Thursday, August 24th 2017
Retailers are Buying AMD RX Vega 64 at $675 Each
The Radeon RX Vega series launch has been particularly disappointing for gamers and PC enthusiasts because their otherwise interesting price-performance ratios at $499 for the RX Vega 64 and $399 for the RX Vega 56, were quickly stripped away by dwindling stock and sky-rocketing prices, with the RX Vega 64 even going above $1k in some places. We are not even sure if the miners are to blame or whether supplier-level pricing has been adjusted after the launch to a higher price point that makes AMD's promised pricing impossible to achieve.
It turns out that retailers might not be the ones making a quick buck at this madness. Leaked invoices show that distributors (entities that supply inventory to retailers) have inflated prices even at their level. A San Jose-based distributor, Ma Laboratories Inc., is quoting USD $675 per unit of a reference-design (not Limited Edition), Radeon RX Vega 64 SKU to a computer store. The $499 price AMD launched the RX Vega 64 at, is supposed to be the end-user price (minus government taxes). The retailer we're in touch with confirmed that they were offered no volume pricing discount due to low stock at the distributor itself. A distributor should ideally sell the product to a retailer at a much lesser price than $499, so the retailer can make their margin. The higher up the supply-chain, the more control AMD gets. The company is in a better position to rein in on distributors than retailers. If distributors are inflating prices with apparent impunity, it wouldn't surprise us if this goes even higher up.Can AMD do anything about this? It can work with AIB partners to significantly increase production to bring down prices. But that would be a huge gamble, which will either work, putting cards in the hands of gamers at the prices they were promised; or won't, by creating more miners; or worse still, end up as bankruptcy-causing unsold inventories, if the mining craze were to somehow subside.
There is another option AMD can try, in our opinion. It can re-launch RX Vega 64 and RX Vega 56 as new SKUs which come with crippled cypto-currency mining abilities (a special BIOS or something driver-level, or even something at the silicon-level), and discontinue the RX Vega 56 and RX Vega 64. The new SKUs could be clearly advertised as not being meant for crypto-currency mining (so as to deter false-marketing lawsuits). This is important for AMD, because the Radeon brand is under threat.
The more overpriced Radeon cards end up in the hands of miners, the fewer cards end up in the hands of gamers at the prices AMD promised; and conversely the lesser game developers are inclined to optimize their games for AMD Radeon, because fewer gamers use Radeon. NVIDIA can accelerate brand Radeon's demise by doubling down on game developer relations and pushing the next-generation of Game Works.
It turns out that retailers might not be the ones making a quick buck at this madness. Leaked invoices show that distributors (entities that supply inventory to retailers) have inflated prices even at their level. A San Jose-based distributor, Ma Laboratories Inc., is quoting USD $675 per unit of a reference-design (not Limited Edition), Radeon RX Vega 64 SKU to a computer store. The $499 price AMD launched the RX Vega 64 at, is supposed to be the end-user price (minus government taxes). The retailer we're in touch with confirmed that they were offered no volume pricing discount due to low stock at the distributor itself. A distributor should ideally sell the product to a retailer at a much lesser price than $499, so the retailer can make their margin. The higher up the supply-chain, the more control AMD gets. The company is in a better position to rein in on distributors than retailers. If distributors are inflating prices with apparent impunity, it wouldn't surprise us if this goes even higher up.Can AMD do anything about this? It can work with AIB partners to significantly increase production to bring down prices. But that would be a huge gamble, which will either work, putting cards in the hands of gamers at the prices they were promised; or won't, by creating more miners; or worse still, end up as bankruptcy-causing unsold inventories, if the mining craze were to somehow subside.
There is another option AMD can try, in our opinion. It can re-launch RX Vega 64 and RX Vega 56 as new SKUs which come with crippled cypto-currency mining abilities (a special BIOS or something driver-level, or even something at the silicon-level), and discontinue the RX Vega 56 and RX Vega 64. The new SKUs could be clearly advertised as not being meant for crypto-currency mining (so as to deter false-marketing lawsuits). This is important for AMD, because the Radeon brand is under threat.
The more overpriced Radeon cards end up in the hands of miners, the fewer cards end up in the hands of gamers at the prices AMD promised; and conversely the lesser game developers are inclined to optimize their games for AMD Radeon, because fewer gamers use Radeon. NVIDIA can accelerate brand Radeon's demise by doubling down on game developer relations and pushing the next-generation of Game Works.