Nvidia: Not Enough Money in a PS4 GPU for us to bother

[96Firebird]

Turning the settings down is not an option for me.

It may not be an option for you now, but if the prices are "too high", it will become an option. Using BFG's analogy with fuel prices - people used to drive further for vacations and leisure activity when prices were low. Now, they compromise and find alternative methods.

I think people are forgetting that cheap video cards are not a necessity. They are, in fact, priced based on what the market can bare.

 

[badb0y]

It may not be an option for you now, but if the prices are "too high", it will become an option. Using BFG's analogy with fuel prices - people used to drive further for vacations and leisure activity when prices were low. Now, they compromise and find alternative methods.

I think people are forgetting that cheap video cards are not a necessity. They are, in fact, priced based on what the market can bare.

You can't sit on your current hardware and expect to play games 5 years in the future. You will have to upgrade your PC or you will have to abandon PC gaming.

Eventually, if enough people decided not to upgrade the prices would drop to a more reasonable level that the market will tolerate.

Titan is an outlier IMHO and the initial Titan mania is drying up. Titan is now avaiable to purchase at MSRP, quite simply most of the people who wanted one have got one. It will still sell but at a much reduced rate. Nvidia can keep Titan at $1000 as long as there is no direct competition that comes close. It was never meant to be a high volume seller.

AMD and Nvidia would be delighted if we would see the old top end become midrange at the same prices and the new top end would cost $1000. Oh, wait...

The only reason Titan is at $1000 is because AMD has no competition for it similarly the only reason 3960X is $1000 is because there is no competition for it. We only have reasonable,competitive price points at brackets where there is competition.

 

[BallaTheFeared]

Why not? My 9800GT can play BF3 and pretty much anything else.

My 7950 already has to turn settings down or not use them, like Tomb Raider for instance...

The only reason Titan is at $1000 is because AMD has no competition for it similarly the only reason 3960X is $1000 is because there is no competition for it. We only have reasonable,competitive price points at brackets where there is competition.

Except they're still overpriced because the price structure from $500 down is based on $250 cards (based on last gen design/prices).

 

[badb0y]

Why not? My 9800GT can play BF3 and pretty much anything else.

My 7950 already has to turn settings down or not use them, like Tomb Raider for instance...

I wouldn't call 9800GT "playable" for anything that comes out this year. If your 7950 is struggling with Tomb Raider how do you think your 9800GT would fair in the same game?

 

[BallaTheFeared]

If my 7950 is struggling, that means your 7970 is too. Sounds like you need Titan by your own admission.

 

[badb0y]

If my 7950 is struggling, that means your 7970 is too. Sounds like you need Titan by your own admission.

Isn't your 7950 paired with an i3? I already beat Tomb Raider and I don't remember having any performance issues.

 

[Imouto]

If your 7950 is struggling with Tomb Raider how do you think your 9800GT would fair in the same game?

Like a console?

 

[badb0y]

Like a console?

Absolutely not, console games are much more optimized then PC counterparts.

 

[railven]

Ok, so lets assume that happens.

Why am I upgrading from a $230 i5-2500k that does 5.3Ghz?

Where is my incentive to upgrade, how is Intel paying for R&D and fabs if they aren't enticing me to buy PCs?

There aren't a lot of people in the world today who don't already have a computer, the trick is getting them to upgrade and with your logic hardly anyone would, even now most don't that's why I still repair countless Pent 4 rigs.


Same thing this generation, I paid $185 for my 470 in 2010, there was nothing until the 2GB 7850 reach that price point that offered comparable perf/$. Hence I never upgraded until my card died, I upgraded out of necessity, not desire.

I think you are missing the point of the scenario. People of our nature like to upgrade. It is a core function of our beings. We aren't the masses. The GTX Titan price tag isn't affecting Joe Schmoe who has an i3 powered laptop and happy/satisfied.

The issue at hand is if this WERE to happen, why would we upgrade? We'd lose our market. The other guys, they'll still get the newest i3 even though they won't know it's now a 2c/2t versus their old 2c/4t chip but it has a higher number, thus it must be faster! EDIT: Hell, this would solve Intel's declining PC issue. If that new i5 labeled laptop is really an i3 "intended" design, bam think of the margins. nVidia is pulling it off, why not the others!? We're so boned!

Us, we'll know, and we'll be pissed, and we'll hold on to our i5's because we know they are still "enough." And then when your i5 has run it's course...

 

[Imouto]

Absolutely not, console games are much more optimized then PC counterparts.

We are back to topic!

 

[notty22]

Eventually, if enough people decided not to upgrade the prices would drop to a more reasonable level that the market will tolerate.

Titan is an outlier IMHO and the initial Titan mania is drying up. Titan is now avaiable to purchase at MSRP, quite simply most of the people who wanted one have got one. It will still sell but at a much reduced rate. Nvidia can keep Titan at $1000 as long as there is no direct competition that comes close. It was never meant to be a high volume seller.

AMD and Nvidia would be delighted if we would see the old top end become midrange at the same prices and the new top end would cost $1000. Oh, wait...

Nice story, Titan has always been available at MSRP, unless you are dumb enough to use ebay for a new purchase.

 

[BallaTheFeared]

Isn't your 7950 paired with an i3? I already beat Tomb Raider and I don't remember having any performance issues.

Well then you clearly weren't maxing it out, so it seems you're ok with lower settings after all ^_^

Works fine on my 9800GT @ 1080p :awe:

 

[railven]

Absolutely not, console games are much more optimized then PC counterparts.

Well then you clearly weren't maxing it out, so it seems you're ok with lower settings after all ^_^

Works fine on my 9800GT @ 1080p :awe:

Oh, since these tie together to something I recently saw. The PS3 version of Tomb Raider looks much better than the Xbox version.

The PS3 has about a 7600 variation of a GPU. Balla, any way you can down clock your 9800 to sort of mirror what a 7600 can do? Hell, I'd even take a 7800ish.

 

[ICDP]

Nice story, Titan has always been available at MSRP, unless you are dumb enough to use ebay for a new purchase.

Once again you miss the point of the post and just jump into defend anything that could possibly be seen as an attack against Mother Nvidia.

 

[badb0y]

Well then you clearly weren't maxing it out, so it seems you're ok with lower settings after all ^_^

Works fine on my 9800GT @ 1080p :awe:

We are far removed from the original discussion now, so if I understand you correctly what your implying is that if AMD was to die and there was no competition for nVidia/Intel we wouldn't see any price changes?

 

[BallaTheFeared]

It's hard to imagine anything worse than what we have now, I'd say at first things would be worse, but they'd settle back into what they are now, mid-range $500, "Extreme Edition" $1000, Intel wouldn't change much if at all, they've been dictating market price for almost ten years now so it's unlikely their prices would change.

 

[AnandThenMan]

I can't even begin to understand why anyone would compare a console to a PC. It should be blatantly obvious to everyone that a console has very strict power, form factor, and cost constraints.

 

[railven]

It's hard to imagine anything worse than what we have now, I'd say at first things would be worse, but they'd settle back into what they are now, mid-range $500, "Extreme Edition" $1000, Intel wouldn't change much if at all, they've been dictating market price for almost ten years now so it's unlikely their prices would change.

Intel is changing, and we see it with the performance gain from SB to IVB, and now the early rumors of Haswell. Without AMD pushing the performance metrics, Intel is free to explore other metrics to enhance.

Seems the diminishing return era is in full effect. Thankfully I swapped to a 2 year cycle, so when I get Haswell (or Broadwell if out by then) I'll see a nice 40%+ performance gain Silverlining...gotta find it haha.

 

[yottabit]

...
About the initial costs of the ps3. (Note the CPU and GPU prices)

http://www.xbitlabs.com/news/multimedia/display/20061117130000.html

I really don't buy into these cost estimates that sprout up around these device launches, and particularly this one.

It's comparing to RETAIL cost, when really what matters is wholesale cost.

If the PS3 retailed for $599, it was likely at wholesale cost to retail stores for about $299 (50% typical markup, or maybe $350 or $400 if Sony really leveraged their relationships)

If Sony was using a distributor then they likely sold to the distributor at 20% less than that.

So really their loss on each unit would have been ENORMOUS

However I think it's much more likely they were selling at a much less loss, and the COG estimates are just bogus. So much of those numbers are dependent on volume, and that's the hardest thing to gauge for these types of estimations.

However it can be expected for a console launch of the magnitude of the PS3, Sony will have been buying these components in LARGE volume.

I particularly don't buy the $125 Blu-ray drive, since that is Sony's own technology, and they aren't going to charge themselves a licensing fee.

A lot of time I see these COGs estimates they are more inline with consumer retail prices than the high volume OEM prices the manufacturer is paying.

Like the power supply costing $37, that would mean that if that power supply would be sold retail it would have to cost $100, doesn't seem realistic that it would cost Sony that much to make their own power supply. There's other hilarious line items like "Other components and manufacturing" listed for $148! I think a little more granularity would be useful there!

There's also so much untold story in this (and most) BOM estimates I see, which is the way all the accounting is done. What does the "manufacturing cost" include? What about handling, distribution, overhead? There's so many layers to understanding profitability.

What is easier to determine is the GROSS MARGIN, and that should not be confused with the overall profitability. It's also why we can't trust these ex-engineers extrapolating and saying the company is losing X billions of dollars, because unless they were a Finance executive they likely don't understand the true costs and profitability, how things are being amortized, etc.

These same gripes I have apply to the iPhone BOM estimates and many others. Take them with a grain of salt!

 

[wand3r3r]

I really don't buy into these cost estimates that sprout up around these device launches, and particularly this one.

It's comparing to RETAIL cost, when really what matters is wholesale cost.

If the PS3 retailed for $599, it was likely at wholesale cost to retail stores for about $299 (50% typical markup, or maybe $350 or $400 if Sony really leveraged their relationships)

If Sony was using a distributor then they likely sold to the distributor at 20% less than that.

So really their loss on each unit would have been ENORMOUS

However I think it's much more likely they were selling at a much less loss, and the COG estimates are just bogus. So much of those numbers are dependent on volume, and that's the hardest thing to gauge for these types of estimations.

However it can be expected for a console launch of the magnitude of the PS3, Sony will have been buying these components in LARGE volume.

I particularly don't buy the $125 Blu-ray drive, since that is Sony's own technology, and they aren't going to charge themselves a licensing fee.

A lot of time I see these COGs estimates they are more inline with consumer retail prices than the high volume OEM prices the manufacturer is paying.

Like the power supply costing $37, that would mean that if that power supply would be sold retail it would have to cost $100, doesn't seem realistic that it would cost Sony that much to make their own power supply. There's other hilarious line items like "Other components and manufacturing" listed for $148! I think a little more granularity would be useful there!

There's also so much untold story in this (and most) BOM estimates I see, which is the way all the accounting is done. What does the "manufacturing cost" include? What about handling, distribution, overhead? There's so many layers to understanding profitability.

What is easier to determine is the GROSS MARGIN, and that should not be confused with the overall profitability. It's also why we can't trust these ex-engineers extrapolating and saying the company is losing X billions of dollars, because unless they were a Finance executive they likely don't understand the true costs and profitability, how things are being amortized, etc.

These same gripes I have apply to the iPhone BOM estimates and many others. Take them with a grain of salt!

I don't know the cost of the parts but I do believe someone like the analyst companies that determine component costs have a good idea what they cost. Xbit on the other hand I can agree is not really in their area of expertise.

Regarding the bolded parts, you are in fact 100% wrong. If you read up, the consoles are sold below cost for a long period of time before they actually break even or even start to show a profit. They are vying for marketshare, and it's designed to get people to buy them and they can regain some of the loss through games. Someone who knows more about how they regain the loss can add any sources on that. Regardless, the consoles have been sold at a lost for even several years of their (shelf) life. Sony / MS swallows the hardware costs loss and makes up for it with software.

There are a million sources on that... Googles first result.

"This year is the first time that we are able to cover the cost of the PlayStation 3," said Yoshida. "We aren't making huge money from hardware, but we aren't bleeding like we used to."

http://www.bit-tech.net/news/gaming/2010/06/30/sony-ps3-is-breaking-even/1

In the future it appears they will try to have less of a loss. However that remains to be seen.

As for the grain of salt, if they say the iphone hardware costs $230, I believe it does, or less. They may cost somewhat less, but I'd imagine there are procurement experts involved with the analyst firms.

 

[cplusplus]

I really don't buy into these cost estimates that sprout up around these device launches, and particularly this one.

It's comparing to RETAIL cost, when really what matters is wholesale cost.

If the PS3 retailed for $599, it was likely at wholesale cost to retail stores for about $299 (50% typical markup, or maybe $350 or $400 if Sony really leveraged their relationships)

If Sony was using a distributor then they likely sold to the distributor at 20% less than that.

So really their loss on each unit would have been ENORMOUS

Bolded part is so wrong that it's almost laughable. Stores only had about a 3-10% markup on the actual consoles. Comparatively speaking, they make almost nothing on them. For retailers, just like console manufacturers themselves, the money is in the accessories and the games (and for the stores, probably the third party accessories as opposed to first-party). That's why they push you towards the $30 HDMI cable when you buy one, or to buy a couple extra controllers, a charging stand, and another game or two.

 

[badb0y]

Bolded part is so wrong that it's almost laughable. Stores only had about a 3-10% markup on the actual consoles. Comparatively speaking, they make almost nothing on them. For retailers, just like console manufacturers themselves, the money is in the accessories and the games (and for the stores, probably the third party accessories as opposed to first-party). That's why they push you towards the $30 HDMI cable when you buy one, or to buy a couple extra controllers, a charging stand, and another game or two.

Not to mention used games, they make money hand over fist just by selling used games.

 

[yottabit]

Bolded part is so wrong that it's almost laughable. Stores only had about a 3-10% markup on the actual consoles. Comparatively speaking, they make almost nothing on them. For retailers, just like console manufacturers themselves, the money is in the accessories and the games (and for the stores, probably the third party accessories as opposed to first-party). That's why they push you towards the $30 HDMI cable when you buy one, or to buy a couple extra controllers, a charging stand, and another game or two.

You're right, from the little googling I did it looks like markup on hot electronics can be very low. Typical consumer goods though are marked up much more (my apologies)

I'm not arguing that they aren't in fact losing money on each console sold. But some of the figures I see are outrageous.

If the COGs are really $800+, and it's selling for $499 retail so say $450 wholesale I don't see how they can stomach a $350 loss on each unit. I guess I could be completely wrong and that would explain the billions of dollars of losses they are reporting.
I just intuitively feel like the most a company would be willing to lose on a product would be maybe 10-30% of its COGs, not close to 50% (again its just an assumption)

The reason I'm skeptical is because all these losses come out before even accounting for all the R&D, marketing, etc that had to go into the console

Even if they had a low but positive gross margin on consoles they would probably still report a loss for that product line after taking into account all these aspects of overhead. To go into it with such a huge negative gross margin seems so dangerous

Just to put it into perspective if Sony lost $450 per PS3, and people are saying that loss could be made up by games and accessories, those DO have a higher markup right? So every PS3 user on average would have to buy probably somewhere from (I'm guessing) $600-$1000 of games and accessories over the life of the device to even recoup that initial loss.

http://news.cnet.com/8301-13506_3-10448137-17.html
There are some articles from 2010 stating (from financial records) Sony was losing about $18 per unit. I think that makes a lot more sense, and I wouldn't be surprised if at launch they were losing maybe close to $100-$200 per unit, but I doubt it was anywhere near $400+. A $100 loss could probably be recovered with a few game and accessory purchases, and once a die shrink or other refinement occured they would stop bleeding money like a seive.

I just think theres a little sensationalism associated with the "we are selling it at a loss" line. Companys seem to love saying that to make the consumer feel like they are getting a value, but I feel like reporters (and even these estimation firms maybe) go wild with their estimations

 

[railven]

You're right, from the little googling I did it looks like markup on hot electronics can be very low. Typical consumer goods though are marked up much more (my apologies)

I'm not arguing that they aren't in fact losing money on each console sold. But some of the figures I see are outrageous.

If the COGs are really $800+, and it's selling for $499 retail so say $450 wholesale I don't see how they can stomach a $350 loss on each unit. I guess I could be completely wrong and that would explain the billions of dollars of losses they are reporting.
I just intuitively feel like the most a company would be willing to lose on a product would be maybe 10-30% of its COGs, not close to 50% (again its just an assumption)

The reason I'm skeptical is because all these losses come out before even accounting for all the R&D, marketing, etc that had to go into the console

Even if they had a low but positive gross margin on consoles they would probably still report a loss for that product line after taking into account all these aspects of overhead. To go into it with such a huge negative gross margin seems so dangerous

Just to put it into perspective if Sony lost $450 per PS3, and people are saying that loss could be made up by games and accessories, those DO have a higher markup right? So every PS3 user on average would have to buy probably somewhere from (I'm guessing) $600-$1000 of games and accessories over the life of the device to even recoup that initial loss.

http://news.cnet.com/8301-13506_3-10448137-17.html
There are some articles from 2010 stating (from financial records) Sony was losing about $18 per unit. I think that makes a lot more sense, and I wouldn't be surprised if at launch they were losing maybe close to $100-$200 per unit, but I doubt it was anywhere near $400+. A $100 loss could probably be recovered with a few game and accessory purchases, and once a die shrink or other refinement occured they would stop bleeding money like a seive.

Think of Gilette and the free "razor" promotion. You get one blade head on a handle for free. But once that blade is dull they sell you $0.25 blades for $9.99.

They take a huge loss on the hardware in hopes of making it back in software/accessory sales. It's worked fine for Sony (PS1/PS2 were accounted for like 40% of Sony's total profits during the 2000s) but this time, Sony lost most of it's marketshare to Microsoft which of course cost them tons of software/accessory sales. And Microsoft poorly built the Xbox360 resulting in the RROD, a warranty extension that lasted 3 years (which any smart consumer exploited by forcing an RROD issue on their console even if the fault was something else as Microsoft would give the consumer a refurbished unit) costing them...1.5billion? Something stupid.

Nintendo laughed it's way to the bank.

 

[Rezist]

Think of Gilette and the free "razor" promotion. You get one blade head on a handle for free. But once that blade is dull they sell you $0.25 blades for $9.99.

They take a huge loss on the hardware in hopes of making it back in software/accessory sales. It's worked fine for Sony (PS1/PS2 were accounted for like 40% of Sony's total profits during the 2000s) but this time, Sony lost most of it's marketshare to Microsoft which of course cost them tons of software/accessory sales. And Microsoft poorly built the Xbox360 resulting in the RROD, a warranty extension that lasted 3 years (which any smart consumer exploited by forcing an RROD issue on their console even if the fault was something else as Microsoft would give the consumer a refurbished unit) costing them...1.5billion? Something stupid.

Nintendo laughed it's way to the bank.

When my 360's DVD drive broke I wrapped it in a towel and ran it till it overheated then put it in the freezer and voila RROD.