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So what's the rationale for them pricing it at a point where it makes sense for people to line up around the block? Is it that the initial volume is low enough

So what's the rationale for them pricing it at a point where it makes sense for people to line up around the block? Is it that the initial volume is low enough that the positive press and goodwill is more valuable than what they would gain from price discrimination based on time?

toast0 7y ago
I think there are several factors. a) based on the 3900, the supply will be coming in the next few months, and the price is right, once that happens. b) pricing it higher now and dropping the price in 3 months looks bad c) the pricing has to line up sensible against other chips in the marketplace, both Intel's and also AMD's other chips (including last generation). For many people, they may be willing to wait to get a 3950 at today's MSRP, but would opt for something else if the MSRP was $100 more, and that something else might be an Intel chip. d) it can be hard to know how much demand is really there --- AMD had to order production several months ago, and their pre-launch planning included an assumption that Intel was going to launch something notable in 2019, which didn't happen.
wtallis 7y ago
Launch pricing is often more about PR than short-term supply and demand, especially for high-end flagship products. You don't want to establish a product's reputation as overpriced if you expect to be able to drop prices in a few weeks or months. Having an initial shortage can reinforce the impression that a product is very popular, and the total lost revenue from under-pricing and undersupplying at first is insignificant for a low-volume high-end part.
kllrnohj 7y ago
I think AMD would much rather leave money on the table as long as they are still turning a profit than leave products in a warehouse because the pricing was a bit too high. Marketshare & mindshare are significant areas that AMD needs to claw back as well. Especially since these chips are likely already super profitable. The 3950X ($750) is "just" 2x 3700X's ($300) glued together. It's not like the 3950X is showing any particularly good binning or anything like that.

toast0 7y ago

I think there are several factors. a) based on the 3900, the supply will be coming in the next few months, and the price is right, once that happens. b) pricing it higher now and dropping the price in 3 months looks bad c) the pricing has to line up sensible against other chips in the marketplace, both Intel's and also AMD's other chips (including last generation). For many people, they may be willing to wait to get a 3950 at today's MSRP, but would opt for something else if the MSRP was $100 more, and that something else might be an Intel chip. d) it can be hard to know how much demand is really there --- AMD had to order production several months ago, and their pre-launch planning included an assumption that Intel was going to launch something notable in 2019, which didn't happen.

wtallis 7y ago

Launch pricing is often more about PR than short-term supply and demand, especially for high-end flagship products. You don't want to establish a product's reputation as overpriced if you expect to be able to drop prices in a few weeks or months. Having an initial shortage can reinforce the impression that a product is very popular, and the total lost revenue from under-pricing and undersupplying at first is insignificant for a low-volume high-end part.

kllrnohj 7y ago

I think AMD would much rather leave money on the table as long as they are still turning a profit than leave products in a warehouse because the pricing was a bit too high. Marketshare & mindshare are significant areas that AMD needs to claw back as well. Especially since these chips are likely already super profitable. The 3950X ($750) is "just" 2x 3700X's ($300) glued together. It's not like the 3950X is showing any particularly good binning or anything like that.