NVIDIA Dictates Advertised Video Card Pricing

That's the way it is with MAP and UMAP Pricing. Sony does it. Apple does it. Many others do it.

IMHO it is nothing more than price fixing at the MFR level and should be deemed illegal by the FTC, but I digress...



SulSeeker said:
"Newegg told NVIDIA to “go pound sand,” or at least that is how it was communicated to HardOCP.com, then when NVIDIA threatened to cut off marketing funds paid directly to Newegg, the company changed its tune and followed the policy. "

Maybe this is rash decisioning by me but I would have removed all nvidia products from the Newegg website for a 244 to 48 hour period. A) It would have Nvidia's partners screaming at Nvidia management and B) Directed customers to alternative products.

Whether or not that would have worked is neither here or there. I'm sure some customers would go to TD or NCIX or whatnot, but this UMAP policy crap is just stupid. I thought we lived in a free market.
Click to expand...
 
ivandurago said:
Thats what I was thinking as well. :rolleyes:
Actually I could really care less about having to click a "View price in cart" button. I already know what cards I am considering, and the price range I am willing to spend, so this decision by Nvdia doesn't effect me, other then causes me to spend an extra ~.1 second on newegg. If it causes Nvdia's cards to raise in price, I won't buy them, very simple.
Click to expand...

Maybe if you only buy one card every year or so for your own system that is ok, but there are plenty of people out there that buy and build machines for other people and you don't always put the same card in each machine. You build it for what they are going to use the machine for. Now in comparing the cards available I may see one slightly more in price with a few more options ...and give them the choice or make a different choice for them. Do I want to add several cards to a cart to see prices? No and I shouldn't have to. I know what I'll be doing. I'll be comparing the cards that make my job and life easier. See ya Nvidia.
 
This is not news. HardOCP really comes across amateurish in this article--i.e., they need to do some research before reporting news (otherwise a great site though).

These are all settled issues. MAP policies have been around for years. The Leegin decision simply allows more leeway in how they are enforced. Before, you had unilateral "Colgate" policies that allowed a company to dictate MAP pricing, but the company had to be vague when they decided to enforce the policies. In Leegin, the court acknowledged that there are legitimate reasons for why a company would want to control pricing, and that such companies should be allowed to do so as long as the companies were not doing so for purely anti-competitive means (e.g., to push competitors out of the market). All of this talk of "price fixing" is apples-to-oranges, and out of context.

The legitimate reasons the court referried to include protecting brand equity and channel stability. The value of most modern companies is a sum of their brand equity (ability to charge premium prices over what a generic version of the product would earn), and its established marketing channels (value of the time and effort taken to develop relationships with different types of retailers). Wide price swings dramatically disrupt both for reasons well beyond the scope of this reply. But to summerize, a company that cannot protect its margins for its retailers, will not survive very long. Those who do, become successful for the long term (Apple's iPod, Bose, Sony PS3, etc.).

A retailer MUST bring something to the table to "earn" the margins it gets when it sells a product. Being the "low price leader" does not count. That is the single WORST strategy a retailer can have. If you look at what the public perceives as the low price leaders, most really rely on competencies other than being the low price leader, and instead "hide" price premiums throughout their product mix, with only specific, strategic products being absolute low prices. A manufacturer should not even want to have a retailer sell its products if the only value it brings is "low price". The retailer must "earn" its margin through customer support, product support, product expertise, merchandising expertise, logistical expertise, etc.

Newegg is an excellent retailer. The do have low prices on many products. But many are NOT low prices--just normal selling price. Newegg "earns" its margins by providing superior customer service and a superior shopping experience.

Retailers may complain, but they actually like being told what price to sell at--provided other retailers don't cheat. Retailers cannot survive at low margins--they want to be able to make as much margin as possible for a product. But most companies may try to set MAP, but then don't follow through to make sure everyone abides by MAP. And no retailer wants to be the only guy holding the line at MAP while the rest of the world is beating them in price.

I hate to sound preachy or arrogant here, but like I said, this is well-settled material. There is no real controversy here, other than HardOCP stirring the waters.
 
no real controversy? i guess you are right. nvidia is just making it more difficult to shop for and purchase their cards. whatever nvidia wants to do to shoot itself in the foot is just fine...

besides, don't the marketing geniuses at nvidia know that the more clicks a person has to go through, the less likely they are going to continue all the way to the end and actually make a purchase? ever hear of KISS?
 
Ryco that's all irrelevant as long NVIDIA applies the policy consistently.

The bottom line is that they do not want their products sold on the basis of who has the lowest price. Once again, this is standard operating procedure for a manufacturer selling "premium" products. A marketer is seriously dropping the ball if he allows his products to be stripped down to commodity level or hawked by bargain basement retailers during his watch.
 
It's not just about lowest price, it's about ease of use when shopping for the consumer. When I am putting together a machine I want to check out all the cards within a price range. Nvidia has now taken themselves out of that equation. I am not going to make my job harder than it has to be.
 
gal said:
It's not just about lowest price, it's about ease of use when shopping for the consumer. When I am putting together a machine I want to check out all the cards within a price range. Nvidia has now taken themselves out of that equation. I am not going to make my job harder than it has to be.
Click to expand...

...then you have a problem more with In-Basket pricing than with MAP policies, right?

I agree: "in-basket" is bad news all the way around. It is inconvenient for customers, and it skirts the "spirit of the law" in what the MAP policy is trying to accomplish. Savvy manufacturers will ban in-basket pricing as part of their MAP policies.
 
The "click to see the lowest price" or "see the price in the cart" stuff has always aggravated me. I think I'll take my business to ATI cards, where I can at least easily see the price. Being one of those people that builds computers for others, I need to save all the time I can. I've been with Nvidia since the Riva 128. That will most likely change. Of course, it could change back if I could directly see the price... :D

That's just the way I see things.
 
scooter_mcgilicuddy said:
...then you have a problem more with In-Basket pricing than with MAP policies, right?

I agree: "in-basket" is bad news all the way around. It is inconvenient for customers, and it skirts the "spirit of the law" in what the MAP policy is trying to accomplish. Savvy manufacturers will ban in-basket pricing as part of their MAP policies.
Click to expand...

I have a problem not being allowed to see the retail price of a product online along with other items in the same category. Where do you work btw? Any connections here with the company in question?
 
I agree that you should be able to see the price--ie., they should ditch that ridiculous in-basket pricing.

Now I don't know exactly how NVIDIA can enforce this--it is complicated by the fact that the manufacturers take NVIDIA's chipset, and then add their own features. Controlling a reference design's price should be easy, but I admittedly do not know how they deal with overclocked/upgraded fan/upgraded components, etc.

I have no connection to NVIDIA whatsoever, I am just a guy with quite a bit of experience and training in this area.
 
mentok1982 said:
Mike and I (GPUReview.com) think UMAP totally blows so I wrote an article today to explain it
in detail to our readers. I have included screenshots from both Newegg and TigerDirect.

http://www.gpureview.com/nvidias-umap-policy-or-why-nvidia-hates-online-shoppers-article-690.html

I would like to thank [H]ard|OCP for pointing out this travesty to all of us!
Click to expand...

I know there is no point in trying to convince you as consumers, but as professionals you need to know this is common throughout all industries and pretty much required if a manufacturer wants to stay in business.

I don't know how NVIDIA will manage this program, but theoretically they need to take into account different products and pricepoints. For example, if they want to "hold the line" at $399, they need to have other lower priced products for those who can't spend $399.

If they can't/won't do it, then another competitor can step up and do so (ATI). But even that other competitor must control the prices of their products.
 
We don't care about controlling prices, we consumers care about seeing prices. If we can't see and compare them easily, what's the use? It's a waste of time. Not like nVidia is the god of the graphics world. We can always buy from someone else who's not so anal.
 
scooter_mcgilicuddy said:
I know there is no point in trying to convince you as consumers, but as professionals you need to know this is common throughout all industries and pretty much required if a manufacturer wants to stay in business.

I don't know how NVIDIA will manage this program, but theoretically they need to take into account different products and pricepoints. For example, if they want to "hold the line" at $399, they need to have other lower priced products for those who can't spend $399.

If they can't/won't do it, then another competitor can step up and do so (ATI). But even that other competitor must control the prices of their products.
Click to expand...


That is not true in any way shape or form.

Nvidia sells chips. If they sell a chip for $100 to Asus and Asus makes a card and sells it for $50 it does not hurt Nvidia at all. It hurts Asus.
 
scooter_mcgilicuddy said:
I agree that you should be able to see the price--ie., they should ditch that ridiculous in-basket pricing.

Now I don't know exactly how NVIDIA can enforce this--it is complicated by the fact that the manufacturers take NVIDIA's chipset, and then add their own features. Controlling a reference design's price should be easy, but I admittedly do not know how they deal with overclocked/upgraded fan/upgraded components, etc.

I have no connection to NVIDIA whatsoever, I am just a guy with quite a bit of experience and training in this area.
Click to expand...

Your experience certainly isn't in customer relations.It's not a matter of how many companies practice this,it's a bad policy,period.HardOCP has every right to bring this to consumers attention,it's just one more example of Nvidia's arrogance and bad attitude towards their customers.
 
M4rk said:
We don't care about controlling prices, we consumers care about seeing prices. If we can't see and compare them easily, what's the use? It's a waste of time. Not like nVidia is the god of the graphics world. We can always buy from someone else who's not so anal.
Click to expand...

Once again, are you annoyed by the MAP pricing, or by the in-cart pricing?

You should easily be able to compare prices---because they should be standard no matter where you go. That's the point. If the GTX260 is $399, then it is $399. Nothing left to compare, unless there are other GTX260s different feature sets that either cost more or less.
 
michael.pa2 said:
Your experience certainly isn't in customer relations.It's not a matter of how many companies practice this,it's a bad policy,period.HardOCP has every right to bring this to consumers attention,it's just one more example of Nvidia's arrogance and bad attitude towards their customers.
Click to expand...

I have nothing to do with customer service or with NVIDIA. I am just trying to fill you in on how it works. It is what it is.
 
sxotty said:
That is not true in any way shape or form.

Nvidia sells chips. If they sell a chip for $100 to Asus and Asus makes a card and sells it for $50 it does not hurt Nvidia at all. It hurts Asus.
Click to expand...

It sounds counter intuitive, but it is true--some situations more so than others--but it is true.

In your example, it seems like Asus will be hurt more than NVIDIA. But NVIDIA's ability to get premium prices for their chips is impacted over the long run by how they are perceived by consumers. And if consumers come to associate NVIDIA as cut-rate, over time the Asuses of the world won't be as willing to pay NVIDIA as much for their chips.
 
scooter_mcgilicuddy said:
It sounds counter intuitive, but it is true--some situations more so than others--but it is true.

In your example, it seems like Asus will be hurt more than NVIDIA. But NVIDIA's ability to get premium prices for their chips is impacted over the long run by how they are perceived by consumers. And if consumers come to associate NVIDIA as cut-rate, over time the Asuses of the world won't be as willing to pay NVIDIA as much for their chips.
Click to expand...

And just how do you think Nvidia is perceived at the moment?Is it better to thought of as cut-throat than cut-rate?:confused:
 
If not for those in-basket price systems, and retailer disclaimers, it would be pretty transparent to consumers. As are most MAP policies...
 
This is all ATI's fault. :D If they had decent video card to compete, then NVIDIA would be more worried about selling their product than competing with themselves.

This practice doesn't bother me too much. I have no problem clicking to find the lowest price.
 
scooter_mcgilicuddy said:
...then you have a problem more with In-Basket pricing than with MAP policies, right?

I agree: "in-basket" is bad news all the way around. It is inconvenient for customers, and it skirts the "spirit of the law" in what the MAP policy is trying to accomplish. Savvy manufacturers will ban in-basket pricing as part of their MAP policies.
Click to expand...

If you're banning basket pricing, then you're effectively setting the minimum selling price.

IMO, I dont' think there's any reason that the etailer should be prevented from saying we'll sell it for X....they just can place an ad (or send an email out) that says we'll sell it for X, if X is less than MAP.

In myh world, an advertisement is bought and paid for, not a pricetag in front of the product inside the store.
 
Hmm, not reading all ten pages, but this is nothing new right? Audio and electronic companies do this all the time. It makes it a smidgen harder but not by much. One person clicks through, sees the real price, reports it, everyone now knows the price?
 
scooter_mcgilicuddy said:
This is not news. HardOCP really comes across amateurish in this article--i.e., they need to do some research before reporting news (otherwise a great site though).

These are all settled issues. MAP policies have been around for years.
Click to expand...



Hey dummy, just because something has been around "for years" doesn't make it good or right or acceptable, and this isn't just about the practice in general but about a specific application of it that DOES matter to this audience. :rolleyes:
 
scooter_mcgilicuddy said:
This is not news. HardOCP really comes across amateurish in this article--i.e., they need to do some research before reporting news (otherwise a great site though).

These are all settled issues. MAP policies have been around for years. The Leegin decision simply allows more leeway in how they are enforced. Before, you had unilateral "Colgate" policies that allowed a company to dictate MAP pricing, but the company had to be vague when they decided to enforce the policies. In Leegin, the court acknowledged that there are legitimate reasons for why a company would want to control pricing, and that such companies should be allowed to do so as long as the companies were not doing so for purely anti-competitive means (e.g., to push competitors out of the market). All of this talk of "price fixing" is apples-to-oranges, and out of context.

The legitimate reasons the court referried to include protecting brand equity and channel stability. The value of most modern companies is a sum of their brand equity (ability to charge premium prices over what a generic version of the product would earn), and its established marketing channels (value of the time and effort taken to develop relationships with different types of retailers). Wide price swings dramatically disrupt both for reasons well beyond the scope of this reply. But to summerize, a company that cannot protect its margins for its retailers, will not survive very long. Those who do, become successful for the long term (Apple's iPod, Bose, Sony PS3, etc.).

A retailer MUST bring something to the table to "earn" the margins it gets when it sells a product. Being the "low price leader" does not count. That is the single WORST strategy a retailer can have. If you look at what the public perceives as the low price leaders, most really rely on competencies other than being the low price leader, and instead "hide" price premiums throughout their product mix, with only specific, strategic products being absolute low prices. A manufacturer should not even want to have a retailer sell its products if the only value it brings is "low price". The retailer must "earn" its margin through customer support, product support, product expertise, merchandising expertise, logistical expertise, etc.

Newegg is an excellent retailer. The do have low prices on many products. But many are NOT low prices--just normal selling price. Newegg "earns" its margins by providing superior customer service and a superior shopping experience.

Retailers may complain, but they actually like being told what price to sell at--provided other retailers don't cheat. Retailers cannot survive at low margins--they want to be able to make as much margin as possible for a product. But most companies may try to set MAP, but then don't follow through to make sure everyone abides by MAP. And no retailer wants to be the only guy holding the line at MAP while the rest of the world is beating them in price.

I hate to sound preachy or arrogant here, but like I said, this is well-settled material. There is no real controversy here, other than HardOCP stirring the waters.
Click to expand...

I smell... damage control
 
yacoub35 said:
Hey dummy, just because something has been around "for years" doesn't make it good or right or acceptable, and this isn't just about the practice in general but about a specific application of it that DOES matter to this audience. :rolleyes:
Click to expand...

Hmmm. Thanks for the insight jacoub. Perhaps you should just ignore what I have written so far, and go about living in a state of ignorance-induced bliss.

Or you could avoid name calling, and understand that I am not connected to NVIDIA in any way, and am merely trying to explain what is a common practice throughout many industries.
 
swiftB3 said:
QFT... Having repeated twice that he has "nothing to do with NVidia", reminds me of a little Shakespeare: He "doth protest too much, methinks." :p

Edit -- make that 3 ;)
Click to expand...

Now swiftB3, would I be counting down the days until the new 4850/4870s are released, or contemplating crossfiring my 3870 if I were employed/associated/connected with NVIDIA in any way? :p

Seriously. I am not. But I did get a chuckle out of the Shakespeare quote...

I am your typical mild-mannered amateur computer junkie, and I check out HardOCP a couple of times a day. Rarely is there anything tech-related that I am qualified to run my mouth on, however this is a topic that I know very well, and was merely trying to fill you all in on.
 
One things for certant.

NVIDIA IS DAMN GOOD TO MAKE A MESS.

well, i dunno how much time ive spent explaining, 8800 GT is faster than 8800 GTS 320/640 mb but not the GTS 512 mb, and the 9800 GTX is just a margin faster than the 8800 gts 512 mb and people just dont understand anything >_<


Im sticking to ati for easy marketing, and non defects since my first ATI R9000, and then i found out, ohh this works better than lotsa the GF cards, lets go ati on main comp, used ATI since, not one RMA till now out of 15 ati cards :D

I got the performance for 1280x720, im satisfied, ati's might not be good over 1680x1050 ! but they sure are quality, my 3870x2 is damn quiet :D

I got a big case, lotsa fans, and its rather cool inside the case might be why, anyways, the GTX280 makes more noise
 
scooter_mcgilicuddy said:
Retailers may complain, but they actually like being told what price to sell at--provided other retailers don't cheat. Retailers cannot survive at low margins--they want to be able to make as much margin as possible for a product.
Click to expand...

Isnt this precisely what happened with the DRAM price fixing scam in 2002?

If retailers cant survive at low margains, then how is it that local retailers have remained competitive with online businesses?

And I still would like to know how displaying MSRP in addition to the actual retail price on website listings is any different from forcing people to "click through" to a shopping cart.

If nvidia was really worried about customers being confused, they could merely tell them to refer to the listed MSRP values to determine how the cards should perform relative to one another.
 
scooter_mcgilicuddy said:
however this is a topic that I know very well, and was merely trying to fill you all in on.
Click to expand...

The sad truth is that we dont want dictated advertising prices and dont want to hear how other industries have been using it for years and how consumers have been left with exactly the problems we want to avoid.
We do not want it for very good reason.
Nothing you have said makes us think it is acceptable in any way.
 
Originally Posted by scooter_mcgilicuddy
Being the "low price leader" does not count. That is the single WORST strategy a retailer can have.
Click to expand...
Do tell why?
A manufacturer should not even want to have a retailer sell its products if the only value it brings is "low price".
Click to expand...
Ummm Do tell why? Sure this is your super awesome opinion on what YOU think a manufacturer SHOULD do, but... back it up.

Some manufacturers that largely rely on the sale of components for finished goods (ex. NVIDIA) CHOOSE to make it their strategy to just sell as much product as possible. There is no law of strategy that says price competition disrupts supply channels, or it is bad or you SHOULD not do it.

Obviously companies like Palit can be very succesful at this strategy. If domestic brands can't compete, then they go out of business. It's just the way a free market works. Price fixing or controls only serve to give poor competitors a crutch to continue selling overpriced goods.
 
Nenu said:
The sad truth is that we dont want dictated advertising prices and dont want to hear how other industries have been using it for years and how consumers have been left with exactly the problems we want to avoid.
We do not want it for very good reason.
Nothing you have said makes us think it is acceptable in any way.
Click to expand...

Sigh. If you all don't want to hear about this, then I will go about my business and get back to more important stuff like trolling for unofficial 4850/4870 benchmarks. If it is more fun to simply bitch and moan and MF NVIDIA back and forth, go for it. But if you want insight on this matter, I am happy to provide it.

As a fairly loyal ATI guy, I am merely doing my duty to say that NVIDIA is not evil here, and we all should not avoid them because they doing what they must do to preserve their long term existence.
 
I beg to differ, NVidia need a lesson to stop the rest of the PC industry following suit!!
 
scooter_mcgilicuddy said:
Once again, are you annoyed by the MAP pricing, or by the in-cart pricing?

You should easily be able to compare prices---because they should be standard no matter where you go. That's the point. If the GTX260 is $399, then it is $399. Nothing left to compare, unless there are other GTX260s different feature sets that either cost more or less.
Click to expand...

Maybe your missing the point of this article, it is not to make all products the same price. The retailers are still allowed to have their own price points...we just have to work harder to see it.
 
QuakerOatz said:
Do tell why?

Ummm Do tell why? Sure this is your super awesome opinion on what YOU think a manufacturer SHOULD do, but... back it up.

Some manufacturers that largely rely on the sale of components for finished goods (ex. NVIDIA) CHOOSE to make it their strategy to just sell as much product as possible. There is no law of strategy that says price competition disrupts supply channels, or it is bad or you SHOULD not do it.

Obviously companies like Palit can be very succesful at this strategy. If domestic brands can't compete, then they go out of business. It's just the way a free market works. Price fixing or controls only serve to give poor competitors a crutch to continue selling overpriced goods.
Click to expand...

Wow QuakerOatz. Calling me on the carpet for this.

OK. I cannot cram a couple years of marketing strategy into a reply, so rest assured that it is common knowledge that "low price leader" is a disastrous strategy, typically employed by marketing/retail newbies. By all means, throw in a well-timed sale here and there, but if you rely on constant sale prices, you are a retail dead man walking.

Certainly companies exist in the high-volume, low-margin space, (ie., commodity space), but if they are smart, they constantly innovate to try to earn price premiums for their products. That is the goal of business. Poor competitors are not in the position to do this (no one will pay the premium). There ARE laws of strategy regarding pricing and the interaction with market channels. It is a whole body of knowledge called "Market Channel Management". As a marketing manager, you simply cannot throw your products out there and let the chips fall where they may.

As for my credentials...well, I don't want to make this a discussion about Scooter's credentials vs. the legitimacy of the practice of price management (what it is called). But if you want to know: my top tier MBA, top tier law degree, specialization in business/competition law, strategy, marketing, brand/channel management, and e-commerce merchandising, coupled with about a dozen years of dealing with such topics on behalf of manufacturers/distributors/retailers qualifies me to run my mouth off with little fear of being wrong (in contrast with tech topics!). You can take what I say or leave it. But as I said above, I am sensing that there is a lot of messenger shooting here, and I am better off reading about my next videocard purchase or whether to RAID0 my drives.
 
deeznuts said:
Hmm, not reading all ten pages, but this is nothing new right? Audio and electronic companies do this all the time. It makes it a smidgen harder but not by much. One person clicks through, sees the real price, reports it, everyone now knows the price?
Click to expand...

So I have to go to forums to get pricing in one place to build pcs for my customers?
 
Believe the marketing, pay no attention to nvidia behind the curtain.
 
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