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Declining to follow the price cut plan

DailyTech revealed last week ATI's new pricing strategy to compete with NVIDIA's GTS 250 rebrand, also known as the 9800 GTX+.

The ATI Radeon HD 4850 512MB was to drop to $129, while the Radeon HD 4870 512MB was scheduled to be cut to $149. This was supposed to be accomplished primarily through the use of mail-in rebates, which ATI would help offset.

Most of the board partners took up the offer on the 4850. However, due to several factors converging at once, the 4850 can now be picked up for around $120 at several e-tailers, albeit with the mail-in rebate.

The story with the 4870 is something else entirely. The Radeon HD 4870 512MB was supposed to drop to $149 with a mail-in rebate, but some of ATI's graphics card partners are resisting this as they feel that since the card outperforms the GTX 260, it should compete against that card. They instead are positioning the 1GB version of the 4850 against the 1GB version of the GTS 250 at the $149 price point.

One of our sources in Taiwan told us: "The ATI lineup is very strong, and we feel the 4850 should go against the GTS 250 and the 4870 against the GTX 260".

ATI has been very aggressive with its pricing, with lower prices and higher performance in the same segments as its nemesis NVIDIA. This has led to declining revenues for board manufacturers, already hard hit by lower demand due to the global recession.


 

 

GTX 280

ATI Radeon 4870

GTX 260 Core 216

ATI Radeon HD 4850

GTS 250

Stream Processors

240

800

216

800

128

Texture Address / Filtering

80 / 80

40

72/72

40

64 / 64

ROPs

32

16

28

16

16

Core Clock

602MHz

750MHz

576MHz

625MHz

738MHz

Memory Clock

1107MHz

900MHz GDDR5 (3600MHz eff)

999MHz

993MHz GDDR3 (1986MHz eff)

1100MHz

Memory Bus Width

512-bit

256-bit

448-bit

256-bit

256-bit

Frame Buffer

1GB

512MB

896MB

512MB

512MB

Transistor Count

1.4B

956M

1.4B

956M

754M

Price Point

$349

$149

$199

$129

$129



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RE: Huh?
By Targon on 3/11/2009 9:39:01 PM , Rating: 3
You have to look at it from the overall company perspective, not just how well the products are selling.

If AMD is able to produce an excessive number of 4870 GPUs, in order to avoid excess inventory, they need to sell more. Considering that AMD as a whole has been having a really rough time due to the economy, and until the Phenom 2, having parts that were not terribly competitive to the Core 2 series of processors, AMD needs money.

So, get more 4870 based cards sold. Even if the profit per card is less, the higher volume would more than make up for the lost profits per unit. It is sort of like selling 100 units at $10 each, or sell 1000 units at $9 each. AMD has not been in the position to sell products for top dollar, so their entire business plan revolves around selling more and more products.

Then, you also have to figure there is brand loyalty that builds up over time. If you have been buying a Geforce card for the past four generations, you will be more inclined to stick with NVIDIA. If AMD can get more people to buy a Radeon, and can stay competitive, those people will buy Radeon products going forward if they are happy with the product. So, AMD is thinking ahead on this one.

The whole idea of rebates is really annoying in general, because of all the complaints about rebate processing. You have the receipt, you have the product, with the box, you fax or send it over, and still end up without the promised rebate money. AMD could drop the price by 10 percent across the board and it would have the same overall effect that the rebates would have, without giving customers the headache.


"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs














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