Also issues with the product, the poor decision to get into the OEM space, conflict with their prior OEM partners, and a few other reasons (including poor timing of the market and various loans).Just so you know, I'm enjoying our conversation. I don't mean to come off as insulting. Only being direct.
Brand Damage: Low inventory and high desire is one of the reasons 3DFX died.
Nvidia makes no money from scalpers beyond what htey would make selling the product in the first place. Distributors (for better or worse, a scalper is another distributor layer) make the money there, not the OEM. Scalpers have no impact to the bottom line of the corporation directly.On a short term scalpers doesn't hurt your bottom line. On the very short term it bolsters it.
I'll set aside the company reputation portion for the moment - Turing was not great for hte home consumer (although we still bought a TON of them), but was absolutely massive in the datacenter space, AI/ML space, HPC space, and others. I've sold more turing cards than any other (excepting the M10 from the maxwell generation, as it has no replacement) for those use cases, by an order of magnitude - especially the T4 series of DC cards. Triply so when you include the fact that most of the world is WFH right now and there's massive drive for those cards for said initiatives. And those cards drive licensing revenue too, which is not only repeatable, but much higher margin than hardware.But while short term profits are great for investor dividends and day traders, damage to the company reputation starves it of long term sustainability and erodes a customer base. Ask yourself, why the 3080 was priced at $699 instead of $999, and why did Jensen have to do a song a dance to 10 series owners? Why did they immediately have to enlist Digital Foundry to back up their claims? Because the Turing launch was THAT bad, and the pricing had eroded consumer confidence.
As for the company reputation - so they've had a crappy launch. You going to only buy AMD cards now? It will be forgotten; human psyche these years is very short term focused, and then moves on to some new squirrel. We're also a somewhat captive audience as there are exactly two options right now - Nvidia and AMD, and part of the feature set is Nvidia only as far as we know and can purchase.
They're making money hand over fist. They own a virtual monopoly in the DC/AI/ML space, as well as in the automotive space. There's also a balance to pricing beyond "maximize profits", as that definitely DOES damage your brand. And even with AMD playing their cards right - there's a lot of this space that they can't just "enter" as they simply don't have the tech yet (see again, DC space/etc, where AMD has effectively exited from the GPU perspective). Pricing is a highly complex subject, especially during a recession like we're in now.Had Turing been more successful, they would now be reaping far greater profits from what should be one of their most successful and financially strong generations. Instead they are selling for pitiful profits which inevitably provide less capital for both R&D (ask ATI about that) and further brand erosion (3DFX) by having consumers focus on negative instead of positive experience. Additionally, it has opened a massive door for AMD to step in if they play their cards right, and gut a hole into a previous locked up market (see AMD Ryzen).
Sure, but there are always some lost sales. What competitors? AMD (as far as we know) does not yet have a true competing product. Until Big Navi arrives, we don't know if it exists or not - or what it performs as. Lots of promise, lots of non-delivery in history - I hope Big Navi is good (want to upgrade my 5700XT), but we just don't actually KNOW yet. And even then, do we really think that it will be fully head-to-head competitive than the 30X0 series? Intel is not a competitor.The owners: Of course they're happy. Some of this is bolstered by the lack of availability though. They may even subconsciously be increasing their satisfaction by knowing they are part of an elite so to speak.
The folks who still want them: Most is the key word. Most means lost sales. Most means lost brand. Most means opportunity for competitors to steal customers. You know what locks people in? A non-refundable $50 deposit with the guarantee of delivery. Customers who make purchases on this level will often actively ignore the competition because they want to reaffirm their choice, and only associate within an eco-chamber of reinforcement.
Those deposits open a HUGE pile of legal issues, as they are run differently in every state and across state lines - non-refundable isn't an option in some places, and rules around refunds are different between states/etc (see, for an example, the fine print on ticketmaster orders, and how it can differ between states).
Folks who don't want one: They ARE customers. Anyone that desires your product is a customer. The trick is to retain them until they have the capital to buy. Two things typically happen: They save up the money, or they purchase a lesser but similar experience. This is lost opportunity. Now AMD has a chance convert these customers into clients. How do you save that? Third party payment plan with a reservation and non-refundable but small deposit, followed by motivational marketing.
Tier-2 customers (folks actively avoiding you) are not actually customers. You concentrate on Tier-1 (ones who could be and want to be) and tier-3 (folks that don't know about your product somehow), while making sure Tier-2 doesn't do anything weird to you (consider Tier-2 the fanboys of the other side, in the normal marketing models) - https://cdn.slidemodel.com/wp-content/uploads/6539-02-blue-ocean-strategy-16x9-15-870x489.jpg gives a good example of the model normally used for this (this is partially my world). Again, this assumes that AMD's part can serve as a substitute - we don't know that yet, although you are correct, that many people will consider it a substitute. Then again, my RTX 2080TI is also a substitute - at least for now.
Sale was made - to the distributor (scalper) or end user, the effect to the company bottom line is effectively nil. You're right that in the long term, nvidia DOES care about scalpers - because eventually they damage the brand, or can, but for a single launch? With everything else going on? Eh. Impact is minor right now - they're selling as many cards as they can make, a community of people has risen to try and GET the cards, many of us are just shrugging and paying the scalpers (if we can - I'm staring at a Gigabyte 3090 on ebay right now for a reasonable price), and there's still not a competitor. If they find a way of dealing with this and getting parts into peoples hands over the next 6 months, everyone will be happy and it will be mostly forgotten before long.Angry at scalpers: A small but viable potential base that could convert to sales that may have otherwise missed. People will do all sorts of things when they feel slighted. Scalpers are notoriously hated. Nvidia could flip these potentials into sales by a reservation program and pushing a message of screw the scalpers. It's a small drop in a bucket most likely, but it's also extra motivation for all other potential clients.
Again, the model you suggest has traded short term profits for long term sustainability which in itself is a valid model IF you have a long term reward to reap from it and no or little competition. But they do have competitors, and they don't have much to reap from allowing their products into the hands of scalpers other than short term profits. If they continue to take that business model, then they risk eroding their public value and ending up on the bad end of a holding company sale interested only in their IP. This is part of the reason that Nvidia NEEDS Arm.
Now, if Big Navi is truly competitive, and they can't figure out how to get yields up, or the scalpers find a way to totally dominate the market (profit margins there do matter to them, since they're effectively running on retail cost of goods sold), then they have to make a decision - Reebok/Nike/etc don't have issues with scalpers, as they've made the decision to accept that distribution model... Nvidia may not, as their products may not be unique enough for it to work or be valid (or the outcry might be significant enough to threaten the other lines of business), but until we see what their competition has, we just don't know.
Lots of unknowns here. It's far more complex than "just throw up a preorder deposit system", which is the point I'm trying to make - because that's not as easy as it sounds. Same argument I get into with folks doing rental of enterprise datacenter equipment - if your customer's accounting isn't really built around operational expenses, and is built around capital instead with either EBITDA or capital amortization as key, then it doesn't matter how cost effective your solution is - they're not changing their accounting model to buy a bit of kit. The CFO would shoot you.