5 ms·

As a sibling comment notes, Intel can (and has a history) of doing this physically. Where a manufacturer price discriminates by offering two products, a normal

As a sibling comment notes, Intel can (and has a history) of doing this physically. Where a manufacturer price discriminates by offering two products, a normal one and an inferior one, it may be the case that the cheapest way to do that is by simply making twice as many “good” ones and intentionally disabling half of them. There is a very famous economics paper by Deneckere and McAfee that outlines exactly this behaviour from Intel in the 386 (…?) days, and how it may even lead to Pareto improvement - and increased consumer welfare. I can’t find it at the moment on mobile, but it should be relatively easily surfaced. Edit: found it, “Damaged Goods” - https://www2.econ.iastate.edu/faculty/langinier/teaching2005/615-fall2005/paper-hom2/damagegoods.pdf https://www2.econ.iastate.edu/faculty/langinier/teaching2005...

akira2501 5y ago
I thought the normal and inferior products lines are usually the result of binning, not of intentional production. In which case, it's a way to make good on products that would not normally sell under your brand and would otherwise be disposed of. If your manufacturing efficiency has advanced to the point that you no longer have low quality parts coming out of your binning process, then I think customers are right to wonder why that savings and efficiency aren't being passed on or being used to further advance the product line. In any case, if the purpose of passing the inferior products off under an alternative label is to avoid brand damage, then this seems to be the opposite of that.
- milderworkacc 5y ago
  In many cases yes, it is the result of binning, but the 486 SX (my first comment incorrectly said 386) was an intentionally disabled 486 DX. From memory, you could then purchase a 487, which was actually just a full-fat 486 DX to slot into your co-processor slot as an 'upgrade'!
- toast0 5y ago
  My understanding is that binning is typical at the beginning of the product line, but usually process tweaks increase the yield as the product continues. At which point things become complex. If you no longer have N core chips because all of them test good at more cores, but don't want to sell the N+1 core chips at the old N core price, you've raised prices with all that entails.
  - akira2501 5y ago
    Your last point seems sound, but it strikes me that this model might only possible since there is a limited number of competitors in the market. I would expect more competition to drive the prices down while still increasing product core counts.
- sokoloff 5y ago
  A supplier of voltage regulators sold the same (physically and functionally interchangeable) part to Ford and to Cessna. Cessna required 100% testing of the parts. Ford accepted statistical process controls. Solution: make the parts on one line, inspect the greater number of how many they’d need to inspect for Ford and Cessna, stamp all the inspected parts and sell any part to Ford and only stamped parts to Cessna. All three companies can benefit from that arrangement.
  - SomeHacker44 5y ago
    Yay! I had a Cessna voltage regulator fail after over 30 years. So i would say this system works. :)
    - sokoloff 5y ago
      Well, “works” in the sense that your Cessna is (and mine was) flying around the very best inspected of 1960s technology…
- stordoff 5y ago
  It's often done for binning, but you also get working hardware that has been disabled. Many AMD CPUs have been unlockable with a reasonable success rate[1], and IIRC all of certain models of X800 GPUs could be upgraded from 12 to 16 pixel pipelines (which from memory was sold as the X800XL variant). I can see how in theory it might make sense for market segregation. Say you're designing a 2-core and a 4-core CPU - the design simplifications and manufacturing efficiencies of just making one chip (and partly disabling some of them) _might_ drive the price down for both market segments compared to manufacturing two designs, even if on the surface the 2-core user seems to be buying more hardware than they are given access to. With that in mind, SDS doesn't seem like such a bad idea. Buying an n-core chip that can later be upgraded to a 2n-core chip without buying a completely new part seems preferable in some ways to buying an n-core that is actually a 2n-core chip that has had half its cores laser-sliced off (and thus can never reasonably be reactivated) to fit a market need. [1] https://www.cpu-world.com/info/AMD/Unlocking_cores_and_L3.html https://www.cpu-world.com/info/AMD/Unlocking_cores_and_L3.ht...
  - anfilt 5y ago
    The thing is with those disabled aspects of AMD gpus, AMD is not trying to sell it to you later. Also it could have been disabled because it was faulty when testing so binned differently or just to meet unit numbers for a SKU. Thing is you don't know. Here intel is selling you a pice of hardware but by telling you can pay later to unlock it. They are telling you it this extra functionality works. The thing is once intel sells a device they no longer own it. So what rubs a lot people wrongly here is that for something you own your now having to ask intel to use some aspect of it. For things you own you should not be asking 3rd parties for permission to use your property. If you are asking a 3rd party for permission do something/use something “you own”. This implies the seller has managed to retain some aspects of the right of exclusion. The issue here is the sell of tangible property normally involves the transfer of all rights. If the seller wants to retain some rights normally a contract is needed. Now with this situation intel using a couple things to basically retain this right of exclusion. First cryptography since you don’t have the private keys anything controlled by those keys intel effectively controls. Second is software copyright. A type of intangible property were the right to copy/reproduce is by default legally retained unlike other forms of property. So any software tools to enable this additionally functionality intel can keep a tighter grasp legally on its reproduction. Anyways the short and sweet if your having to ask the seller for permission after the sell to do something with something you “own” it implies the seller is some how retaining some property rights. This is going to rub people wrongly for tons of reasons.
- kristjansson 5y ago
  There's also just straight up demand for worse products at a lower price. To wit: many luxury goods 'outlets' now sell lines produced exclusively for the outlet market rather than unsold merchandise from the primary retail channel. If there isn't product in the outlet stores, that segment's demand is met by a competitor. Of course, there's an argument that this is just to protect the exclusivity of the primary retail channel, and that increased prices in that channel cover any losses from destroying, rather than down-binning unsold merchandise. The same argument might also apply to HEDT processors :)
kristjansson 5y ago
This is a great reference, thanks for digging it up!

akira2501 5y ago

I thought the normal and inferior products lines are usually the result of binning, not of intentional production. In which case, it's a way to make good on products that would not normally sell under your brand and would otherwise be disposed of. If your manufacturing efficiency has advanced to the point that you no longer have low quality parts coming out of your binning process, then I think customers are right to wonder why that savings and efficiency aren't being passed on or being used to further advance the product line. In any case, if the purpose of passing the inferior products off under an alternative label is to avoid brand damage, then this seems to be the opposite of that.

milderworkacc 5y ago
In many cases yes, it is the result of binning, but the 486 SX (my first comment incorrectly said 386) was an intentionally disabled 486 DX. From memory, you could then purchase a 487, which was actually just a full-fat 486 DX to slot into your co-processor slot as an 'upgrade'!
toast0 5y ago
My understanding is that binning is typical at the beginning of the product line, but usually process tweaks increase the yield as the product continues. At which point things become complex. If you no longer have N core chips because all of them test good at more cores, but don't want to sell the N+1 core chips at the old N core price, you've raised prices with all that entails.
- akira2501 5y ago
  Your last point seems sound, but it strikes me that this model might only possible since there is a limited number of competitors in the market. I would expect more competition to drive the prices down while still increasing product core counts.
sokoloff 5y ago
A supplier of voltage regulators sold the same (physically and functionally interchangeable) part to Ford and to Cessna. Cessna required 100% testing of the parts. Ford accepted statistical process controls. Solution: make the parts on one line, inspect the greater number of how many they’d need to inspect for Ford and Cessna, stamp all the inspected parts and sell any part to Ford and only stamped parts to Cessna. All three companies can benefit from that arrangement.
- SomeHacker44 5y ago
  Yay! I had a Cessna voltage regulator fail after over 30 years. So i would say this system works. :)
  - sokoloff 5y ago
    Well, “works” in the sense that your Cessna is (and mine was) flying around the very best inspected of 1960s technology…
stordoff 5y ago
It's often done for binning, but you also get working hardware that has been disabled. Many AMD CPUs have been unlockable with a reasonable success rate[1], and IIRC all of certain models of X800 GPUs could be upgraded from 12 to 16 pixel pipelines (which from memory was sold as the X800XL variant). I can see how in theory it might make sense for market segregation. Say you're designing a 2-core and a 4-core CPU - the design simplifications and manufacturing efficiencies of just making one chip (and partly disabling some of them) _might_ drive the price down for both market segments compared to manufacturing two designs, even if on the surface the 2-core user seems to be buying more hardware than they are given access to. With that in mind, SDS doesn't seem like such a bad idea. Buying an n-core chip that can later be upgraded to a 2n-core chip without buying a completely new part seems preferable in some ways to buying an n-core that is actually a 2n-core chip that has had half its cores laser-sliced off (and thus can never reasonably be reactivated) to fit a market need. [1] https://www.cpu-world.com/info/AMD/Unlocking_cores_and_L3.html https://www.cpu-world.com/info/AMD/Unlocking_cores_and_L3.ht...
- anfilt 5y ago
  The thing is with those disabled aspects of AMD gpus, AMD is not trying to sell it to you later. Also it could have been disabled because it was faulty when testing so binned differently or just to meet unit numbers for a SKU. Thing is you don't know. Here intel is selling you a pice of hardware but by telling you can pay later to unlock it. They are telling you it this extra functionality works. The thing is once intel sells a device they no longer own it. So what rubs a lot people wrongly here is that for something you own your now having to ask intel to use some aspect of it. For things you own you should not be asking 3rd parties for permission to use your property. If you are asking a 3rd party for permission do something/use something “you own”. This implies the seller has managed to retain some aspects of the right of exclusion. The issue here is the sell of tangible property normally involves the transfer of all rights. If the seller wants to retain some rights normally a contract is needed. Now with this situation intel using a couple things to basically retain this right of exclusion. First cryptography since you don’t have the private keys anything controlled by those keys intel effectively controls. Second is software copyright. A type of intangible property were the right to copy/reproduce is by default legally retained unlike other forms of property. So any software tools to enable this additionally functionality intel can keep a tighter grasp legally on its reproduction. Anyways the short and sweet if your having to ask the seller for permission after the sell to do something with something you “own” it implies the seller is some how retaining some property rights. This is going to rub people wrongly for tons of reasons.
kristjansson 5y ago
There's also just straight up demand for worse products at a lower price. To wit: many luxury goods 'outlets' now sell lines produced exclusively for the outlet market rather than unsold merchandise from the primary retail channel. If there isn't product in the outlet stores, that segment's demand is met by a competitor. Of course, there's an argument that this is just to protect the exclusivity of the primary retail channel, and that increased prices in that channel cover any losses from destroying, rather than down-binning unsold merchandise. The same argument might also apply to HEDT processors :)

kristjansson 5y ago

This is a great reference, thanks for digging it up!