Most active commenters
  • kbolino(6)
  • Tijdreiziger(3)

←back to thread

Nvidia won, we all lost

(blog.sebin-nyshkim.net)
977 points todsacerdoti | 33 comments | | HN request time: 1.863s | source | bottom
1. strictnein ◴[] No.44469082[source]
This really makes no sense:

> This in turn sparked rumors about NVIDIA purposefully keeping stock low to make it look like the cards are in high demand to drive prices. And sure enough, on secondary markets, the cards go way above MSRP

Nvidia doesn't earn more money when cards are sold above MSRP, but they get almost all the hate for it. Why would they set themselves up for that?

Scalpers are a retail wide problem. Acting like Nvidia has the insight or ability to prevent them is just silly. People may not believe this, but retailers hate it as well and spend millions of dollars trying to combat it. They would have sold the product either way, but scalping results in the retailer's customers being mad and becoming some other company's customers, which are both major negatives.

replies(7): >>44469212 #>>44469420 #>>44469456 #>>44469566 #>>44469693 #>>44469946 #>>44471646 #
2. kbolino ◴[] No.44469212[source]
Scalping and MSRP-baiting have been around for far too many years for nVidia to claim innocence. The death of EVGA's GPU line also revealed that nVidia holds most of the cards in the relationship with its "partners". Sure, Micro Center and Amazon can only do so much, and nVidia isn't a retailer, but they know what's going on and their behavior shows that they actually like this situation.
replies(1): >>44470514 #
3. rubyn00bie ◴[] No.44469420[source]
> Scalpers are a retail wide problem. Acting like Nvidia has the insight or ability to prevent them is just silly.

Oh trust me, they can combat it. The easiest way, which is what Nintendo often does for the launch of its consoles, is produce an enormous amount of units before launch. The steady supply to retailers, absolutely destroys folks ability to scalp. Yes a few units will be scalped, but most scalpers will be underwater if there is a constant resupply. I know this because I used to scalp consoles during my teens and early twenties, and Nintendo's consoles were the least profitable and most problematic because they really try to supply the market. The same with iPhones, yeah you might have to wait a month after launch to find one if you don't pre-order but you can get one.

It's widely reported that most retailers had maybe tens of cards per store, or a few hundred nationally, for the 5090s launch. This immediately creates a giant spike in demand, and drove prices up along with the incentive for scalpers. The manufacturing partners immediately saw what (some) people were willing to pay (to the scalpers) and jacked up prices so they could get their cut. It is still so bad in the case of the 5090 that MSRP prices from AIBs skyrocketed 30%-50%. PNY had cards at the original $1999.99 MSRP and now those same cards can't be found for less than $2,999.99.

By contrast look at how AMD launched it's 9000 series of GPUS-- each MicroCenter reportedly had hundreds on hand (and it sure looked like by pictures floating around). Folks were just walking in until noon and still able to get a GPU on launch day. Multiple restocks happened across many retailers immediately after launch. Are there still some inflated prices in the 9000 series GPUs? Yes, but we're not talking a 50% increase. Having some high priced AIBs has always occurred but what Nvidia has done by intentionally under supplying the market is awful.

I personally have been trying to buy a 5090 FE since launch. I have been awake attempting to add to cart for every drop on BB but haven't been successful. I refuse to pay the inflated MSRP for cards that haven't been been that well reviewed. My 3090 is fine... At this point, I'm so frustrated by NVidia I'll likely just piss off for this generation and hope AMD comes out with something that has 32GB+ of VRAM at a somewhat reasonable price.

replies(3): >>44469600 #>>44469671 #>>44470080 #
4. lmm ◴[] No.44469456[source]
> Nvidia doesn't earn more money when cards are sold above MSRP

How would we know if they were?

replies(1): >>44472873 #
5. adithyassekhar ◴[] No.44469566[source]
Think of it this way, the only reason 40 series and above are priced like they are is because they saw how willing people were to pay dueing 30 series scalper days. This over representation by the rich is training other customers that nvidia gpus are worth that much so when they increase it again people won't feel offended.
replies(2): >>44470292 #>>44470677 #
6. pshirshov ◴[] No.44469600[source]
W7900 has 48 Gb and is reasonably priced.
replies(1): >>44470353 #
7. ksec ◴[] No.44469671[source]
>Oh trust me, they can combat it.

As has been explained by others. They cant. Look at the tech which is used by Switch 2 and then look at the tech by Nvidia 50 series.

And Nintendo didn't destroy scalpers, they are still in many market not meeting demand despite "is produce an enormous amount of units before launch".

replies(1): >>44476203 #
8. thaumasiotes ◴[] No.44469693[source]
> Nvidia doesn't earn more money when cards are sold above MSRP, but they get almost all the hate for it. Why would they set themselves up for that?

If you believe their public statements, because they didn't want to build out additional capacity and then have a huge excess supply of cards when demand suddenly dried up.

In other words, the charge of "purposefully keeping stock low" is something NVidia admitted to; there was just no theory of how they'd benefit from it in the present.

replies(1): >>44470313 #
9. whamlastxmas ◴[] No.44469946[source]
Nvidia shareholders make money when share price rises. Perceived extreme demand raises share prices
10. cherioo ◴[] No.44470080[source]
Switch 2 inventory was amazing, but how did RX 9070 inventory remotely sufficient? News at the time were all about how limited its availability https://www.tweaktown.com/news/103716/amd-rx-9070-xt-stock-a...

Not to mention it's nowhere to be found on Steam Hardware Survey https://store.steampowered.com/hwsurvey/videocard/

replies(1): >>44470649 #
11. Mars008 ◴[] No.44470292[source]
Is AMD doing the same? From another post in this thread:

> Nowadays, $650 might get you a mid-range RX 9070 XT if you miraculously find one near MSRP.

If yes then it's industry wide phenomena.

12. rf15 ◴[] No.44470313[source]
which card's demand suddenly dried up? Can we buy their excess stock already? please?
replies(1): >>44470388 #
13. kouteiheika ◴[] No.44470353{3}[source]
It' $4.2k on Newegg; I wouldn't necessarily call it reasonably priced, even compared to NVidia.

If we're looking at the ultra high end, you can pay double that and get an RTX 6000 Pro with double the VRAM (96GB vs 48GB), double the memory bandwidth (1792 GB/s vs 864 GB/s) and much much better software support. Or you could get an RTX 5000 Pro with the same VRAM, better memory bandwidth (1344 GB/s vs 864 GB/s) at similar ~$4.5k USD from what I can see (only a little more expensive than AMD).

Why the hell would I ever buy AMD in this situation? They don't really give you anything extra over NVidia, while having similar prices (usually only marginally cheaper) and much, much worse software support. Their strategy was always "slightly worse experience than NVidia, but $50 cheaper and with much worse software support"; it's no wonder they only have less than 10% GPU market share.

replies(1): >>44494171 #
14. thaumasiotes ◴[] No.44470388{3}[source]
I didn't say that happened. I said that was why NVidia said they didn't want to ramp up production. They didn't want to end up overextended.
replies(1): >>44474055 #
15. amatecha ◴[] No.44470514[source]
Yeah wait, what happened with EVGA? (guess I can search it up, of course) I was browsing gaming PC hardware recently and noticed none of the GPUs were from EVGA .. I used to buy their cards because they had such a good warranty policy (in my experience)... :\
replies(2): >>44470583 #>>44470590 #
16. theshackleford ◴[] No.44470583{3}[source]
In 2022 claiming a lack of respect from Nvidia, low margins, and Nvidia's control over partners as just a few of the reasons, EVGA ended its partnership with Nvidia and ceased manufacturing Nvidia GPUs.

> I used to buy their cards because they had such a good warranty policy (in my experience)... :\

It's so wild to hear this as in my country, they were not considered anything special over any other third party retailer as we have strong consumer protection laws which means its all much of a muchness.

replies(1): >>44473293 #
17. izacus ◴[] No.44470590{3}[source]
EVGA was angry because nVidia wouldn't pay them for attempts at scalping which failed.
replies(1): >>44473088 #
18. Rapzid ◴[] No.44470649{3}[source]
The 9070 XT stock situation went about like this; I bought a 5070 Ti instead.
19. KeplerBoy ◴[] No.44470677[source]
Did you just casually forget about the AI craze we are in the midst of? Nvidia still selling GPUs for gamers at all is a surprise to be honest.
20. solatic ◴[] No.44471646[source]
Scalpers are only a retail-wide problem if (a) factories could produce more, but they calculated demand wrong, or (b) factories can't produce more, they calculated demand wrong, and under-priced MSRP relative to what the market is actually willing to pay, thus letting scalpers capture more of the profits.

Either way, scalping is not a problem that persists for multiple years unless it's intentional corporate strategy. Either factories ramp up production capacity to ensure there is enough supply for launch, or MSRP rises much faster than inflation. Getting demand planning wrong year after year after year smells like incompetence leaving money on the table.

The argument that scalping is better for NVDA is coming from the fact that consumer GPUs no longer make a meaningful difference to the bottom line. Factory capacity is better reserved for even more profitable data center GPUs. The consumer GPU market exists not to increase NVDA profits directly, but as a marketing / "halo" effect that promotes decision makers sticking with NVDA data center chips. That results in a completely different strategy where out-of-stock is a feature, not a bug, and where product reputation is more important than actual product performance, hence the coercion on review media.

21. sidewndr46 ◴[] No.44472873[source]
Theoretically they'd need to make a public filing about their revenue and disclose this income stream. More to your point, I think it's pretty easy to obscure this under something else. My understanding is Microsoft has somehow always avoided disclosing the actual revenue from the Xbox for example.
22. kbolino ◴[] No.44473088{4}[source]
I've never seen this accusation before. I want to give the benefit of the doubt but I suspect it's confusing scalping with MSRP-baiting.

It's important to note that nVidia mostly doesn't sell or even make finished consumer-grade GPUs. They own and develop the IP cores, and they contract with TSMC and others to make the chips, and they do make limited runs of "Founders Edition" cards, but most cards that are available to consumers undergo final assembly and retail boxing according to the specs of the partner -- ASUS, GIGABYTE, MSI, formerly EVGA, etc.

MSRP-baiting is what happens when nVidia sets the MSRP without consulting any of its partners and then those partners go and assemble the graphics cards and have to charge more than that to make a reasonable profit. This has been going on for many GPU generations now, but it's not scalping. We can question why this "partnership" model even exists in the first place, since these middlemen offer very little unique value vs any of their competitors anymore, but again nVidia has the upper hand here and thus the lion's share of the blame.

Scalping is when somebody who's ostensibly outside of the industry buys up a bunch of GPUs at retail prices, causing a supply shortage, so that they can resell the cards at higher prices. While nVidia doesn't have direct control over this (though I wouldn't be too surprised if it came out that there was some insider involvement), they also never do very much to address it either. Getting all the hate for this without directly reaping the monetary benefit sounds irrational at first, but artificial scarcity and luxury goods mentality are real business tactics.

replies(1): >>44475158 #
23. kbolino ◴[] No.44473293{4}[source]
The big bombshell IMO is that, according to EVGA at least, nVidia just comes up with the MSRP for each card all on its own, and doesn't even tell its partners what that number will be before announcing it to the public. I elaborate on this a bit more in a response to a sibling comment.
24. bigyabai ◴[] No.44474055{4}[source]
I don't even think Nvidia could overextend if they wanted to. They're buying low-margin, high demand TSMC wafers to chop into enormous GPU tiles or even larger datacenter products. These aren't smartphone chipsets, they're enormous, high-power desktop GPUs.
25. izacus ◴[] No.44475158{5}[source]
Then you didn't follow the situation, since majority of EVGA anger was because nVidia wouldn't buy back their chips after EVGA failed to sell cards at hugely inflated price point.

Then they tried to weaponize PR to beat nVidia into buying back their unsold cores they thought they'll massively profit off with inflated crypto hype prices.

replies(1): >>44475383 #
26. kbolino ◴[] No.44475383{6}[source]
Ok, this seems to be based entirely on speculation. It could very well be accurate but there's no statements I can find from either nVidia or EVGA corroborating it. Since it's done by the manufacturer themselves, it's more like gouging rather than scalping.

But more to the point, there's still a trail of blame going back to nVidia here. If EVGA could buy the cores at an inflated price, then nVidia should have raised its advertised MSRP to match. The reason I call it MSRP-baiting is not because I care about EVGA or any of these other rent-seekers, it's because it's a calculated lie weaponized against the consumer.

As I kind of implied already, it's probably for the best if this "partner" arrangement ends. There's no good reason nVidia can't sell all of its desktop GPUs directly to the consumer. EVGA may have bet big and lost from their own folly, but everybody else was in on it too (except video gamers, who got shafted).

replies(1): >>44476170 #
27. Tijdreiziger ◴[] No.44476170{7}[source]
NVIDIA doesn’t make a lot of finished cards for the same reason Intel doesn’t make a lot of motherboards, presumably.
replies(1): >>44476790 #
28. rubyn00bie ◴[] No.44476203{3}[source]
If you put even a modicum of effort into trying to acquire a Switch 2 you can. I’ve had multiple instances to do so, and I don’t even have interest in it yet. Nintendo even sent me an email giving me a 3 day window to buy one. Yes, it will require a bit of effort and patience but it’s absolutely possible. If you decide you want one “immediately” yeah you probably are going to be S.O.L. but it has literally been out a month as of today. I’d bet by mid August it’s pretty darn easy.

Nintendo has already shipped over 5 million of them. That’s an insane amount of supply for its first month.

Also, Nvidia could have released the 50-series after building up inventory. Instead, they did the opposite trickling supply into the market to create scarcity and drive up prices. They have no real competition right now especially in the high end. There was no reason to have a “paper launch” except to drive up prices for consumers and margins for their board partners. Process node had zero to do with what has transpired.

29. kbolino ◴[] No.44476790{8}[source]
Maybe, but that's not a great analogy. The standardized, user-accessible sockets mean many different CPUs can be paired with many different motherboards. There's also a wide variety of sizes and features in motherboards, plus they have buses for connecting various kinds of peripherals. GPUs have none of this flexibility or extensibility.
replies(1): >>44484276 #
30. Tijdreiziger ◴[] No.44484276{9}[source]
Yeah, but you’re missing the specialization angle.

NVIDIA and Intel as companies are specialized in the design (and in the latter case, manufacturing) of chips. Board OEMs are specialized in making a consumer-ready product, maintaining worldwide sales and distribution channels, and consumer relations.

Of course, it wouldn’t be impossible for NVIDIA to start doing these things on their own (see Apple, who designs chips, designs computers around those chips, and operates retail stores where those computers are sold), but presumably NVIDIA prefers the current arrangement, where they can just focus on the chips and leave the rest to OEMs.

See also Intel under Gelsinger, who sold off the NUC and server lines (finished products) to focus on the core business (x86 chips).

replies(1): >>44485576 #
31. kbolino ◴[] No.44485576{10}[source]
Ironically, Intel's GPU business seems to be entirely in-house. Though maybe it too will get spun off in whole or in part.

As far as nVidia is concerned, they lost the privilege to be treated like a small fabless startup. They are regularly ranked as the highest valued company on the U.S. stock market. They clearly can make and sell the whole card themselves, so having GIGABYTE, ASUS, and co. hang around and take the heat for their business decisions feels pretty scummy. It's also clearly bad for the consumer, as Founders Edition cards actually do sell for MSRP. This partner crap is all an obsolete relic of a bygone era, being drawn out well past its prime.

replies(1): >>44486463 #
32. Tijdreiziger ◴[] No.44486463{11}[source]
They can, but do they care to?

They’re making an overwhelming share of their revenue on ‘data center’, so I doubt they’re desperate to shake up their gaming business.

33. pshirshov ◴[] No.44494171{4}[source]
> Why the hell would I ever buy AMD in this situation?

I've purchased one earlier this year for ~3200 USD. Brand new. Dunno why US prices are so high. Torch/llama work fine on this card, it's suitable for multiple compute tasks, the price is reasonable, but apparently not always/everywhere.

> you can pay double that

That's... double that.

UPD. Just checked current EU prices. W7900 is 3200 EUR (been cheaper before), cheapest Nvidia card is RTX Pro 5000 for 5300 (much slower than W7900), cheapest 96Gb Nvidia card is 10K.

W7900 still provides best bang per dollar.