Friday, June 22nd 2018
NVIDIA's Next Gen GPU Launch Held Back to Drain Excess, Costly Built-up Inventory?
We've previously touched upon whether or not NVIDIA should launch their 1100 or 2000 series of graphics cards ahead of any new product from AMD. At the time, I wrote that I only saw benefits to that approach: earlier time to market -> satisfaction of upgrade itches and entrenchment as the only latest-gen manufacturer -> raised costs over lack of competition -> ability to respond by lowering prices after achieving a war-chest of profits. However, reports of a costly NVIDIA mistake in overestimating demand for its Pascal GPUs does lend some other shades to the whole equation.
Write-offs in inventory are costly (just ask Microsoft), and apparently, NVIDIA has found itself in a miscalculating demeanor: overestimating gamers' and miners' demand for their graphics cards. When it comes to gamers, NVIDIA's Pascal graphics cards have been available in the market for two years now - it's relatively safe to say that the majority of gamers who needed higher-performance graphics cards have already taken the plunge. As to miners, the cryptocurrency market contraction (and other factors) has led to a taper-out of graphics card demand for this particular workload. The result? NVIDIA's demand overestimation has led, according to Seeking Alpha, to a "top three" Taiwan OEM returning 300,000 GPUs to NVIDIA, and "aggressively" increased GDDR5 buying orders from the company, suggesting an excess stock of GPUs that need to be made into boards.
With no competition on the horizon from AMD, it makes sense that NVIDIA would give the market time to assimilate their excess graphics cards. A good solution for excess inventory would be price-cuts, but the absence of competition brings that to a halt: NVIDIA's solutions are selling well in the face of current AMD products in the market, and as such, there is no need to artificially increase demand - and lower ASP in the meantime. Should some sort of pressure be applied, NVIDIA can lower MSRP at a snap of its proverbial fingers.
Of course, this begs the question of what exactly will NVIDIA do with its R&D on other graphics product generations that are falling further and further into the future. Volta never saw the light of day in consumer graphics card products, and we're already talking about the launch of a Turing or Ampere architecture from the company - hoping it would be released in Q3 of this year. There is R&D investment that will lose its impact and chance to generate the revenue expected at its inception. Sure, revenue keeps coming in from older generation hardware - but these delays allow the competition to try and leapfrog, performance and technology-wise, the interim NVIDIA architectures that haven't been released to market, setting their sights on future releases. We're left with an NVIDIA that only partially capitalized their Volta R&D in the pro and server segment, for example, and wasted funds that could be better spent elsewhere. But opportunity cost is part of this business, right?
Sources:
Seeking Alpha, via TechSpot
Write-offs in inventory are costly (just ask Microsoft), and apparently, NVIDIA has found itself in a miscalculating demeanor: overestimating gamers' and miners' demand for their graphics cards. When it comes to gamers, NVIDIA's Pascal graphics cards have been available in the market for two years now - it's relatively safe to say that the majority of gamers who needed higher-performance graphics cards have already taken the plunge. As to miners, the cryptocurrency market contraction (and other factors) has led to a taper-out of graphics card demand for this particular workload. The result? NVIDIA's demand overestimation has led, according to Seeking Alpha, to a "top three" Taiwan OEM returning 300,000 GPUs to NVIDIA, and "aggressively" increased GDDR5 buying orders from the company, suggesting an excess stock of GPUs that need to be made into boards.
70 Comments on NVIDIA's Next Gen GPU Launch Held Back to Drain Excess, Costly Built-up Inventory?
So if this is just OEM overstock, then this is absolutely nothing. But if this story repeats for AIB vendors, then there is something to it.
12NM came and was an actual upgrade but a minor one at that.
GDDR5 and 5x have been around for a long time and they don't want to make 384 width bus cards like the old times.
The tech out there haven't supported a new gpu, you can slap an architecture on the same node but it rarely accounts to much.Yeah, I don't have any concerns for nvidia other than:
next gen is on 12nm ?
amd will be on 7nm shortly thereafter and will it be very competetive, the longer next gen nvidia drags on the closer it'll be to actual good 7nm chips.
Regardless nvidia has a lot of legs to stand on so no worry for nvidia, a short slap by amd to nvidia never did anyone any harm in the consumer market too, nvidia will sell a lot regardless of performance as we've seen before, crappy products and 50% share (even worse products than Vega!)
Sure, companies are in it to make money but there is a limit of how much to hold back and milk a market before you make real damage.
Just look at Intel, they hold back the core count for the consumer segment for like 6-7 years and sales of the PC industry went down 25%, now when AMD made comeback we are on our way to 32 cores for customer in just a year and it will not stop there, probably 48-64 cores next year. Sales are for the first time in 6-7 years looking to recover in the PC industry but much damage is done and it will take time to recover sales.
By skipping gpu generations in gaming nVidia are holding back the whole gaming industry and start to make real damage, specially in VR development that need much more gpu power to make better VR headsets with much higher resolution and frame rate. They can not release these products without at least 200-400% more gpu power.
Game developers that make fantastic games count on a certain progress in gpu gaming market during development.
Developing a game that will be finished in say 3 years they make plans for graphics and functions for that game to what the average gpu power will be at the hand of gamers at end of those 3 years when the game is expected for release.
If then no progress in gpu power is made they are forced during development to reconsider both cutting back on graphics and functionality of the game before release.
Sure you say, nVidia will sooner or later release a new architecture, yep they will but it will then take years from that release before that architecture gets used in games since people must have time to upgrade to build a consumer base with that architecture.
The only thing nVidia is doing is holding back the gaming evolution to line their pockets with more money at cost of all gamers.
Also the main stream graphic cards 1050/1060 visual quality are starting to match the visual quality of XBOX ONE X and PS4 Pro making inexperienced gamers buy these consoles instead of PCs thus driving gamers in to AMD's hands since they make the gpu:s in both current consoles and also the coming next gen consoles.
So when Jen-Hsun Huang smiles at you and ever so gently is buttering you up with his smooth tongue that he cares about gamers, imagine a couple of horns on his head and you will see the true face of Jen-Hsun Huang on top of that slick leather jacket.
In short they'll come back down to earth only when people stop buying their hype & halo products!
Nvidia has a thin rope to walk.
Most likely these are to be crippled, and packaged as a limited-market release version lesser card that sells e.g. if these were 1080tis they be crippled to the neighborhood of
1070/1070ti performance and sold only in China.