Originally Posted by ILoveHighDPI
Doesn't this just bring Nvidia into price parity with AMD?
I think it would be far fetched to say they ever had any plans of selling a 3GB 1060 for more than an 8GB 480. Maybe they were caught off by how aggressive AMD's pricing is, but I seriously doubt Nvidia ever planned on charging 25% more for something that's roughly equivalent.
AMD was just as if not more caught guard by Nvidia announcing the gtx 1070 was supposedly 379 dollar card. Considering the 1070 is 50% faster, 240 dollar pricing is just about right considering more performance usually has worse performance per dollar and Nvidia has the better branding.
What shows you that AMD didn't really intend to price this card so low to begin with was the build quality of the card and the low quantity of cards in terms of replenishing stock.
AMD considering the cards are sold out had no reason to charge 240 for the cards, but to get positive press in reviews vs the 1070, they had to price them this low. The marketing value was more important than the short term profits because if this card sold at 300 dollars, it would have been a dud because the 1070 is too much faster for the extra money. Because it's a full die, the rx 480 is going to have stock issues for a while if demand continues. I could see this card being profitable for AMD if this was the cut down variant, but because it's the full variant for this price, it's going to not be really a profitable chip for AMD. It will gain them marketshare but their profits from the card are going to be abysmal. Looking at the gross margins of both companies, there isn't enough wiggle room for AMD to be very profitable with the rx 480's pricing. The cost of the 1070 and rx 480 should be similar because of their cost to make, but they are not. And adding in the 140 difference in price and Nvidia's gross margins overall for the company, if the 1070 is making a 50% margin(their overall is 58 which is inflated by high priced pro, car, data center, titans and full fat dies), their isn't much room for AMD
E.g if it cost Nvidia 100 dollars to produce a 1070chip, 100 dollar markup + 66 board cost + $20 for 4gb of extra memory. $10 packaging + 15% partner margin + 10% retailer markup = 375 with the left over cost for logistics
Without the 100 dollar mark up, the cost is 248.
80 dollar chip cost + 66 board cost(this should be a tad higher than Nvidias) + 20 dollars for extra memory + 10packaging + 15% + 10% = $222 This left over amount is the amount of wiggle room AMD has for profit which is dilute by the partners cut.
If you think these costs are too high, you have to take into account Nvidia's pricing. If you think AMD chip cost is too much and overestimated and it should be lower, it would automatically lower the cost of the 1070 chip and basically margins on the 1070 chip would be 65-75% range which considering its actually a good value in Nvidia's lineup, is way too high of a margin to be possible. The thing is however, the 1070 and the rx 480 have likely a very similar cost to make. The PCB on the rx 480 is higher quality, the bus is the same and so is the memory. .Although they are different in die size, the 1070 is so cut down, that their cost is likely similar since the rx 480 requires a full die. The 1070 may have a more expensive cooler, but the ones with this cooler cost 450 dollars.
Minus logistics and AMD is making very low margins, that are console like, but without the console volume to make up for it. Also the R and D for the console chips was covered by Sony and MS.
Also considering finfets costs over 28nm planar, AMD should be charging more for their products vs 28nm but they are not.
In terms of economics, you always price products where price will meet demand so that you maximize profit. Besides the initial launch supply, supply has been bad. What this means is AMD should have charged a higher price. It's why Nvidia tacked on their initial founders edition bullcrap, because they knew quantities of the 10xx series was initially going to be bad. The problem for AMD from an economics perspective, 240 is a bad price, but from a marketing perspective, it's a good price. AMD had to pick one or the other and since AMD needs a boost to the AMD brand for Moral, it picked marketing.
Overall both companies because of competition exert pressure which is good for the consumer. Although greedy on their uncut chips, there are cards in Nvidia's lineup that force AMD to price their products low.