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Why’s Nvidia’s margins so high in comparison? Given the technology and patent portfolio I’m surprised that someone hasn’t tried to take them over.

fermienrico 9y ago
Can you elaborate further why you think their technology and patent portfolio can be taken over by "someone"?
- jandrese 9y ago
  I thought Intel might have wanted to purchase them years ago when their own homegrown graphics stack was so terrible instead of spending years and millions of dollars to get it up to merely adequate for moderate use. Today I don't know who would buy them. Intel seems to be ok with being mediocre because they're the choice for people who don't give a shit anyway. There was an outside chance a car manufacturer might have wanted to buy them up as a strategic move against their competitors if nVidia's autonomous car GPU thing panned out, but I think they were too late to the ball for that one. It's hard to see the value proposition for most companies.
  - freehunter 9y ago
    >Intel seems to be ok with being mediocre I have a lot of complaints about Intel and their mediocrity, but the Intel HD graphics have gotten good in the last 10 years. The Intel GMA was awful and could barely run Quake 3. Intel HD will power through quite a lot. Not up to snuff with a real gamer's card, sure, but good enough that a casual gamer won't have a problem with it. And you get it for free, so bonus there. I play relatively recent games on my Macbook and it's a lot better than you might think.
    - jandrese 9y ago
      It's fine until you actually start pushing it hard. Intel is far less aggressive with driver fixes and the cards will absolutely collapse at higher detail levels on big screens. No argument that they have improved (the many years and millions of dollars I mentioned were spent), so much so that the low end discrete GPU market is completely dead. But there is still a lot of space between the best Intel card and a mid range nVidia or AMD card like a Geforce 1070.
      - freehunter 9y ago
        >It's fine until you actually start pushing it hard. That's exactly what you don't do with an integrated card. I can play Cities: Skylines and Guild Wars 2 on my 2015 13" Macbook Pro. I think that's amazing. I could barely get 5FPS on the last generation Intel GMA with the original Guild Wars all the way turned down.
- rdlecler1 9y ago
  China would jump on this in a second but the US government would shoot this down.
lmm 9y ago
Are AMD's margins actually any worse in the graphics card market? Or is it just that AMD is also playing in the (lower-margin) CPU market, so their overall margin is worse?
- fermienrico 9y ago
  There is no way to know their margins for GPU because in their financial reports, AMD combines "CPU and Graphics" into one bucket.
- paulmd 9y ago
  Nobody here can tell you that officially, at least without breaking an NDA, but the answer is very obviously "yes". Comparing apples to apples, AMD sells their Vega 64 flagship at a MSRP of $499, NVIDIA sells a product with an equivalent die size at $1200. AMD sells their cutdown at $399, NVIDIA sells theirs at $799. And that's before you figure that NVIDIA is using commodity GDDR5/5X while AMD is using expensive HBM2 on consumer products - NVIDIA charges between $3k and $15k for their HBM2 products. So half the MSRP, with a more expensive BOM. AMD's margins on Vega are trainwreck bad. Some experts actually think they are losing money on every unit sold at MSRP, hence the "$100 free games bundle" on launch, and the de-facto price increases above MSRP during the fall. They're banking heavily on HBM2 costs coming down, and probably also on NVIDIA not being aggressive with the launch of gaming Volta (aka Ampere). Apart from Vega FE, they really don't see any of the extra revenue from the inflated prices during the mining boom either. That's all going to AIB partners and retailers. All AMD gets out of it is volume, and up until now they've been reluctant to increase production. In contrast Ryzen is actually dirt cheap to manufacture due to its MCM layout. Their margins there are probably better than Intel, even with prices significantly below the launch prices.
ordinaryradical 9y ago
I am curious about this as well and would like the context if anyone has it. As far as I could find, it seems that the interesting thing about Nvidia is that while they only make GPUs they've learned how to cross-market them across domains (data centers, AI, gaming, automotive) and to charge premiums according to each niche. So I think that while the products themselves have subtle differentiations, you more or less get access to each vertical from doing the same R&D for each chip generation. This may be too much a generalization, but it looks as though Nvidia has figured out how to create wildly different products out of the same GPUs and multiplies its revenue accordingly.

fermienrico 9y ago

Can you elaborate further why you think their technology and patent portfolio can be taken over by "someone"?

jandrese 9y ago
I thought Intel might have wanted to purchase them years ago when their own homegrown graphics stack was so terrible instead of spending years and millions of dollars to get it up to merely adequate for moderate use. Today I don't know who would buy them. Intel seems to be ok with being mediocre because they're the choice for people who don't give a shit anyway. There was an outside chance a car manufacturer might have wanted to buy them up as a strategic move against their competitors if nVidia's autonomous car GPU thing panned out, but I think they were too late to the ball for that one. It's hard to see the value proposition for most companies.
- freehunter 9y ago
  >Intel seems to be ok with being mediocre I have a lot of complaints about Intel and their mediocrity, but the Intel HD graphics have gotten good in the last 10 years. The Intel GMA was awful and could barely run Quake 3. Intel HD will power through quite a lot. Not up to snuff with a real gamer's card, sure, but good enough that a casual gamer won't have a problem with it. And you get it for free, so bonus there. I play relatively recent games on my Macbook and it's a lot better than you might think.
  - jandrese 9y ago
    It's fine until you actually start pushing it hard. Intel is far less aggressive with driver fixes and the cards will absolutely collapse at higher detail levels on big screens. No argument that they have improved (the many years and millions of dollars I mentioned were spent), so much so that the low end discrete GPU market is completely dead. But there is still a lot of space between the best Intel card and a mid range nVidia or AMD card like a Geforce 1070.
    - freehunter 9y ago
      >It's fine until you actually start pushing it hard. That's exactly what you don't do with an integrated card. I can play Cities: Skylines and Guild Wars 2 on my 2015 13" Macbook Pro. I think that's amazing. I could barely get 5FPS on the last generation Intel GMA with the original Guild Wars all the way turned down.
rdlecler1 9y ago
China would jump on this in a second but the US government would shoot this down.

lmm 9y ago

Are AMD's margins actually any worse in the graphics card market? Or is it just that AMD is also playing in the (lower-margin) CPU market, so their overall margin is worse?

fermienrico 9y ago
There is no way to know their margins for GPU because in their financial reports, AMD combines "CPU and Graphics" into one bucket.
paulmd 9y ago
Nobody here can tell you that officially, at least without breaking an NDA, but the answer is very obviously "yes". Comparing apples to apples, AMD sells their Vega 64 flagship at a MSRP of $499, NVIDIA sells a product with an equivalent die size at $1200. AMD sells their cutdown at $399, NVIDIA sells theirs at $799. And that's before you figure that NVIDIA is using commodity GDDR5/5X while AMD is using expensive HBM2 on consumer products - NVIDIA charges between $3k and $15k for their HBM2 products. So half the MSRP, with a more expensive BOM. AMD's margins on Vega are trainwreck bad. Some experts actually think they are losing money on every unit sold at MSRP, hence the "$100 free games bundle" on launch, and the de-facto price increases above MSRP during the fall. They're banking heavily on HBM2 costs coming down, and probably also on NVIDIA not being aggressive with the launch of gaming Volta (aka Ampere). Apart from Vega FE, they really don't see any of the extra revenue from the inflated prices during the mining boom either. That's all going to AIB partners and retailers. All AMD gets out of it is volume, and up until now they've been reluctant to increase production. In contrast Ryzen is actually dirt cheap to manufacture due to its MCM layout. Their margins there are probably better than Intel, even with prices significantly below the launch prices.

ordinaryradical 9y ago

I am curious about this as well and would like the context if anyone has it. As far as I could find, it seems that the interesting thing about Nvidia is that while they only make GPUs they've learned how to cross-market them across domains (data centers, AI, gaming, automotive) and to charge premiums according to each niche. So I think that while the products themselves have subtle differentiations, you more or less get access to each vertical from doing the same R&D for each chip generation. This may be too much a generalization, but it looks as though Nvidia has figured out how to create wildly different products out of the same GPUs and multiplies its revenue accordingly.