AMD FX 9590 Price Drop on Aria.co.uk

[SlowSpyder]

Great post jvroig! In grade school I used to play this game on an Apple IIe where we had to set prices on apples to best maximize the profits vs. apples sold. Reading your post reminded me of fourth grade... haha.

 

[Torn Mind]

I don't want to come across as patronizing, but since being an economist isn't a pre-req for being an extreme PC enthusiast, I'm going to assume anyone reading my post has no economic background whatsoever (I'm sure though that most of you have at least taken a class or two in college, or have had some practical exposure due to the office, etc)

Good to know I'm not the only one who has gone through learning about economics. Rock on.

On the buyer's side, e-peen stroking and product differentiation WORKS on some people, it makes sense to at least try to stroke the e-peen of the person who not-quite informed and well-versed in what he is buying but still thinks is an enthusiast. He is still a slave to male biology and he will shell out the money on what he has been convinced to think is a "Ferrari"-like part.

 

[frozentundra123456]

Ah the price. It's actually a smart move (from a capitalist's point of view, but since we're all capitalists here (free economic system, right?) perhaps we should say it's the best move from the bean counter's point of view).

It's a thing called "capturing the consumer surplus", and I have no idea if I can do the concept justice in a forum post, but gosh darn, I'm gonna try to explain it anyway!

I don't want to come across as patronizing, but since being an economist isn't a pre-req for being an extreme PC enthusiast, I'm going to assume anyone reading my post has no economic background whatsoever (I'm sure though that most of you have at least taken a class or two in college, or have had some practical exposure due to the office, etc)

I. Pricing
So the Sales Division (SD) says, "Hey, there's this ugly slump in sales! We absolutely can't afford this, because we like to eat and all, and so do our families. Do something, Product Division!"

Product Division (PD) says, "We have no new products, although last week Engineering said they could 'make' a new thing with more voltage and higher clocks. It's gonna be pretty hot and consume 1.21 gigawatts from the flux capacitor alone."

SD : "Perfect! We wanted a lower tier, but a higher tier is even better! Halo product! E-peen! Package it as some breakthrough! 5GHz!"

And so we have a new product (well, two, but let's pretend there is only one). Dubbing it the 9590. Now, the problem the Sales Division and Product Division (and their financial / cost accounting division, whatever) has is how to price it.

Let's start at an arbitrary point, say, $1000 dollars for a CPU that according to Engineering will consume 1.21 gigawatts but be around 10-20% faster than the current high-end Piledriver.

According to the data points that Sales and Product has, they'd sell 3 units at $1000. They ask their financial / cost accounting guys: "Hey, can 3 units sold cover the costs of this play and give us bonus monies?"

Numbers are crunched, and bean counters get back to them: No.

Alright, so what to do? Do we abandon the endeavor since the accounting guys said no profits to be had? Hmmm...

Well, what happens if we lower the price to $900? Well, those 3 people who would buy it at $1,000 will definitely still buy it at $900, so we already have at least 3 people as well. Presumably, a few more - who balked at $1,000.00 - would be enticed to buy the thing. So we'd have, say, maybe 10 buyers at $900.00, compared to only 3 at $1,000.00... and so on and so forth until they get a chart like so:

Price : Forecast
$1,000 : 3
$900.00 : 10
$800.00 : 100
$700.00 : 200
$600.00 : 300
$500.00 : 400
$400.00 : 550
$300.00 : 800

(Of course, these figures are all made up for the sake of this free lecture).

If they consider that the lowest price is $300 ($200 is out because that's the 8350, they say), then they'll find that they sell the most units at $300! Eureka! They are all set to offer it at $300 since that'll sell the most units.

II. Maximizing Profits, not Units Sold
Unfortunately, the cost accounting guys tell them that their rationale is a little off. A business isn't interested in maximizing units sold, per se. Rather, they are there to maximize profits - which sometimes means maximizing units sold, sometimes just really jacking up the price.

For this purpose, let's just say that each unit sold takes a good round figure like $150 to create and sell (our simplified Cost of Goods Sold, or COGS). The cost accounting guys show them the profit calculations:

Aha! Although it sells only half the units as the $300 price point, selling for $500 is actually more profitable as per their own forecast that the cost accounting dudes used!

Properly schooled, Sales and Product hurriedly give the thumbs up to a $500 price point.

Perfect, right? What else could possibly be lacking here?

III. Consumer Surplus
Sales and Product hurriedly write their report so the executives can greenlight the project. In a very non-subtle way, they also hint that they prefer their bonus monies - as a result of this sure-fire successful project - in the form of cash, instead of a paid vacation to Hawaii.

The CFO looks through everything, sees the chart pasted above from the bean counters, and grows uneasy. If we offer the product at $500, we have atleast, according to Sales and Product, 300 customers who would have gladly paid more, but now would not have to. He whips out his LibreOffice Calc spreadsheet (AMD has no money for real Excel, right? ) and further tortures himself with just how much money is lost by not offering the product at higher than $500:

The CFO doesn't like what he sees. By offering it solely at a $500 price point, the forecast also shows that $63K of potential profit was foregone. This $63K is the total of what consumers would have willingly paid for anyway, but then the product was priced lower than their limit, so they happily kept the change and kept their wallets fatter than expected. The capitalist spirit in the CFO hates that thought, it chilled his spine and made him sweat cold little beads. Gosh darn it, if customers are willing to spend that extra money, then I want to get it, give them to me! He shouts this back to the cost accounting dudes, who then meet with Sales and Products again.

This potential profit ($63K) that is lost is called the consumer surplus. They (consumers / customers) would have spent that money on your product gladly, but due to your set price, they just gladly went home with extra money.

IV. Capturing Consumer Surplus
This is where ridiculous launch prices come in. And if you've been following me so far, you'd understand this goes not just for the 1.21 gigawatt CPU's in question, but for practically every product - which for us notably includes GPUs.

If I were in the CFO's place, using the chart above, I would ask them to launch the product in question at $800, to be able to capture the consumer surplus which amounts to a significant 5-digit figure profit. Then, lower the price point (several steps in several months, or just one step, whatever they decide) to be able to eventually reach $500 price point which is the most profitable price point.

This is just one way that shows capturing consumer surplus.

Now, go back to months or years back, when you may have ranted about ridiculous launch prices of a new line of video cards. Card X launches at a ridiculous $499 (and you then dutifully ranted at the AT comments section how you will never buy Card X for that ridiculous price), then gets price-reduced to $399 after several months, then gets price-reduced again to $349 few months later, before ending with a final cut at $329 ~1.5 years after the launch.

Those price-cuts are a technique to capture consumer surplus. Sure, if they launched at $329 to begin with, you wouldn't have ranted about it. But the bean counters, the dutiful, business-minded capitalists that they are, don't want the potential profits at $499, $399, and $349 to go to waste - after all, while you may have passionately ranted about it, there are others who wouldn't think twice about $499 for Card X. The company wants their money, so they take those first, before taking the monies of those who would only spend $329.

Same here. We can assume that the 9590 was priced at a ridiculous $1000 before offering it at the actual profitable baseline price point of $300, is because they saw it was a waste to just offer it at $300 right off the bat if there are people who would gladly pay the $1000 for it. They want that consumer surplus, and if it indeed exists, it is their duty to get as much of it as possible.


There you go. I've oversimplified some of the concepts, but I hope I got the point across. When we enthusiasts rant about ridiculous prices, what we are really ranting about is businesses being businesses. They are merely capturing the consumer surplus to further increase profit from the baseline "most profitable price point".

Cheers!

I guess I should have worded my statement more clearly. I was speaking of value to the consumer. What I should have said is "I don't see how a reasonable, well informed consumer could justify paying 900.00 for that chip." And I think the huge price drops starting to show up so soon pretty much verify that.

If you think it is the job of business to take advantage of biased or poorly informed consumers to maximize profit, then it was priced perfectly.

Disclaimer: I do have a pretty jaundiced view of most businesses that they are out to screw the consumer as much as possible. Although I am not sure if that is "jaundiced" or just pretty much accurate.

 

[Idontcare]

I dont have so much of a problem with the chip per se, but I just dont see how one can defend it at the price. I think that is proven by the precipitous price drops starting to show up.

I challenge you to scrutinize the price of anything you have personally bought with your own money and tell me how you feel the price is justified or defensible.

It is an entirely arbitrary threshold.

Look at collectibles, antiques, niche products of any variety or industry.

What makes a lambo worth $300k?

What makes a US dollar worth 98.68 Yen?

What makes my house worth $300k in the state of PA but the same house would be worth $3m in CA?

Value is whatever someone is willing to pay.

My house is worth $300k because that is all the next buyer is willing to pay for it.

The first 9590's were worth $900 because that is what the first buyers were willing to pay for them.

The buyers obviously valued the 9590 at $900, those that didn't value it at that pricepoint didn't become buyers.

 

[frozentundra123456]

I challenge you to scrutinize the price of anything you have personally bought with your own money and tell me how you feel the price is justified or defensible.

It is an entirely arbitrary threshold.

Look at collectibles, antiques, niche products of any variety or industry.

What makes a lambo worth $300k?

What makes a US dollar worth 98.68 Yen?

What makes my house worth $300k in the state of PA but the same house would be worth $3m in CA?

Value is whatever someone is willing to pay.

My house is worth $300k because that is all the next buyer is willing to pay for it.

The first 9590's were worth $900 because that is what the first buyers were willing to pay for them.

The buyers obviously valued the 9590 at $900, those that didn't value it at that pricepoint didn't become buyers.

Where I disagree is the concept that the value of an item is what the buyer is willing to pay. There is also value to an item based on what task that item performs. The "real" value of the 9590 based on what work it can do has not changed, the price has just been adjusted by the marketplace to be more in line with the intrinsic value of the item based on the work it can perform.

To carry your reasoning to the logical extreme would imply that no one ever spent too much on a purchase, because whatever they paid for something is what it is worth, because that is what they paid. Seems like circular reasoning to me.

 

[Torn Mind]

There has actually been much written within the field of economics about the nature of "value". Many theories proposed. Some are intrinsic (objective) theories and the others are subjective. However, it is a different matter entirely on whether a party ought to price a good according its objective worth with no regards to who you are selling to or actually take into account how much the buyer is willing to spend

 

[Idontcare]

Where I disagree is the concept that the value of an item is what the buyer is willing to pay. There is also value to an item based on what task that item performs. The "real" value of the 9590 based on what work it can do has not changed, the price has just been adjusted by the marketplace to be more in line with the intrinsic value of the item based on the work it can perform.

To carry your reasoning to the logical extreme would imply that no one ever spent too much on a purchase, because whatever they paid for something is what it is worth, because that is what they paid. Seems like circular reasoning to me.

I'm not saying these things because I invented them, these are fairly widely known and accepted concepts.

People can view their purchases as being "I overpaid for item XYZ" but that will usually come down to the fact they don't account for the differences in expenses associated with acquiring the goods.

Take me brother for example. He'll drive some 150miles, one-way, to buy an item on craigslist (used and in questionable condition) just to "save" money over buying the item locally on craigslist.

Ask him if he factored in the cost of gas, depreciation on his car, added maintenance expenses, plus the value of the lost productivity of his time and he'll look at you like you just spoke Chinese...but all those factors contribute to the opportunity cost of buying an item while thinking you saved money.

Same with the guy who bought the item for more, but at far less total cost once all the other expenses are tallied.

Everyone makes a decision to buy something at some point for a reason. Whether they over-paid or under-paid is a topic that really will be answered bases on the personal biases and desired outcomes of the people doing the arguing.

My brother will argue till his face turns blue that I overpaid for an item because I didn't spend 6hrs in a car driving to pick it up from some dude in a parking lot. I'd argue my time is worth more than the cost differential.

 

[Abwx]

Sometimes things must be said twice to be understood
by a part of the audience....

And it can still be not enough , though..

 

[bgt]

The 9590 doesn't use 100W more than any Intel CPU in general "office" usage, so this is a pointless question.

Exactly, its getting a bit boring all this endless talk about power usage of a FX.
1 chooses for a FX or 1 does not. It just is a fine CPU.

 

[jvroig]

To carry your reasoning to the logical extreme would imply that no one ever spent too much on a purchase, because whatever they paid for something is what it is worth, because that is what they paid. Seems like circular reasoning to me.

You kind of missed an important nuance in what we've been trying to impart (but that's ok, after all, how much info could one realistically cram into an informal forum post?).

It's not that no one overpaid because what they paid for is what it is worth. However, in luxury goods - such as the 9590 in question - it is almost always certainly true. In the category of basic human needs, however, one could find oneself overpaying when price gouging is taking place, simply because there is no alternative - including the alternative of "do not buy at all". For example, bread, rice, drinking water, electricity bills, maybe even rent - if these are things you can't live without, and you have no other alternative source for them (local grocery only, with the next nearest one being 20 miles away or so), then you are certainly overpaying - and you'd know it, because every time you are rung up at the cash register, you'd find yourself grumbling a few cuss words (Monopolies also have a tendency to have this negative effect, hence why there may be some regulation of such in each of our respective states/countries/regions/etc)

No such contrived condition ever exists (that I can think of) for luxury goods - be they lambos or high-end enthusiast PC gear. Because even if you find yourself with no reasonable alternative source, you can opt not to buy and wait for a more opportune time - you would not literally die of hunger, thirst, or exposure to the elements.

I wish I could answer your queries about "value" more deeply without turning this into a boring lecture. This is a very fascinating subject that economists of all shapes and sizes - be they mere academics or "practical" ones who are actually out to sell a product or service - have been tangling with for a long time..

However, I do want you to think about something and, if you find yourself so inclined, maybe do some internet reading about it. If not, no harm done, after all we aren't in class, we're just a few PC enthusiasts shooting the bull around the water cooler, so to speak


I. Beanbag chairs, 3D-printed thingamajigs, and the case of the missing intrinsic value
Think about this: Goods sold don't necessarily need to be a tangible, physical asset, right? For one thing, they (the "goods" in question) could be a service or services. We just clump them all together as "goods and service", but we mean one thing: something that comes at a cost for the buyer that the buyer (mostly) willingly pays for due to the benefit/value of that "good or service".

That's my intro in establishing that information itself is something of value and bought and paid for as "goods or service". Information is important - it drives technology and business decisions, and the accuracy and timeliness of which can turn a decision based on it to be terribly bad or terribly good.

Imagine I were a tech consultant who you know possesses a unique insight in today's latest modern enterprise tech buzzwords or whatever other snake oil. Imagine you are the CEO of a startup, and you've read about me and say to yourself, "By golly! If we're gonna make it as Silicon Valley's latest darling, we need this man's expertise!".

You give me a ring, I drop by your plush office with the stylishly cool beanbag chairs and 3D-printed prototypes of your latest thingamajigs adorning each sala set. You tell me that your company is at a crossroads early on in the game, and you need to know how most tech things related to you will probably pan out, confidence levels in the enterprise sector, any disruptive trends that may be a strength or weakness for your plans, etc. You give me 10 Manila folders to study for me to really grasp the ambitiousness of your dreams.

Next week, my report to your company arrives - 3 thick binders, single-spaced but filled with colorful charts thanks to some analytics. I bill you for the information provided in those 3 binders, and you gladly cut me a check for $75,000.00, bristling with confidence that your company will now have a better time at navigating the treacherous cross-winds of the tech sector and the enterprise sector. Also, you were not personally offended when I told you that no CEO in this day and age should ever be caught saying "by golly" - information/advice that I gave to you for free, because I'm such a nice guy

1 year later, I am interviewed by some College or University paper. It's for free (gratis), it's an academic thing, they really don't have a budget for this, and they wouldn't even want to spend anything even if they had - they'd just look for a source elsewhere or find an entirely different topic. Anyway, the topic turns out to be the same as pretty much what your company wanted to know about a year ago. I checked the NDA, and we only agreed on a 6-month NDA. Cool, NDA down. In the interview, I go through pretty much the entirety of what was found in the 3 binders you paid for, which I now call a "whitepaper". This information is of course then published at the respective College or University, free for the consumption of anyone with the intestinal fortitude to slog through my very long ramblings purported to be "insights".

Now, you mentioned something about "intrinsic" value in your reply to Idontcare, and I see that's tripping you up because you can't get over the idea that something, by nature of just being itself, will have a set value, as if that value (by which we only mean in the most rudimentary way, being "cost"/price) was part of its characteristics. And to try to divorce you of that idea, let's get back to the scenario I created above, you being the CEO, me being the rockstar consultant who just billed you $75K for information.

If 1 year later, you see the exact same information published FOR FREE, freely accessibly by anyone with access to the College/University publishings, will you suddenly find yourself enraged and say "holy crap, it was only worth $0? I've been ripped off! The intrinsic value of that thing was only $0 after all!".

Of course you won't (or rather, you shouldn't; I can't actually speak for you in a hypothetical scenario). For one thing, the information, being one year old, is already of limited utility - it's now useless for you and your competitors both (fortunately, you bought it from me a year ago, so you had that information much earlier and hopefully used it to great effect). This is why we only agreed to a 6-month NDA - after that, the information might as well be public, because its utility for enterprise-level or tech-innovation-ness is nil.

For another thing, the entity I effectively "sold" the same information to has no real utility for it other than academic purposes and probably historical record-keeping and filling their students' brains with useless jargon and snake oil. For them, this is just another paper to store in their archives after a handful of accesses by their student population and few misc people. For you, however, that exact same information helped you build a better business or an empire. It was personally valuable to you, even though to thousands of students it was just random gibberish they read then discarded. It was $75K well-spent for you, even though most students couldn't even be bothered to read for FREE. This would be true even if the info was not yet stale, as long as the other entity was still a non-competitor and the info would not leak to competitors through them. You'd still have spent $75K well because it helped you build your empire, even though some academics got it for a song after you did.

So we have the exact same goods in question - no real physical asset to speak of, although we can materially imagine it as those 3 binders - but it is not worth a dollar to the university, but is worth close to a hundred grand for you. Which is the "correct" intrinsic value?

There isn't any.


II. Intrinsic value of material goods?
And I know your first instinct will be to argue that information is different from 'material' goods, so let me tell you another story.

I saw three identical models of laptops on sale. Two were the usual black and grey/silver models, ho-hum. The third variant, however, was pink. But all three shared the exact same specs. The pink laptop, however, had a price premium of around $20.00.

I asked an attendant if this was a mistake, perhaps the printing of the specs was mistaken or erroneously copy-pasted. No sir, he said, it's just that pink laptops, they found, were generally sell-able at higher prices. Hmmm, good call, I said. I asked for the manager and congratulated him, telling him that move was legen - wait for it - dary. Legendary. True story.

Anyhoo, I didn't buy it, pink isn't my favorite color; I do admit it was rather striking, and I can understand why some customers - presumably of the female orientation - would pay a mere $20 just to have a nice pink variant instead of the lame black or silver ones.

Where is the intrinsic value? Only the outer coloring of the equipment was changed. Are the customers paying an extra $20 for the pink variant being ripped off? Because by your understanding of "value", all three models MUST have the same intrinsic value, because you are viewing value from a strictly utilitarian point of view - cost/value must be based on what it does / can do / how it performs.

But that's just certainly so untrue. When you pay a premium to get a gadget or device in your favorite color - or a unique "limited edition" variant that the manufacturer just completely arbitrarily made and marked as "limited edition" just because he can - it has value for you because you end up enjoying it more, pleasing your eye, matching your drapes and hand-bag, and allowing you to brag to the office that you and only you (plus around 5000 other people worldwide, but screw them) have this limited edition thingamajig.

There is no such thing as intrinsic value. There is a cost to make items, but that is far from what it should be sold for, and what something is sold for is yet another different thing from value. So cost, value, and selling price are 3 completely different things; they simply co-exist with each other. At a minimum, you should sell something at higher than cost, and the maximum is merely its value to the customer - and that translates to whatever they are willing to pay for it. Which goes back to the concept of consumer surplus and ways to capture consumer surplus. However, several other market forces as well as relevant external factors do affect pricing, so it is usually never just dependent on cost and value.

III. Pay what you want at work
The Humble Bundle is yet another example. I've not actually tried or participated in it myself, but I've read it is "pay what you want". I'd imagine a lot of people paid a measly dollar, while perhaps an also significant chunk of people paid anywhere from $5-10. Now, because of the existence of those who paid $1, are those people who paid $10 or more being ripped off? Are they being cheated somehow? Where is the intrinsic value? What is the correct intrinsic value of the Humble Bundle: $1, $10, $100? If you say it is $X amount, then are those paying more being screwed, and are those paying less cheating everyone else?

The answers are both no, because there is no such thing as $X amount that means intrinsic value. If you like the games so much that you would gladly pay $20 for the bundle, even though a million other people just paid $1 legally, you aren't wrong or being screwed, and they aren't wrong or being cheaters. They paid what they thought it was worth to them, you paid what it was worth to you. Or would you insist that only crazy people would ever pay more than a dollar for any Humble Bundle just because the option exists and lots of people pay only that?

IV. How time affects the value of goods and services
I started with the example of information because it's the most clear-cut thing I could think of when talking about the concept of how time (or timeliness) affects pricing - or to be more accurate, how timeliness makes something more valuable or, in the case of lack of timeliness, less valuable. Good, timely info is perfect for making decisions. If the info only comes after decisions are made, then it is useless now since the path has been chosen and the die has been cast, so to speak.

We can also look at it from a more practical perspective: movie tickets. They have some good "material-ness" to them - either a good old-fashioned stub, or what you young 'uns have now, those smartcard tickets with the RF and what not. From a purely "being able to watch the movie" utilitarian point of view, buying movie tickets don't make sense - you don't control the environment, noisy bastards might ruin your experience or that kid who interrupted your enjoyment because he passed in front of you to go to the wash room right during the explosive action scenes, and considering the cost of the ticket for 1 (one) viewing only, it makes far better economic sense to buy the DVD six months later. It's far more enjoyable to watch it at your own couch and flatscreen, plus you can rewind if you missed something or want to repeat, or pause it if you have to do the call of nature, etc.

But all that doesn't take into account one thing - you have to wait for the DVD's to come out. If you want to watch it right now, then you have to pay the piper. And then pay for the DVD's later if you still want them. Otherwise, not being able to watch them now will turn you into the office noob or pariah, and you find yourself unable to grasp the in-jokes that may have resulted from the weekend's latest box office. It is a shameful existence that you might wish to avoid, so although you'd have preferred a DVD, you pay for a movie ticket to enjoy it now.

Are movie-goers being screwed because a fixed price for single-viewing in an uncontrollable environment will never be able to match the benefits of having your own DVD at home? Where's the intrinsic value there? Again, no such thing. It's either worth it for you (therefore, of the correct value for you) to pay for the ticket, or it isn't and you'd rather wait for the DVD, or it is completely not worth it to you to spend time on that movie so you don't watch it and you don't buy the DVD either (i.e., Shrek 3)


V. Conclusions and Google-ables
Pricing goods is a pretty deep subject, and one of the most interesting parts of economics for me, personally. It's not as simple as most people imagine it to be, as is most things in life. If you really wish to know more about it, keywords that come to mind that can potentially lead you to a more in-depth read that I couldn't afford to do in a forum post are:
1. "Consumer surplus", "capturing consumer surplus"
2. "Demand curve and pricing"
3. "Market segmentation"
4. "A fool and his money"; see also, "soon parted" (kidding, sort of )

Dr. Hal Varian's work in the economics of information are also pretty good reads, I'm not sure how much of his work is online, though, but it wouldn't hurt to google.

Last bit:
Making posts like this one and my previous one literally takes me hours to craft. I think the last one was 2 hours, this one close to 3. If you were a customer, I'd be charging you through the nose for my effort. But since I am doing this in my spare time, and it is of value to me to do so because I enjoy these discussions, I expend that effort freely and gladly - and also because you wouldn't pay a dollar for a forum post, even if it took hours to craft

So I can't sell you this lecture, even though I charge pretty highly for consultations, seminars, and trainings (not actually in economics, mind you; I'm primarily a tech guy and consultant, but in the world of business IT and tech, you cannot go anywhere if you don't understand economics and financial accounting, because these things are significant factors to tech in the real world outside of the lab). You get it here for free, while corporate customers pay the piper. Are they being screwed? Absolutely not. Not only am I a dashingly handsome and charming trainer, they actually need those trainings, seminars, and consultations. It is critical for their operation. Therefore, it is worth thousands in consultation fees for them.

The same cannot be said for you, or for everybody else with the intestinal fortitude to actually read what I wrote, here and in the previous one. You can either read it, skim it a bit, or skip it completely. You can either believe it, cause you to re-evaluate your beliefs and do further readings, or completely discard it as "crazy person talk". Whatever you choose or whatever happens, it is nowhere near critical to your operation (i.e., your life as an enthusiast), so it is not even close to being worth thousands in consultation fees. Exact same thing, different value depending on who is receiving it.

If I don't stop now, I might never ever stop, ever, so this has to be the end.

Cheers!

 

[zir_blazer]

Outside all of this "capturing consumer surplus" talk, there is a minor inconvenient there: What the hell will happen to the people that paid 800 U$D or so for a product that now cost less than half, just for the luxury of being a "early adopter"? There are several die-hard AMD fans that thinked that they were purchasing a limited edition Processor that was going to had some sort of collectible value, and now they will suddently find that they just loss 400 U$D in assets. I doubt that they are going to do that again.
Intel Processors usually hold a good part of their original value on the resale market because Intel usually just phase out that model and release a new one 100 MHz or so faster to take its place instead of slashing prices. Tech Report did an analysis of that some years ago.

 

[mrmt]

It's not that no one overpaid because what they paid for is what it is worth. However, in luxury goods(...)

This. There is a clear trend above certain performance levels to have to pay step price premiums to have access to them. 4670K tok 4770K, 4770K to 3930K, 3930K to 3970X, GTX 770 to GTX 780, GTX 780 to Titan, etc. The added performance there clearly doesn't justify the price people are paying to get these processors. People who are buying the top notch parts either have very specific purposes, bragging rights, or just the peace of mind of having the best product out there. Either way, they are not getting the best bang for the buck.

In the case of Intel and AMD and Nvidia and AMD, what used to define the price bracket a given part would site was performance. No faster part of any manufacturer would cost more than the other in the long run, so whenever you go for the top notch parts you won't get the best bang for the buck but you couldn't buy anything faster without spending much more money. While the added performance doesn't justify the price increase, there is definitely a performance benefit in buying the top notch parts.

Where the 9590 is different is that it breaks this rule. They aren't looking to Intel's line up and placing it within the same price bracket of correspondent parts. They are selling the 9590 as a luxury product, something people will just buy for the sake of the status but without any performance benefits. Forget bang for the buck, and forget getting the most out of the money spent. FX just offers itself and AMD brand, period.

This automatically places the FX 9590 in the realms of brand loyalty and status, meaning that it is a luxury good by definition. Nobody who gives a damn about performance will buy the thing because the decision of buy the FX 9590 using the performance criteria doesn't make sense. It's a product for the AMD fan or at least the person who doesn't buy Intel at all.

This is why I find this product insulting. I have a rule that a high price must have something to back that up (whether I can/want to afford it or not) when compared to its peers. If I can't find anything, then someone is definitely trying to rip me off. The FX 9590 falls squarely in this case. You can just look to the blue side of the fence and grab something better. You can even buy a FX 8350 for a third of the price and have all the similar benefits except for AMD sticker and 600 less bucks in your credit card.

But that's me, as a consumer. if I were at AMD marketing and my data pointed at the existence of a small group of people willing to pay three times what I charged for a higher binned SKU, I would give them just that, charging as high as I could. Maybe it's a group of fanboys trying to save AMD for the sake of competition, maybe someone who wants to say thank you for AMD, maybe the A64 fan that is pissed off at Intel practices almost a decade ago, maybe it's a guy too lazy to build a new a LGA2011 rig. It doesn't matter if it is a bunch of idiots desperately willing to be separated from their money or buyers making conscious decisions, AMD has to provide that kind of pricing.

 

[inf64]

Why are you guys so worked up about this? Market is always the best judge of products. If this one (and 9370) is such a "fail" then nobody will buy it, simple as that. Beating a dead horse about how much fail you think it is makes zero difference.

 

[Torn Mind]

Outside all of this "capturing consumer surplus" talk, there is a minor inconvenient there: What the hell will happen to the people that paid 800 U$D or so for a product that now cost less than half, just for the luxury of being a "early adopter"? There are several die-hard AMD fans that thinked that they were purchasing a limited edition Processor that was going to had some sort of collectible value, and now they will suddently find that they just loss 400 U$D in assets. I doubt that they are going to do that again.
Intel Processors usually hold a good part of their original value on the resale market because Intel usually just phase out that model and release a new one 100 MHz or so faster to take its place instead of slashing prices. Tech Report did an analysis of that some years ago.

We still don't know if it is just an inventory dump on the part of a couple UK sellers. AMD announces official price cuts. And besides, there probably really aren't that many super-duper Vishera chips and they can't sell them too fast.