NVIDIA Unlikely to Help Retailers Cut Excess Mainstream GPU Pricing

Discussion in 'HardForum Tech News' started by Megalith, Jan 13, 2019.

  1. Megalith

    Megalith 24-bit/48kHz Staff Member

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    NVIDIA hopefuls believe the company could lower prices by way of rebates to quicker reduce excess inventory, but CFO Colette Kress has dispelled that fantasy somewhat, noting software bundles are the “popular” option. Rebates aren’t an impossibility, but the company has “very little control over inventory pricing in the channel, as it’s in the hands of retailers.” Kress says prices will normalize in January, but excess GPUs will remain for one or two quarters.

    “There are many different ways in terms of how we are trying to work through the overall inventory,” Kress says. “Bundling has been quite popular… we also look in terms of rebates. But you have to be careful with that, and it’s hard to get to, because the overall inventory has probably already worked down the channel. We don’t have necessarily the direct contact as we do with the initial part of our sale that we do with AICs.”
     
    Last edited: Jan 13, 2019
  2. Nobu

    Nobu 2[H]4U

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    Iow, the GPUs may have already moved from their partners to other retailers, in which case those retailers would have to ask nvidia for rebates.
     
  3. filip

    filip [H]ard|Gawd

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    Man is history repeating itself so fast? Quarter 3 for Nvidia and they were saying they did not drop inventory prices fast enough to match the demand. Now prices are though the roof again. What is the reasoning behind this? If they had a hard time selling GPUs at those prices why bring the prices back up. This might be 3 quarters of old inventory at the end all while trying to sell a new product line at inflated price points.
     
  4. steakman1971

    steakman1971 2[H]4U

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    I think the retail prices are already to high. Inflate them more - geez.
     
  5. Shoganai

    Shoganai Limp Gawd

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    Maybe this will help their stock tank more.
     
  6. umeng2002

    umeng2002 Gawd

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    Make cheaper products, Jensen.
     
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  7. oldmanbal

    oldmanbal [H]ard|Gawd

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    They also said that 1-2 quarters ago lmao
     
  8. DukenukemX

    DukenukemX [H]ardness Supreme

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    This is all due to the fact that used RX 480's and GTX 1060's are less than $150 on Ebay. Add that anyone with a R9 290, 390, GTX 970, 980 has like zero reason to buy a GPU that has the same performance that they do. Nvidia is like, "nah bro the people will start buying our overpriced GPU's" and the prices stay high. Retailers are upset that nobody is buying this shit and want to lower prices.

    Nvidia's marketing team finally fucked up.

    v8U7BdU.png
     
  9. Dermen

    Dermen Limp Gawd

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    Don't worry, the execs who are at fault for this will get at least $25 million when they are fired.
     
  10. funkydmunky

    funkydmunky 2[H]4U

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    The rumor I read was it was an excess of 1080 chips. This made zero sense to me as the 1080 was the ONE Nvidia GPU that sucked at mining (for its price) so why would they over commit to it? Additionally I see no glut of 1080's for sale at retail. Lots of 1070/1070ti's and 1060's. But no real big price breaks. Do we know what chips are in overstock because nothing is seeming obvious.
     
  11. filip

    filip [H]ard|Gawd

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    We know what the over stock is, they (both Nvidia and AMD) will have overstock of "old" gen cards until quarter 2-3 2019, that is when they anticipated the channel to clear. This was said in q3 2018 financial results if I am not mistaken.
    Now the 1080 and 1080ti are out of stock at retailers, but those 1060 with gddr5x where suppose to be 1080\1080ti boards, so the inventory just shifted from them to the 1060.
     
  12. velusip

    velusip [H]ard|Gawd

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    Water wet, etc.

    Nvidia makes their buck as soon as the vendor signs, so the risk (and responsibility for said risk) sits entirely on the vendor. That risk goes up with competition, something Nvidia doesn't have to worry too much about since, again, the vendors already signed.

    It's just like franchises, the non-negotiable agreement to sell products rife with restrictions ensures the franchise owner can make a steady profit regardless of how poorly the individual franchise operates.

    In other words, "ha ha ha ha ha!" - Nvidia all the way to the bank.
     
  13. KazeoHin

    KazeoHin [H]ardness Supreme

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    Man, I haven't seen a 1080 ti or 1080 on my shelf for months. Where is this "excess inventory"?

    Maybe Australia is in a different situation...
     
  14. Uvaman2

    Uvaman2 2[H]4U

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    Devil's advocate: Why would they lower their cut? AMD cut prices on 56 and 64, and prices got jacked right back up...
     
  15. odditory

    odditory [H]ardness Supreme

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    Said no shareholder ever.
     
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  16. KazeoHin

    KazeoHin [H]ardness Supreme

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    Remember when Nintendo launched the WiiU and everyone was saying they were doomed?

    Yeah, Nintendo had a few Olympic sized pools of cash that they could hunker down on to ride out the bad publicity, bad products, and lacklustre sales.

    Nvidia has a few pools of cash as well, so don't expect them to start shaking in their boots until they have a few bad products in a row.
     
  17. Olle P

    Olle P Limp Gawd

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    Seriously? The retailers only have the ability to inflate prices, not to reduce them.
    As I've understood it:
    Nvidia sells (mostly) GPUs only, to AIB partners at a price with a significant profit margin.
    The partners produce cards with these GPUs, adding to the price.
    The cards are then sold directly to retailers (in a few markets) or to distributors (in most of the World). Distributors add more to the price.
    The retailers also need to have some profit margin. At today's cutt-throat competition a margin of 5% or less is the norm, and that's not profit but used to cover the retailer's overhead.

    If retailers are able to have a larger profit margin (like 10%) once in a while I think it's not just good for them, but necessary to keep the business running.
    It's the monopolies and oligopolies that must reduce their margins if the prices are to drop.
     
  18. Patton187

    Patton187 Gawd

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    I would love to see accurate sales figures for the 2080ti.
     
  19. Design1stcode2nd

    Design1stcode2nd Gawd

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    Going to be keeping my 1070 for a long time. I'm not paying $700 for a GPU.
     
  20. Uvaman2

    Uvaman2 2[H]4U

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    Or any? card.

    The market and pricing seem so erratic to me.
    In a way I get it, if nVidia cuts their price they might just be cutting their slice of profit, and that is it!, they might not gain any other side benefit like customer loyalty, or mind share, since everybody else seems to just jack-up the price, and not pass on any savings.
    The only cards I think have been semi-stable for a month? or so have been the RXs-580- 590 and lower variants.
    Only thinking new here, not used.
     
  21. One2Zero

    One2Zero n00b

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    This is a load of fucking shit. Authorized disties (ASI, Ingram, Synnex, Tech Data, ect ect.) will get funding for rebates on specific chipsets and boards. This is not granular to the AiB's so if there is a 1050 Ti 4GB rebate this is applied to all boards meeting that criteria. This is a sell-out rebate so for the buyer, it's instant and applied directly to the invoiced price (i.e 250 quote - 50 nvidia rebate =200). On top of this, AiB's will also offer the same type rebate and in some cases you will see the AiB+NVIDIA rebate stacked. AiB rebates tend to be lower than the nvidia direct. Again, this is on a distribution level...you know THE CHANNEL.

    But wait...there's more. NVIDIA claims that they have no control over pricing in the channel....bullshit.

    Let's take Newegg for example...who do you think they purchase from? ASI generally. They do purchase MFR direct as well, but most often their inventory is coming from distribution. So clearly they can take advantage of this rebate strategy. My guess is that NE will also have a PP (Price Protection) plan in place with both the AiB and distribution. So yes, they can get funding to lower their pricing.

    Also, AiBs and NVIDIA can also lower the pricing massively and control the flow of goods at the same time by way of mail-in-rebates. This is a great way to lower your price, but avoid completely diluting the market and trashing your price. (Plus you have the added benefit that most of the MiRs are probably insured through 3rd parties because hey....people don't complete mail-in-rebates. They see the lower price and buy.... The ones that do complete the MiR will get them on a PP card and those will generate fees/reveune for the issuer as well. Profit.....)



    TL;DR - NVIDIA has multiple avenues and programs to lower pricing while keeping their market pricing stable.

    As a side note, their PR arm is full of shit and its crystal fucking clear that they knew the crypto market was going to tank. They'll hide behind the "inventory gut" for "the pricing increase", but its clear they were trying to offset this downturn with higher rev/margin on Turing.
     
  22. One2Zero

    One2Zero n00b

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    The part that you're missing here is that when a purchase goes through disty from a large buyer, NE for example, they will have a SPA in place for purchases. The MFR basically gives the retailer the lower pricing and the disty will still make their cut (Large deals, disties are still making something in the 1-3% range) This doesn't include any MDF or other backend money that NE receives.

    Don't be fooled, when things are on "sale" its highly likely that there is money being allocated to the retailer to push the inventory. PMs live and die by inventory turns and write offs, I guarantee that they will go to the MFR and ask for funds to move aging/slow moving inventory vs writing down product to sell.