6 ms·

why isn't it priced higher then?

by VMG 7y ago

GaryNumanVevo 7y ago
generally to gain back market share
- missosoup 7y ago
  Your ability to gain market share ends when supply ends. If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher or need to increase manufacturing capacity in order to actualize the potential market share to be gained.
  - mattigames 7y ago
    Except if you want to be known for being as the cheaper option and not just thinking about short-term profits; even if it takes a little delay to actually get the supply needed to satisfy the demand.
  - leoh 7y ago
    What? Increase price to lower demand so they have a lower market share than they do now so they can have a higher market share later?
    - missosoup 7y ago
      If they're supply-limited, they can increase price all the way until demand falls to meet supply. Selling widgets priced below the equilibrium point achieves nothing for capturing market share, it just loses potential revenue. I.e. if they can only manufacture 1000 widgets, but 10,000 people want to buy one at the given price point, the gained market share is still only 1000 individuals. The number of people who want one but can't get one due to lack of supply is not market share. Temporary under-pricing might be a valid strategy if AMD is planning to ramp up manufacturing capacity, but comments further down in this thread suggest they lack the fabs to do that.
      - imtringued 7y ago
        You're completely forgetting about the future loss of sales when someone only looks at AMD CPUs once. The buyer will switch to Intel immediately and then when prices are finally down again won't be shopping around for prices. The impression that AMD is overpriced remains.
        missosoup 7y ago
        They could have priced higher and still dominated intel price/perf ratio wise. The supply/demand equilibrium point is somewhere higher than the current price and lower than intel break-even price. The only way they'd set the impression of overpricing is if they actually overpriced. They did the opposite. Whether it was a mistake in pricing or some calculated second-order strategy, we'll never know. What we do know is they're leaving cash on the table whether intentionally or not. Temporarily (keyword) underpricing to hurt competitors is not unheard of but I don't see how it will hurt intel unless it significantly shifts mindshare for the next ~2 years and allows AMD to get a real foothold in the server market.
        zwaps 7y ago
        They have basically one opportunity to set the expected price point and as it turns out, they prefer to get all the positivity and hype on their side, than perfectly optimize to marginal demand. I am not sure it is a bad choice.
      - keithnoizu 7y ago
        Selling out of inventory isn't a bad move if you seeking to raise capital or debt to increase production capability. E.g. were profitable and selling out at this price point and arguably would continue to do so as we ramp up production. Especially if looking down the road long term. In the short term it generates buzz, thus this very post here on hacker news, which isn't necessarily negative unless it is a prolonged inventory shortage.
  - nordsieck 7y ago
    > If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher or need to increase manufacturing capacity in order to actualize the potential market share to be gained. That's the standard micro economics answer. You're not wrong. However, I don't think you're right either. The pricing of consumer products is a black art because people don't necessarily behave like economics textbooks say they should. Some possibilities: 1. This is a short term supply hiccup. The good will of keeping the price the same of the medium term is worth more than the money AMD would make by raising and then lowering the price of their chips. 2. They are constrained in their ability to raise their prices by Intel, which is broadly thought of as a superior product (leaving out the technical analysis of the current generation). 3. They want to create the perception of scarcity.
    - navjack27 7y ago
      They've been binning these chips for months maybe even a year at this point. The binned CCDs used in the 3950X are also used in Epyc. I'm sure server has a higher priority over DIY.
      - paranoidrobot 7y ago
        From what I've read/heard - AMD are selling every chip they can make. So whatever the highest test the chip passes, it's sold as that. This is apparently why nobody is having much luck getting any kind of overclocking beyond the on-box specs - AMDs just very good at ensuring chips go where they're required.
  - disordinary 7y ago
    Then you have consumers feeling ripped off when the next batch arrives, as has said above they could be trying to build brand loyalty.
  - galaxyLogic 7y ago
    > If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher If they did that the news would have been AMD is expensive which is not much of a news-story. Whereas now the news is that AMD is sold out because it is so good.
missosoup 7y ago
Depends on whether it was sold out due to manufacturing capacity or just a local logistical issue. If manufacturing capacity, then it should've been priced higher. If local logistics, then this data point has no bearing on whether it's priced correctly or not.
- ajross 7y ago
  What if it's actually priced below cost and supply is deliberately restricted? Making the top bins of a part "marketing only" products has been done in the past, and fits the evidence here...
  - throwaway2048 7y ago
    The binning on 3950x chips is nothing extraordinary, thats why the chiplet model is so powerful, because you don't need to have 16 perfect cores on one die to sell the CPU.
    - ajross 7y ago
      Then why are there so few of them? You can't buy these things anywhere, despite being priced at a volume level. Something doesn't add up.
      - kllrnohj 7y ago
        Well, the 3950X just launched, so there's a demand spike that's going to follow from that. But that aside these are sharing parts with the Epyc series. If AMD is getting volume orders for Epyc that is definitely going to take priority. The allocation order is going to go enterprise first, system builders second, retail boxes a distant 3rd.
        ajross 7y ago
        The Epyc devices are lower binnings though! That's exactly my point. They don't seem to have the 3.5+ GHz parts available in a reasonable quantity. When Intel was doing this with "1 GHz" Pentium 3's way back when, they got crucified for a paper launch.
deleted 7y ago
[deleted]
Akababa 7y ago
It could be that this is the long-term efficient price after demand from early adopters goes down. Or maybe they underestimated demand altogether and it's too late to raise prices now.
deleted 7y ago
[deleted]
aoeusnth1 7y ago
AMD is still gaining back mindshare. Yes, they’re not optimizing for profit right now, because they’re also gaining something valuable - entrenched market position. Intel’s dominance is incredibly sticky, and their name brand alone is worth 10s of billions. By blowing away Intel at every price point by a wide margin (and with Threadripper halo SKUs with no Intel competition), AMD is flexing and showing they are winners, and Intel are losers. People want to feel like winners when they buy products.
- Iv 7y ago
  The last Intel security bugs made them lose a lot of the reputation they had, at least amongst system adminstrators though. Now is a crucial time for AMD to strike back.
  - mcv 7y ago
    This and their Minix backdoor are the reasons why I wanted an AMD for my laptop, but I was sad I couldn't find a high-end Thinkpad with AMD processor. I hope that will change next year.
    - snvzz 7y ago
      Why call it minix backdoor? It puts some blame on minix, yet minix is blameless here. Minix is an excellent FOSS microkernel multiserver OS with a focus on reliability and fault tolerance. The way Intel is using it just isn't nice.
      - mcv 7y ago
        I'm not blaming it on Minix, but it does make use of Minix. I'm mentioning it to identify what I'm talking about. I believe the official name is Intel Management Engine. Or maybe that's just part of it.
        snvzz 7y ago
        Intel ME is the name I usually see, and also the name that the tools to remove/disable when possible do reference.
FPGAhacker 7y ago
I think this is a fair question to ask, I don’t know why you are being downvoted. It bothers me that hackernews penalizes curiosity.
nullifidian 7y ago
The new threadrippers are on par or more expensive than Intel's solutions if judged by performance/cost per core. Especially if ridiculously priced motherboards are considered.
kllrnohj 7y ago
The 3950X is the most expensive consumer platform CPU on the market, and AMD's HEDT lineup has a starting price higher than Intel's flagship HEDT part. So how much higher priced should it be?

why isn't it priced higher then?

by VMG 7y ago

why isn't it priced higher then?

GaryNumanVevo 7y ago

generally to gain back market share

missosoup 7y ago
Your ability to gain market share ends when supply ends. If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher or need to increase manufacturing capacity in order to actualize the potential market share to be gained.
- mattigames 7y ago
  Except if you want to be known for being as the cheaper option and not just thinking about short-term profits; even if it takes a little delay to actually get the supply needed to satisfy the demand.
- leoh 7y ago
  What? Increase price to lower demand so they have a lower market share than they do now so they can have a higher market share later?
  - missosoup 7y ago
    If they're supply-limited, they can increase price all the way until demand falls to meet supply. Selling widgets priced below the equilibrium point achieves nothing for capturing market share, it just loses potential revenue. I.e. if they can only manufacture 1000 widgets, but 10,000 people want to buy one at the given price point, the gained market share is still only 1000 individuals. The number of people who want one but can't get one due to lack of supply is not market share. Temporary under-pricing might be a valid strategy if AMD is planning to ramp up manufacturing capacity, but comments further down in this thread suggest they lack the fabs to do that.
    - imtringued 7y ago
      You're completely forgetting about the future loss of sales when someone only looks at AMD CPUs once. The buyer will switch to Intel immediately and then when prices are finally down again won't be shopping around for prices. The impression that AMD is overpriced remains.
      - missosoup 7y ago
        They could have priced higher and still dominated intel price/perf ratio wise. The supply/demand equilibrium point is somewhere higher than the current price and lower than intel break-even price. The only way they'd set the impression of overpricing is if they actually overpriced. They did the opposite. Whether it was a mistake in pricing or some calculated second-order strategy, we'll never know. What we do know is they're leaving cash on the table whether intentionally or not. Temporarily (keyword) underpricing to hurt competitors is not unheard of but I don't see how it will hurt intel unless it significantly shifts mindshare for the next ~2 years and allows AMD to get a real foothold in the server market.
        zwaps 7y ago
        They have basically one opportunity to set the expected price point and as it turns out, they prefer to get all the positivity and hype on their side, than perfectly optimize to marginal demand. I am not sure it is a bad choice.
    - keithnoizu 7y ago
      Selling out of inventory isn't a bad move if you seeking to raise capital or debt to increase production capability. E.g. were profitable and selling out at this price point and arguably would continue to do so as we ramp up production. Especially if looking down the road long term. In the short term it generates buzz, thus this very post here on hacker news, which isn't necessarily negative unless it is a prolonged inventory shortage.
- nordsieck 7y ago
  > If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher or need to increase manufacturing capacity in order to actualize the potential market share to be gained. That's the standard micro economics answer. You're not wrong. However, I don't think you're right either. The pricing of consumer products is a black art because people don't necessarily behave like economics textbooks say they should. Some possibilities: 1. This is a short term supply hiccup. The good will of keeping the price the same of the medium term is worth more than the money AMD would make by raising and then lowering the price of their chips. 2. They are constrained in their ability to raise their prices by Intel, which is broadly thought of as a superior product (leaving out the technical analysis of the current generation). 3. They want to create the perception of scarcity.
  - navjack27 7y ago
    They've been binning these chips for months maybe even a year at this point. The binned CCDs used in the 3950X are also used in Epyc. I'm sure server has a higher priority over DIY.
    - paranoidrobot 7y ago
      From what I've read/heard - AMD are selling every chip they can make. So whatever the highest test the chip passes, it's sold as that. This is apparently why nobody is having much luck getting any kind of overclocking beyond the on-box specs - AMDs just very good at ensuring chips go where they're required.
- disordinary 7y ago
  Then you have consumers feeling ripped off when the next batch arrives, as has said above they could be trying to build brand loyalty.
- galaxyLogic 7y ago
  > If the demand is exceeding AMDs manufacturing capacity, then they should have priced higher If they did that the news would have been AMD is expensive which is not much of a news-story. Whereas now the news is that AMD is sold out because it is so good.

missosoup 7y ago

Depends on whether it was sold out due to manufacturing capacity or just a local logistical issue. If manufacturing capacity, then it should've been priced higher. If local logistics, then this data point has no bearing on whether it's priced correctly or not.

ajross 7y ago
What if it's actually priced below cost and supply is deliberately restricted? Making the top bins of a part "marketing only" products has been done in the past, and fits the evidence here...
- throwaway2048 7y ago
  The binning on 3950x chips is nothing extraordinary, thats why the chiplet model is so powerful, because you don't need to have 16 perfect cores on one die to sell the CPU.
  - ajross 7y ago
    Then why are there so few of them? You can't buy these things anywhere, despite being priced at a volume level. Something doesn't add up.
    - kllrnohj 7y ago
      Well, the 3950X just launched, so there's a demand spike that's going to follow from that. But that aside these are sharing parts with the Epyc series. If AMD is getting volume orders for Epyc that is definitely going to take priority. The allocation order is going to go enterprise first, system builders second, retail boxes a distant 3rd.
      - ajross 7y ago
        The Epyc devices are lower binnings though! That's exactly my point. They don't seem to have the 3.5+ GHz parts available in a reasonable quantity. When Intel was doing this with "1 GHz" Pentium 3's way back when, they got crucified for a paper launch.

deleted 7y ago

[deleted]

Akababa 7y ago

It could be that this is the long-term efficient price after demand from early adopters goes down. Or maybe they underestimated demand altogether and it's too late to raise prices now.

deleted 7y ago

[deleted]

aoeusnth1 7y ago

AMD is still gaining back mindshare. Yes, they’re not optimizing for profit right now, because they’re also gaining something valuable - entrenched market position. Intel’s dominance is incredibly sticky, and their name brand alone is worth 10s of billions. By blowing away Intel at every price point by a wide margin (and with Threadripper halo SKUs with no Intel competition), AMD is flexing and showing they are winners, and Intel are losers. People want to feel like winners when they buy products.

Iv 7y ago
The last Intel security bugs made them lose a lot of the reputation they had, at least amongst system adminstrators though. Now is a crucial time for AMD to strike back.
- mcv 7y ago
  This and their Minix backdoor are the reasons why I wanted an AMD for my laptop, but I was sad I couldn't find a high-end Thinkpad with AMD processor. I hope that will change next year.
  - snvzz 7y ago
    Why call it minix backdoor? It puts some blame on minix, yet minix is blameless here. Minix is an excellent FOSS microkernel multiserver OS with a focus on reliability and fault tolerance. The way Intel is using it just isn't nice.
    - mcv 7y ago
      I'm not blaming it on Minix, but it does make use of Minix. I'm mentioning it to identify what I'm talking about. I believe the official name is Intel Management Engine. Or maybe that's just part of it.
      - snvzz 7y ago
        Intel ME is the name I usually see, and also the name that the tools to remove/disable when possible do reference.

FPGAhacker 7y ago

I think this is a fair question to ask, I don’t know why you are being downvoted. It bothers me that hackernews penalizes curiosity.

nullifidian 7y ago

The new threadrippers are on par or more expensive than Intel's solutions if judged by performance/cost per core. Especially if ridiculously priced motherboards are considered.

kllrnohj 7y ago

The 3950X is the most expensive consumer platform CPU on the market, and AMD's HEDT lineup has a starting price higher than Intel's flagship HEDT part. So how much higher priced should it be?