As we reported yesterday, nVidia is prepared to pull out all the stops to re-take market share from AMD in the tough graphics market. Information KitGuru heard about the latest round of price cuts was that the GTX470 could be cut by over 21%. Searching the big sites today, we have already found some evidence that this is true.
Smaller sites need to sell-through old stock before they can buy new kit. The mega-stores don’t suffer from that problem.
To paraphrase a classic 16th century Ye Olde English saying, they have the supplier’s nuts in a vice and can squeeze anything they want, whenever they want.
For example, if nVidia insiders reveal that the GTX470 will benefit froma price cut of more than 21%, then the major sites have 2 choices:-
- With fast moving product, they can sit back on the reduction and enjoy massive profits – until the smaller resellers sell out old stock and start to undercut them
- On slower moving lines, they can stimulate customers immediately by passing the cut along directly
In the States, Newegg is one of the biggest resellers. We’ve analysed their GTX470 offers this morning and the GTX470 price drops have already come through.
Worth bearing in mind that resellers are under no legal obligation to pass over the whole of a cut. They might see $50 as ‘enough bait to make them bite’, while at the same time INCREASING margin on the stimulated sales.
Either way, the ongoing push by nVidia to reduce prices in order to gain market share looks set to continue.
KitGuru has been asked by several industry insiders how far we think the price cuts will go.
The answer is simple.
People only need to change price if they are NOT selling out. Production of the Radeon 5000 series still seems to be hampered by issues with TSMC’s line. While AMD sells all of the cards it can make, there is no pressure to change price.
To see when nVidia is having an effect on AMD’s sales, look for 2 subtle warning signs:-
- Solid price drop for one of the existing Radeon 5000 cards (e.g. 5770, 5850 or 5870)
- Introduction of one of AMD’s next generation cards early (e.g. a ’6000 series’ card in store before the end of September)
Unless you see one or both of these – then you know that there was no effect.
Frankly, KitGuru would like to see some price-stimulation from AMD. It’s not natural to push out a range of cards and leave them in the market for more than a year with no sign of price pressure.
Consumers like movement. We demand to be stimulated dammit!
Fingers crossed that with the next one or two price drops from nVidia, we finally see (a) price drops or (b) new product from AMD
KitGuru says: We’d also like to see the high-selling SKUs from nVidia finally hit the market. Especially the promise of a 50w Fermi with the 420 product (as we reported back in May).
Chitter chatter below, but if you want to bellow – head to the KitGuru forums.