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I'm curious why they aren't charging more for it. Wouldn't that be free profit margin? Or perhaps they are trying to hurt Intel by selling it at a price where

I'm curious why they aren't charging more for it. Wouldn't that be free profit margin? Or perhaps they are trying to hurt Intel by selling it at a price where Intel can't make a profit if they lower their prices to be competitive? Or, maybe it has to do with trying to quickly grab market share. Maybe AWS and other purchases of servers have a somewhat fixed budget, so cheaper chips translates directly to more chips sold? Both those explanations seem unlikely to me.

tmd83 7y ago
Only AMD execs truly knows but I think there might be two factors involved. They really want to attract new customers and build echo system and the second part is hard when everyone has been buying almost entirely intel. The second is their cost for such a cheap should be enormously cheaper than intel because of chiplet design. A single chip die for the intel chip is way bigger and yield and cost dramatically increases as die size gets bigger from what I read. So at same profit margin AMD chips would be cheaper and to gain the market share they are probably willing to lower their profit too so those two element adds up.
- metildaa 7y ago
  Note that this chip cost increase is due to silicon defects, a larger chip has more defects, thus your failure rate significantly increases with each increase in chip area. AMD is working around this by using 8 separate CPU chips, wired together with one interconnect chip.
- cududa 7y ago
  Your ecosystem argument really holds a lot of water with me. AMD said they wouldn’t be introducing a new socket type until 2021
api 7y ago
Intel is the standard and that has amazing sticking power. AMD is trying to make an offer DC operators can't refuse to break that. Intel is reeling from major design flaws and process stagnation right now. It makes sense for AMD to punch hard. Now is the time. Also note that the eternally predicted ARM64 wave into servers, workstations, and cloud is not materializing. So far nobody has been willing to build such high performance chips and price them aggressively enough. All things considered it's an amazing window for AMD to take the market lead.
- ianai 7y ago
  At some point, too, they’re likely to get a comparable ARM entrant. The threat of competition puts downward pressure on prices.
  - api 7y ago
    I just ninja edited to add that. Hah. Anyway that could happen but keep in mind that a new ISA (for server workloads) is a much harder sell than a new chip brand. An ARM64 would need to be priced much lower (at least in $/perf/watt terms) than this already mega aggressive AMD offering. Personally I think Epyc this cheap really harms ARM's chances in the data center. If Apple goes ARM64 for Mac it could indirectly help ARM get into the DC by showing that ARM is not just for small stuff. Longer term you also have the RISC-V wildcard. A mostly free core and ISA could in theory move the whole game to the foundry and lead to a race to the bottom on price/performance.
    - rbanffy 7y ago
      > a new ISA (for server workloads) is a much harder sell than a new chip brand It really depends. As long as performance is there and the apps work as expected, I'll deploy my workloads on whatever runs them for the best cost per transaction. Additionally, we don't have a say on what architecture our hosted services are on - if AWS decides my RDS databases are to move to ARM64, or Google decides my CloudSQL will run on POWER9 - I probably won't notice as long as the performance is right. In the past I have deployed production Python-based workloads to amd64 and SPARC (I did POWER too, but for fun) without change. I'm most certain I can do the same with ARM64 or RISCV.
      - ianai 7y ago
        ARM does allow for customized silicon. But right now I’ve heard the architecture is slower than x86 at division because it doesn’t have devoted registers to the operation. It’s going to be a huge factor in the DC. Never before have people been able to customize silicon. And now (ish) they can for figures that make sense to more than just the usual suspects.
znpy 7y ago
They probably still make a profitable enough margin, but they want to make it so check it's unreasonable not to (at least) give it a decent try.
nagisa 7y ago
Note, that the list price for Intel Xeons is something that nobody really pays. Behind the closed doors bulk pricing is negotiated and the price-per-chip in practice is only a fraction of the list price.
- loeg 7y ago
  Enterprise sales: everyone gets 40% off list. Still, 60% is a big multiple of these prices.
  - sitkack 7y ago
    AMD also doesn't have a heard of salespeople, pay list with AMD, haggle with Intel. Smaller shops that didn't have the time of day with Intel sales, they will go AMD. All of the small clouds with go AMD. There is no oxygen down at 8k for Intel, they will have to move to chiplets to get the yields up, to drop the prices that far. AMDs costs for these parts is probably double what the consumer versions are, so we are probably looking at 7k+ of profit per chip. They are forcing Intel to move to chiplets or be really really wounded. Clearly AMD is not participating in a duopoly game, which would be the expected anticompetative behavior. If I were AMD I would give away the mobos. This is going cause a lot of Intel parts to be EOLd early.
elif 7y ago
It seems to me that if they are trying to gain market-share in the server market, it is wise to price their chips such that the costs for the required chasis-and/or-mb-swap are obviously covered. If they priced at intel-$1k, for instance, many organizations would rule it out because the operational and additional hardware costs to switch would easily dwarf the $1k discount. Sort of like people still buy gas cars even though the long-term economics of electric make so much more sense. The math has to be obviously beneficial (e.g. same sticker price, same range) for the switch to happen en masse.
fpoling 7y ago
Enterprise and data centers must consider the risk of a supplier not been able to fulfill their contracts. AMD is inherently more risky in the long term than Intel as AMD does not produce chips themselves. So they must offer cheaper products just to account for that. Add extreme inertia in the enterprise sector and one can see why AMD cannot have the same profit margins as Intel.
- opencl 7y ago
  Both Intel and GF had problems ramping up their new node. Intel has been stuck with chip shortages for the past year and is still on 14nm because of this, AMD was able to (partially) switch to TSMC. I'd say that AMD's ability to pick a vendor and potentially multi-source for fabrication puts them at significantly less risk of supply shortages.
  - blihp 7y ago
    Over time they'll be able to show that. It's going to take them several more years before the memory of their previous architecture (i.e. the 5-10 years, depending on who you ask, prior to Ryzen) truly fades and they are seen as a serious long-term alternative to Intel by risk averse buyers.
nolok 7y ago
Customer acquisition. You have a farm of Intel, you know Intel will be back in some years, what will get you to take a risk and bother with having some AMD in there? Less than half the price of the competition. AMD is not trying to get as much money out of it, they're trying to get market share, in a segment of the market where "single product line all identical all across" is a big thing. Last time they were on top they didn't, and Opteron failed to take enough market share (a story that is not as well known because the bigger one was the customer chips and Intel abuses with oem). They don't want a repeat.

tmd83 7y ago

Only AMD execs truly knows but I think there might be two factors involved. They really want to attract new customers and build echo system and the second part is hard when everyone has been buying almost entirely intel. The second is their cost for such a cheap should be enormously cheaper than intel because of chiplet design. A single chip die for the intel chip is way bigger and yield and cost dramatically increases as die size gets bigger from what I read. So at same profit margin AMD chips would be cheaper and to gain the market share they are probably willing to lower their profit too so those two element adds up.

metildaa 7y ago
Note that this chip cost increase is due to silicon defects, a larger chip has more defects, thus your failure rate significantly increases with each increase in chip area. AMD is working around this by using 8 separate CPU chips, wired together with one interconnect chip.
cududa 7y ago
Your ecosystem argument really holds a lot of water with me. AMD said they wouldn’t be introducing a new socket type until 2021

api 7y ago

Intel is the standard and that has amazing sticking power. AMD is trying to make an offer DC operators can't refuse to break that. Intel is reeling from major design flaws and process stagnation right now. It makes sense for AMD to punch hard. Now is the time. Also note that the eternally predicted ARM64 wave into servers, workstations, and cloud is not materializing. So far nobody has been willing to build such high performance chips and price them aggressively enough. All things considered it's an amazing window for AMD to take the market lead.

ianai 7y ago
At some point, too, they’re likely to get a comparable ARM entrant. The threat of competition puts downward pressure on prices.
- api 7y ago
  I just ninja edited to add that. Hah. Anyway that could happen but keep in mind that a new ISA (for server workloads) is a much harder sell than a new chip brand. An ARM64 would need to be priced much lower (at least in $/perf/watt terms) than this already mega aggressive AMD offering. Personally I think Epyc this cheap really harms ARM's chances in the data center. If Apple goes ARM64 for Mac it could indirectly help ARM get into the DC by showing that ARM is not just for small stuff. Longer term you also have the RISC-V wildcard. A mostly free core and ISA could in theory move the whole game to the foundry and lead to a race to the bottom on price/performance.
  - rbanffy 7y ago
    > a new ISA (for server workloads) is a much harder sell than a new chip brand It really depends. As long as performance is there and the apps work as expected, I'll deploy my workloads on whatever runs them for the best cost per transaction. Additionally, we don't have a say on what architecture our hosted services are on - if AWS decides my RDS databases are to move to ARM64, or Google decides my CloudSQL will run on POWER9 - I probably won't notice as long as the performance is right. In the past I have deployed production Python-based workloads to amd64 and SPARC (I did POWER too, but for fun) without change. I'm most certain I can do the same with ARM64 or RISCV.
    - ianai 7y ago
      ARM does allow for customized silicon. But right now I’ve heard the architecture is slower than x86 at division because it doesn’t have devoted registers to the operation. It’s going to be a huge factor in the DC. Never before have people been able to customize silicon. And now (ish) they can for figures that make sense to more than just the usual suspects.

znpy 7y ago

They probably still make a profitable enough margin, but they want to make it so check it's unreasonable not to (at least) give it a decent try.

nagisa 7y ago

Note, that the list price for Intel Xeons is something that nobody really pays. Behind the closed doors bulk pricing is negotiated and the price-per-chip in practice is only a fraction of the list price.

loeg 7y ago
Enterprise sales: everyone gets 40% off list. Still, 60% is a big multiple of these prices.
- sitkack 7y ago
  AMD also doesn't have a heard of salespeople, pay list with AMD, haggle with Intel. Smaller shops that didn't have the time of day with Intel sales, they will go AMD. All of the small clouds with go AMD. There is no oxygen down at 8k for Intel, they will have to move to chiplets to get the yields up, to drop the prices that far. AMDs costs for these parts is probably double what the consumer versions are, so we are probably looking at 7k+ of profit per chip. They are forcing Intel to move to chiplets or be really really wounded. Clearly AMD is not participating in a duopoly game, which would be the expected anticompetative behavior. If I were AMD I would give away the mobos. This is going cause a lot of Intel parts to be EOLd early.

elif 7y ago

It seems to me that if they are trying to gain market-share in the server market, it is wise to price their chips such that the costs for the required chasis-and/or-mb-swap are obviously covered. If they priced at intel-$1k, for instance, many organizations would rule it out because the operational and additional hardware costs to switch would easily dwarf the $1k discount. Sort of like people still buy gas cars even though the long-term economics of electric make so much more sense. The math has to be obviously beneficial (e.g. same sticker price, same range) for the switch to happen en masse.

fpoling 7y ago

Enterprise and data centers must consider the risk of a supplier not been able to fulfill their contracts. AMD is inherently more risky in the long term than Intel as AMD does not produce chips themselves. So they must offer cheaper products just to account for that. Add extreme inertia in the enterprise sector and one can see why AMD cannot have the same profit margins as Intel.

opencl 7y ago
Both Intel and GF had problems ramping up their new node. Intel has been stuck with chip shortages for the past year and is still on 14nm because of this, AMD was able to (partially) switch to TSMC. I'd say that AMD's ability to pick a vendor and potentially multi-source for fabrication puts them at significantly less risk of supply shortages.
- blihp 7y ago
  Over time they'll be able to show that. It's going to take them several more years before the memory of their previous architecture (i.e. the 5-10 years, depending on who you ask, prior to Ryzen) truly fades and they are seen as a serious long-term alternative to Intel by risk averse buyers.

nolok 7y ago

Customer acquisition. You have a farm of Intel, you know Intel will be back in some years, what will get you to take a risk and bother with having some AMD in there? Less than half the price of the competition. AMD is not trying to get as much money out of it, they're trying to get market share, in a segment of the market where "single product line all identical all across" is a big thing. Last time they were on top they didn't, and Opteron failed to take enough market share (a story that is not as well known because the bigger one was the customer chips and Intel abuses with oem). They don't want a repeat.