Speculation: Ryzen 3000 series

[PeterScott]

I will add one more thing to what I already wrote.

This is a fierce contest. If one party has an advantage, it MUST USE IT FULLY. Because if they do not, the other party, when it gets up to speed again, will profit from this unnecessary slowdown. So thinking, that somebody should WITHOUT ANY RATIONAL REASON keep prices high, even they could be lower (meaning accelerated market share increase), just because they appear low enough at this moment, would not be clever at all. BECAUSE IT IS NOT JUST ABOUT MOMENTARY SITUATION BUT ABOUT FUTURE TOO. Any unnecessary slowdown means losses now or in the future.

Mockingbird, do you understand this? Imagine a race. You just run as fast as you can, because if you slow down for no reason, the competitors will get you sooner. Is this sports analogy clear enough?

Bolding your whole paragraph doesn't lend it any more credibility.

I get the sense that many forum posters are playing economic checkers, while the actual company leaders are playing economic chess.

The last thing any producer wants is for their product to be treated like a low margin commodity. Everyone in the tech game wants to be in Apples position: Having very high brand perception, so you can command higher margins.

Slashing your prices and margins is pretty much giving up. It's not smart business, it's the last resort of a struggling business.

 

[maddie]

Kocicak said:


I will add one more thing to what I already wrote.

This is a fierce contest. If one party has an advantage, it MUST USE IT FULLY. Because if they do not, the other party, when it gets up to speed again, will profit from this unnecessary slowdown. So thinking, that somebody should WITHOUT ANY RATIONAL REASON keep prices high, even they could be lower (meaning accelerated market share increase), just because they appear low enough at this moment, would not be clever at all. BECAUSE IT IS NOT JUST ABOUT MOMENTARY SITUATION BUT ABOUT FUTURE TOO. Any unnecessary slowdown means losses now or in the future. That means raising or keeping the prices as high as the market would tolerate, in order to obtain the highest profit margin and not lower the prices unless forced to do so by the other party.

I fixed it for you.

This should be a proscribed action.

You REALLY should NOT change what someone posted so as to advance your agenda. Anyone reading your post by itself will be mislead as to what the original poster intended. Very nasty action by you and should be condemned by ALL members.

 

[IEC]

Y'all should probably temper your expectations. If you have... optimistic projections for both price AND performance, you will likely be disappointed on at least one metric, if not both.

I would not expect drastically different price points if performance is much improved.

 

[mattiasnyc]

https://www.merriam-webster.com/dictionary/price war
"commercial competition characterized by the repeated cutting of prices below those of competitors

It is a price war, just not a price war followed to its logical conclusion (yet).

But there hasn't been a repeated cutting of prices of any significance though. There was the launch price, and then as far as I can recall prices dropped about once for the first gen of Ryzen before the imminent release of Ryzen 2. If this was an actual price war then the release of Ryzen gen 1 would have led to Intel lowering prices (which it didn't), and then when it had AMD would have responded with lower prices on gen 1 products, Intel would have cut prices, AMD would have cut prices, and so on.

It's a very different thing to introduce a new CPU that offers more for less, particularly when we're dealing with this type of technology. The argument by some has been that you didn't need much more than 2-4 cores for gaming and therefore getting an octa-core AMD chip was of little advantage (for gamers). Well, to those people getting more cores for less/core wasn't really an appealing option, they wanted more performance per core. So Intel could maintain high prices despite AMD's octa cores coming to the market. Intel's subsequent introduction of octa-cores to roughly the same segment didn't really result in much of a price-cut on existing Intel CPUs.

So, I haven't seen a price war yet, and if there ever was one I'd say Intel with its marke share and deep pockets would simply slay AMD. On that note:

And AMD has economy of...not having >100,000 employees, multiple foundries, a huge range of product lines, AND also has a CPU architecture that should be MUCH cheaper to produce at scale.

But with less revenue and smaller share of the market.

Your simple understanding of economics runs into the fact that the details really do matter, and you don't know any of them.

Well if none of us do then we are on an equal playing field so to speak. We can only speculate based on that which we know. What we can look at is how things scale for respective businesses. So the argument that we don't know details doesn't really lend you any more credibility than it does anyone else who is speculating.

For example: Can Intel produce their 2 x 28-core Xeon monstrosity for less than AMD makes a 64-core chiplet-based Epyc? And will anybody buy it, when the Epyc is so much more efficient?
Economies of scale or not, that's gonna be pretty tough, and it makes all the difference in the world to your "Intel can just sell at cost" claim.

Well first of all, does Intel or AMD sell more server chips currently?

As for the economy of scale; the point that was made (I think) was that each company needs revenue. It doesn't matter what the market share is and what the actual cost is of production measured in dollars if you're selling "at cost". If you're selling "at cost" you're making zero profit. So all you have to do is look at the financial statements of the two companies and look a their position in the market as businesses and then you can ask yourself:

If AMD and Intel both decided to sell their CPUs with zero profit - how long would each company last?

I just don't see how AMD would last longer in that situation, regardless of absolute cost.

 

[Mockingbird]

I see. You just do not understand, that profit maximisation is not the only business objective. Business growth by sales maximisation and market share increase??? Never heard about that???

When Intel had the advantage (2011-2017), did Intel dropped its prices to the floor? Hell no!

When NVIDIA have the advantage (right now!), does NVIDIA drop its prices to the floor? Hell no!

You just ignored the evidence that right in front of you.

 

[ozzy702]

Y'all should probably temper your expectations. If you have... optimistic projections for both price AND performance, you will likely be disappointed on at least one metric, if not both.

I would not expect drastically different price points if performance is much improved.

^This. Why are the AMD threads always like this? Unrealistic expectations on performance, price or both that set people's sights to places that are simply fairy tale levels. If AMD knocks it out of the park and steals the crown from Intel on gaming and productivity, why would they offer halo products for significantly less than Intel? AMD isn't a charity and Lisa SU is one of the most brilliant and cutthroat savages in the tech space, I think a lot of people, as usual with AMD, will be disappointed in one way or another.

 

[maddie]

When Intel had the advantage (2011-2017), did Intel drop prices to the floor? Hell no!

When NVIDIA have the advantage (right now!), did NVIDIA drop prices to the floor? Hell no!

You just ignored the evidence that right in front of you.

Dominant marketshare position?

If AMD gets to that position they most probably will be doing the same thing. Increasing margins becomes the only way to increase profits in that market. AMD has far to go to get there, if ever.

Actually this makes the strongest case for the future profitability of the company. Push hard as possible now for marketshare, which will then allow you to increase margins to further increase profitibility.

Do you forget in Nvidia's so recent case, the GTX970? Right now by you only means that they have achieved their dominant position.

 

[OTG]

When Intel had the advantage (2011-2017), did Intel drop its prices to the floor? Hell no!

When NVIDIA have the advantage (right now!), did NVIDIA drop its prices to the floor? Hell no!

You just ignored the evidence that right in front of you.

Why did the overwhelmingly dominant market leaders not drop prices when they already sell everything they make, and would have absolutely zero reason to do so?
vs
Why would a company that's been reduced to a shadow of Intel or Nvidia, desperately grab as much market share as they can during what may be a once in a generation opportunity?

HAVING ONE GOOD PRODUCT GENERATION (ZEN)
vs
90%+ MARKETSHARE

I could easily be wrong about Zen2's pricing.
But if you think AMD suddenly has Intel-like ability to charge whatever the hell they want and sell everything tehy make...

 

[maddie]

^This. Why are the AMD threads always like this? Unrealistic expectations on performance, price or both that set people's sights to places that are simply fairy tale levels. If AMD knocks it out of the park and steals the crown from Intel on gaming and productivity, why would they offer halo products for significantly less than Intel? AMD isn't a charity and Lisa SU is one of the most brilliant and cutthroat savages in the tech space, I think a lot of people, as usual with AMD, will be disappointed in one way or another.

These are speculative arguments on possibilities. Disappointment in this forum, at least by those posting? Not really.

Look back at the ones before the intro of Ryzen 1xxx. 8C for $500?

Never going to happen. They would be crazy. Why would they do something like that? That's too cheap.

 

[IEC]

As a side note since people seem to misunderstand the long-term thinking that goes into business decisions about pricing:

Price is driven by both supply and demand. If you expect that you cannot meet increased demand, you won't price your product lower than your direct competitor(s) - even if you want more marketshare. That would create the untenable position of having both lower ASP as well as being unable to supply the channel enough inventory = crippled margins AND crippled marketshare. If you think AMD would somehow do this, I would point you towards the recently-announced Radeon VII's pricing. It in no way undercuts the competition, and I very much suspect quantities will be limited. Just as consumer-level CPUs on 7nm will almost assuredly be supply-constrained to start, as AMD will be busy churning out enough parts for the datacenter/server markets.

 

[mattiasnyc]

But if you think AMD suddenly has Intel-like ability to charge whatever the hell they want and sell everything tehy make...

Look at Threadripper. Compare its performance to Intel counterparts. Compare pricing.

Clearly AMD isn't selling at very low prices. They're charging what is reasonable.

 

[Mockingbird]

Dominant marketshare position?

If AMD gets to that position they most probably will be doing the same thing. Increasing margins becomes the only way to increase profits in that market. AMD has far to go to get there, if ever.

Actually this makes the strongest case for the future profitability of the company. Push hard as possible now for marketshare, which will then allow you to increase margins to further increase profitibility.

Do you forget in Nvidia's so recent case, the GTX970? Right now by you only means that they have achieved their dominant position.

Why did the overwhelmingly dominant market leaders not drop prices when they already sell everything they make, and would have absolutely zero reason to do so?
vs
Why would a company that's been reduced to a shadow of Intel or Nvidia, desperately grab as much market share as they can during what may be a once in a generation opportunity?

HAVING ONE GOOD PRODUCT GENERATION (ZEN)
vs
90%+ MARKETSHARE

I could easily be wrong about Zen2's pricing.
But if you think AMD suddenly has Intel-like ability to charge whatever the hell they want and sell everything tehy make...

AMD already outsell Intel at many retailers, often as much as 2:1.

Note: retail processor sales only

 

[OTG]

Look at Threadripper. Compare its performance to Intel counterparts. Compare pricing.

Clearly AMD isn't selling at very low prices. They're charging what is reasonable.

I'm confused, you're making my point for me?
The 2990WX costs roughly what Intel's 10-core CPU did, two years ago.

EDIT:
Post this link in any tech forum, two years ago. How do you think the arguments would go?
32 cores for the same price as a 6950x? 12 cores for a third of the price? 16 for half?
A $500 8-core was unbelievable enough, does AMD hate making money?

 

[OTG]

AMD already outsell Intel at many retailers, often as much as 2:1.

Note: retail processor sales only

For mmmmaybe a year, in what may be the smallest category of CPU sales.
It doesn't give them the dominant position they need to hike their prices.
AMD STILL barely has a mobile or server presence.
If Zen2 flops, they're finished as a company, because they don't have the broad revenue stream from having lots of market share in many different market segments to sustain them through a bad patch.
You know, like Intel does.

 

[maddie]

Many years ago, I remember responding to a friend on the question, "how would I most like to improve my thinking". My response was to be better able to see the 2nd & 3rd order effects of my decisions.

The world is awash, in all endeavors, of individuals proposing solutions to problems based only on the 1st order effects of that solution. They just can't see the unintended consequences that often return to bite them. So they progress from crisis to crisis never truly knowing why this keeps happening. Wisdom is truly seeing better than before.

Enough pontificating and back to the topics at hand.

 

[Mockingbird]

For mmmmaybe a year, in what may be the smallest category of CPU sales.
It doesn't give them the dominant position they need to hike their prices.
AMD STILL barely has a mobile or server presence.

As I said before, I am talking about retail box processor sales only, not OEM sales.

OEMs don't pay retail prices.

If Zen2 flops, they're finished as a company, because they don't have the broad revenue stream from having lots of market share in many different market segments to sustain them through a bad patch.
You know, like Intel does.

What does "flop" even mean?

Also, Intel doesn't have "broad revenue stream from having lots of market share in many different market segments". Most of its revenue are still from sales of processors.

 

[maddie]

As a side note since people seem to misunderstand the long-term thinking that goes into business decisions about pricing:

Price is driven by both supply and demand. If you expect that you cannot meet increased demand, you won't price your product lower than your direct competitor(s) - even if you want more marketshare. That would create the untenable position of having both lower ASP as well as being unable to supply the channel enough inventory = crippled margins AND crippled marketshare. If you think AMD would somehow do this, I would point you towards the recently-announced Radeon VII's pricing. It in no way undercuts the competition, and I very much suspect quantities will be limited. Just as consumer-level CPUs on 7nm will almost assuredly be supply-constrained to start, as AMD will be busy churning out enough parts for the datacenter/server markets.

I had questions about this mention of supply constrained before but not so much any more.

Some large TSMC customers have announced a slowdown in the adoption of 7nm products. I see no problem with production constraints as a reason to not push very aggressively for marketshare. For all we know AMD might even be able to negotiate lower prices because of this.

A DEC 6th article
http://www.eenewsanalog.com/news/report-order-downturn-leave-tsmc-spare-7nm-capacity

edit:
looking further, I see see 7nm revenue (4th Q 2018) aprox 16/20 nm revenue. 23% & 21% respectively. If the cost of a wafer is 7nm ~ (2) x 16nm, then wafer starts is already 50% of 16/20nm capacity and ramping. This as a lot more wafer starts than many are assuming to be the case.

AMD, in my opinion will not be wafer constrained.

 

[Mopetar]

Market price is the price that people are willing to pay (for the product).

If AMD has a huge stockpile that it can't sell, the set price is above market price.

Since AMD has no problem selling its processors, it's clearly at or below market price.

Since the processors are already at or below market prices, there's no reason for AMD to lower its prices unless Intel cut its own prices.

But AMD is also trying to take a larger piece of the market, which means expanding their own production volume. In order to entice new customers to purchase AMD CPUs, they naturally have to reduce their price.

There might be a particular stable price at which AMD can sell some number of CPUs, but if they want to sell twice or three times that number of CPUs then the only way to do so is at a lower price.

AMDs new chiplet strategy is going to allow them to produce a greater number of CPUs and to be more nimble in adapting to small changes and shifts in the market since the same chiplet can just as easily be used to make more server chips if demand is strong there, but shifted back to desktop parts if the server market weakens.

Further, the market rate for some product doesn't mean that AMD is necessarily seeing additional profit. During the mining boom, it was the retailers and people flipping cards who were absorbing a lot of the additional profit. Both AMD and NVidia may have seen additional sales, but they were not receiving all of the benefits of those additional sales.

 

[somethingclever]

As a side note since people seem to misunderstand the long-term thinking that goes into business decisions about pricing:

Price is driven by both supply and demand. If you expect that you cannot meet increased demand, you won't price your product lower than your direct competitor(s) - even if you want more marketshare. That would create the untenable position of having both lower ASP as well as being unable to supply the channel enough inventory = crippled margins AND crippled marketshare. If you think AMD would somehow do this, I would point you towards the recently-announced Radeon VII's pricing. It in no way undercuts the competition, and I very much suspect quantities will be limited. Just as consumer-level CPUs on 7nm will almost assuredly be supply-constrained to start, as AMD will be busy churning out enough parts for the datacenter/server markets.

This is the most convincing argument I've seen against why AMD would significantly drop prices. If they can't meet the extra demand that it could cause, then they will also have failed.

The past 20 pages have literally just been the same dissenters echoing the same argument while failing to acknowledge or address refutations against them.

Thank you for breathing fresh air into this thread.

Edit: corrected double negative

 

[exquisitechar]

As a side note since people seem to misunderstand the long-term thinking that goes into business decisions about pricing:

Price is driven by both supply and demand. If you expect that you cannot meet increased demand, you won't price your product lower than your direct competitor(s) - even if you want more marketshare. That would create the untenable position of having both lower ASP as well as being unable to supply the channel enough inventory = crippled margins AND crippled marketshare. If you think AMD would somehow do this, I would point you towards the recently-announced Radeon VII's pricing. It in no way undercuts the competition, and I very much suspect quantities will be limited. Just as consumer-level CPUs on 7nm will almost assuredly be supply-constrained to start, as AMD will be busy churning out enough parts for the datacenter/server markets.

Radeon VII doesn't undercut the competition because it's incredibly expensive to produce. If Nvidia didn't jack up prices with Turing AMD probably wouldn't have even had the opportunity to sell it as a gaming focused card. It's sad to say, but AMD's GPUs are so bad right now they can't afford to undercut Nvidia when they need big, fabbed on a bleeding edge process chip, with a huge amount of expensive memory, just to barely match Nvidia's xx80 tier card that's fabbed on 12nm. The situation with Radeon is so vastly different than what we're seeing with Ryzen 3000 that I think it is pointless to compare the pricing between the two. With Ryzen 3000, AMD will be dominant and they will set the prices as they like, and we have to see what kind of strategy they will go with.

Interesting to consider...although it is out of desperation/a lack of options, they are willing to sell a, what, ~350mm^2 7nm HPC chip with 16GB of HBM2 for $700. Then look at a possible 16 core Ryzen 3K, it would be ~130mm^2 worth of 14nm silicon and two tiny ~80mm^2 7nm HPC chiplets. The Ryzen is so, so much cheaper to produce...

 

[somethingclever]

, Intel doesn't have "broad revenue stream from having lots of market share in many different market segments". Most of its revenue are still from sales of processors.

Are you just going to ignore Intel's memory or networking businesses? Intel was originally a memory company and they never gave that up even if they're not a major player anymore.

 

[OTG]

As I said before, I am talking about retail box processor sales only, not OEM sales.

OEMs don't pay retail prices.

And Retail doesn't sell OEM volume.

What does "flop" even mean?

Also, Intel doesn't have "broad revenue stream from having lots of market share in many different market segments". Most of its revenue are still from sales of processors.

Flop: Bulldozer.
If Zen2 is all smoke and mirrors, AMD probably goes bankrupt.

Intel makes most of its money from CPUs, but they dominate in desktop, HEDT, mobile, server, workstation, everything.
AMD has had one good year, which is great, but that's only desktop and HEDT.
They still barely exist in laptops. Server is going very well, but it's slower to change than Desktop, so there just aren't that many AMD servers out there yet.

Intel may be in trouble in desktop, but if they keep AMD out of the server and mobile markets, it won't matter how many 2600's sell from mindfactory.de.
AMD needs more than just The Fastest Gaming And Facebook Chip Evar, to succeed.

 

[Mockingbird]

But AMD is also trying to take a larger piece of the market, which means expanding their own production volume. In order to entice new customers to purchase AMD CPUs, they naturally have to reduce their price.

There might be a particular stable price at which AMD can sell some number of CPUs, but if they want to sell twice or three times that number of CPUs then the only way to do so is at a lower price.

AMDs new chiplet strategy is going to allow them to produce a greater number of CPUs and to be more nimble in adapting to small changes and shifts in the market since the same chiplet can just as easily be used to make more server chips if demand is strong there, but shifted back to desktop parts if the server market weakens.

Further, the market rate for some product doesn't mean that AMD is necessarily seeing additional profit. During the mining boom, it was the retailers and people flipping cards who were absorbing a lot of the additional profit. Both AMD and NVidia may have seen additional sales, but they were not receiving all of the benefits of those additional sales.

Let's say that AMD's $200 processor costs $50 to make. (not including development cost)

Now, AMD cut the price in half to $100.

Are you telling me that AMD is going to sell at least 3 times as many processors at $100 as it would have at $200?

 

[Mockingbird]

Are you just going to ignore Intel's memory or networking businesses? Intel was originally a memory company and they never gave that up even if they're not a major player anymore.

Intel's SSDs have just been flying off the shelves these days! /sarcasm

 

[Mopetar]

Why are the AMD threads always like this? Unrealistic expectations on performance, price or both that set people's sights to places that are simply fairy tale levels.

We've seen the performance though. We know that a Zen 2 8-core chiplet can match the 9900K. That's a $500 CPU right now.

You can look at it from the perspective of AMD being able to charge $500 for that chiplet and make an immense amount of profit, but there aren't a lot of people who will spend $500 on a CPU. If AMD sells that same performance for ~$250, you suddenly have a much, much larger market.

And it still doesn't matter because we know that AMD can put another chiplet on their Ryzen 3000 CPU and still be able to target the $500 market. Why people assume AMD won't have something that targets these different segments and higher price points simply because they are also offering what looks like insane value at the parts of the market under $300 is beyond me.

If AMD knocks it out of the park and steals the crown from Intel on gaming and productivity, why would they offer halo products for significantly less than Intel? AMD isn't a charity and Lisa SU is one of the most brilliant and cutthroat savages in the tech space, I think a lot of people, as usual with AMD, will be disappointed in one way or another.

AMD wants to grow their market share, which means that they have to increase the overall supply of AMD chips in to the market. Basic laws of supply and demand should tell you that this is going to require AMD to offer consumers better value for their money.

The price brackets don't really change. There will still be something that resembles a ~$300 CPU market (maybe it shifts to be more like the $275 or the $350 market though, but that hardly matters)

Sure, AMD could be utterly foolish and retain the small market share while raising prices by offering a premium product, but Intel isn't going to sit around in their slump forever. You don't think that they won't be utilizing the same approaches that AMD has been in a few years? Some people try to pain this AMD victory as the defeat of Intel, but they're far from dead and defeated. They will be coming back with one hell of a vengeance. If AMD can't look at their own history and realize this they're beyond foolish. If you think Lisa Su is foolish enough to sit around and soaking profits for a few years instead of scrambling to build both marketshare and mindshare for AMD, I don't think she deserves your title of brilliant cut-throat savage.