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[INQ]GTX 295 is dead, Nvidia losing money on GTX260

8189 Views 137 Replies 74 Participants Last post by  Kryten
Charlie again, take with a grain of salt, but looks like its true


NVIDIA HAS BEEN propping up volume by selling below cost for a bit now, and the latest price drop of the GTX260 is sure to bring smiles to the faces of users. The problem is that add-in-board (AIB) partners can't make money on them.
Losing money on each card is not a good business strategy, and making up for it in volume does not make things better. Mercedes could sell S-Class cars for $10, and volume would skyrocket, but that wouldn't be a very sound business strategy. For some reason, Nvidia not only thinks this is a sound strategy, it is implementing it.
The problem is the same one we told you about almost a year ago, the GT200 die is too damn big. Even with a shrink, it is still too damn big, almost twice the size of its closest rival, the ATI R770/4870. Even with poor yields and an expensive board, the card loses to its much more economical rival from ATI. This means Nvidia has to fight a price war against an an opponent with lower costs.
That brings us back to the latest news, the 260 has dropped to $169, which puts it between the price of a 512M and 1G 4870. The problem is that the GTX260 costs Nvidia partners a little less than that to make, they are going to bleed cash over this one. Hang on for a close look into the costs of building a modern GPU.
We will say up front that the numbers given here are the best case scenario. If we are given a range of prices, we will give Nvidia the benefit of the doubt and pick the cheapest. In reality, things are worse than we are stating.
Starting out with the selling price, retailers won't touch a product without a 15 per cent margin... it isn't worth their time. That means that $169 retail price boards have to sell for $144 to trade to meet that number. Lets assume packaging, shipping and add-ins like cables, dongles and software only cost $9, probably quite low all-told. That means the NV partners need to get the 260 out the door for $135 or they are losing money.
The first problem is that Nvidia sells the ASIC bundle, basically a 260 kit with chips and RAM for between $110 and $120. Lets be kind and say it is $110, and there are no shipping or handling costs. FWIW, the GT206 costs around $80-100 to manufacture based on TSMC volume wafer costs and yields someone told us about. Nvidia isn't making much on this, if anything, 14 16 x 32 high bin GDDR3 chips aren't that cheap, cost for volume purchasers is between $1.50 and $2.00 per unit. I would bet NV is losing money here on the kit, 14 x $1.50 = $21. $21 + 80 = $101, best case, they have $9 wiggle room, more likely it is a money loser, not counting MDF funding or rebates.
So that leaves the OEMs with $135 - 110 = $25 to make the boards. Board components are well over $15, this includes all the passive components, resistors, caps and bits with magic smoke in them. Think everything other than that included in the kit. That puts us at $25 - 15 = $10 left in the pot.
A 10 layer PCB is north of $10, this is easy enough to get prices on. $10 - 10 = $0. Ruh-roh Shaggy, we have a problem. Heatsink/fans are $10 or so as well, and that brings us to $0 - 10 = $-10. Whoopsy, we have a bigger problem. Add in about $5 labour that all the AIB vendors tell me it takes to make a board, and we are at $-15.
Looking at the best case numbers, Nvidia board partners are eating $15 per board, but it's likely more than that. They can either jack up the price and hope people pay... or lose money.
Nvidia doesn't like partners who buck their pricing proclamations, and people will buy from the one company which doesn't raise prices.
The OEMs are trapped. If someone steps out of line and hits the $169 price point, they will clean up on sales, and the others will lose. Bad situation, but Nvidia has a price point to hit, and they aren't the ones taking a bath. Actually they are, just not that much, and Nvidia can do no wrong. Just ask them.
Ironically, the price cut will spur sales, and everyone will lose money, except the end users. They win. At the end of the quarter, Nvidians will surely blame economic conditions: it can't be that they are putting their own ego and market share above piddling things like profit. Market share is king, and if they ever have a sane reason to back this nutjob theory up, we will bring it to you. Don't stay up waiting.
Along the same lines, remember when we said that the GTX295 was a halo part on which they lost money? How there would be very limited quantities, and once they were gone, they were gone? Calls to Newegg yesterday show that they have seven in stock, Zipzoomfly had three. That is units, not vendors. Really.

Missing in action: GTX 295
The top two etail vendors had enough stock between them that you could count to it on both hands unless you were missing a finger. Tiger Direct didn't tell us quantities, but only had two brands in stock, and you could not buy multiple units. Basically, they are done for. Don't expect any more unless Nvidia feels its losses in Q1 are not deep enough.
Remember, when we said they were limited and gone once they were gone, some spinners denied it vehemently. Nvidia will probably trickle out a few more to 'prove' this wrong, but the 295 is dead now, two month life span.
I guess you could call their honesty into question once again over this, but isn't that flogging a dead horse? µ

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On a popular etailer (PCCaseGear) here, there are still plenty of GTX 295s.
So, just because two retailers are low in stock of GTX 295s, means they are dead? That is some great logic there.
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Maybe I will buy up the last few gtx295's and hold on to them for a wile.


Originally Posted by PA!NK!LLR View Post
So, just because two retailers are low in stock of GTX 295s, means they are dead? That is some great logic there.

directcanada.com is running low as well. I'm off to go check NCIX.
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anyone want to call BS on this article, as is the case with most Inq related posts on here?

i won't - he's been singing this song for a year now and look how true it's been. i really feel bad for nvidia now
Yeah, I'm trying to sell mine while there's still something left to sell.
So what exactly is going to happen here? These cards will drop dramatically in price or what?
Charlie needs to take a step back and calm down on the nVidia hate.
Only 3 people on the internet make me rage. Chris Crocker, the Mac kid, and Charlie. That level of subjectiveness on a news site shouldn't.....man.... it's basically an opinion essay...
Why does this idiot get his articles published in a great magazine like Computer Power User?
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nvidia will be fine. otherwise its gonna be intel.... fack!

damn ATI/Nvidia pick your game up lol

Originally Posted by low strife
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How does Newegg only have 7 GTX 295's? There are 8 different models in stock.


I count 6 models in stock

Evga x2
BFG x1
XFX x1
PNY x1
MSI x1
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the simple solution to this is stop using old technology, create a new architechture with smaller die. so that it won't hurt when they go on a price war with ati.
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All of this can be summed up in a paragraph, the rest is just him ranting.

Originally Posted by Marin
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All of this can be summed up in a paragraph, the rest is just him ranting.

Exactly. Maybe Charlie was denied a job with nvidia back in the day and they told him to beat it? This dude is out of control...
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So.. Charlie pointing out the obvious flaws in Nvidia's design is equivalent to him hating on Nvidia?

Sorry if there isnt a whole lot to love from Nvidia right now with their sub-par everything.
Seriously think about how much it really costs them to make video cards and how much we pay. Do you really think they loose so much? Sounds like economy crunch hype.
Normally I just brush off this stuff but the guy definitely has a point here...
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