brand. The brand with the higher good will with the consumer is allowed and is supposed to charge more for their product.
If the prestige brand didn't, the second brand marketshare and margins would get smaller and smaller until they went bankrupt. We got a preview of this effect at 28nm. This is what kind of happened when the gtx 670 launched with similar performance to a 7970 and a 150 dollar lower price. And what happened when the gtx 970 launched vs the 290x with a 220 dollar lower price point. AMD got the crap smacked out of them as far as profit and marketshare go and if this pattern continues, we know what will happen.
In a duopoly, it's up to the value brand to keep the prestige brand price in check. If they try to raise pricing, this give every right for the prestige brand to increase pricing because the floor pricing for a certain level of pricing is determined by what the value brand is willing to sell it for. This is because at equal pricing/performance, the prestige brand will vastly outsell the value brand. This is the right of the prestige brand. Hence, the concession for the prestige brand is they raise their prices to have higher margins, which allows the value brand to continue to exist or make money at lower margins. Thus when AMD raised pricing, Nvidia did as well and they put pricing on one of their products lower than AMD to get the second effect as well.
Lets take AMD brand out of the equation(since this might be distorting your view of this situation) and put up a similar example. Lets pretend Vizio and Samsung were the only two tv makers. Lets say Vizio next year, decided to raise the pricing of their products to a price above samsung because it had slightly better picture quality than the samsung. Samsung releases a tv with even better picture quality, so what do you expect pricing to be like for this tv considering there is no alternative brands out there?
Prestige brands can get away with certain behavior the value brand cannot. Thus AMD raising the price with their entire initial 28nm line is what doomed pricing for the consumer. It doesn't mean AMD is stuck as the value brand.
The only way AMD can raise pricing, is if they launch an absolutely superior product that the competition has no chance of beating within a reasonable time frame. Do a enough of these in a row and a few marketing trick and they can become the premium brand.
If AMD never raised prices, Nvidia wouldn't of had the same chance to so grossly increase the price of their midrange.
Founders edition pricing today is just as greedy as launching the 7970 at 550 dollars. Both charge a small premium over last gens high end. However launching the 7970 at 550 was not only a greedy move, but a stupid one because AMD was not the prestige brand and Nvidia had not played it hand yet which it would be doing shortly. Price high and people will wait when you the value brand.
Founders edition itself is kind of stupid and confusing but the price increase is not. Anyone that wasn't being a fanboy and was analyzing the situation, could predict that AMD was not going to launch a true high end in time for the 1080 launch and real competition for them. And because of this, AMD for the gp1080 launch essentially gave away the high end market for the next 7 months or so. This gave Nvidia free reign to dictate pricing. Because of their brand superiority, 699 and 449 pricing although greedy, was a smart business move, unlike the 7970 launch price.Edited by tajoh111 - 7/4/16 at 12:59pm