Friday, December 2, 2022
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How Nvidia is making building a PC much more expensive

Nvidia’s RTX 4090 is on the way. The company revealed it today during its GeForce Beyond event at GTC 2022. It promises two to four times the performance of the RTX 3090 Ti, which would make it one of the biggest jumps we’ve seen in performance between generations.

If you ignore the price, that is. With the launch of the RTX 4090 at $1,599, the RTX 4080 16GB at $1,199, and the RTX 4080 12GB at $899, Nvidia’s new GPUs represent another round of price increases for new GPUs, which makes building a PC more expensive than ever.

Performance gains nullified by higher prices


It used to be the case that newer GPUs were better value for money than older ones, at least if you just compare MSRP. Typically, you could expect 30% or more return per dollar with each new generation, and some generations delivered up to 50% or even 70% more value than the last. For example, the GTX 1080 Ti was about 70% faster than the GTX 980 Ti and only cost about $50 more; The great value of the 1080 Ti is one of the reasons it’s such a legendary Nvidia GPU. However, it’s been apparent for a while that Nvidia just isn’t offering the generational value improvements it used to. We saw it in the RTX 20 series and we also saw it in the RTX 30 series, which was only a partial improvement over its predecessor.

The RTX 40 series is no different. Even if we take Nvidia’s own numbers at face value (the lower end of the range, anyway), the 16GB RTX 4080 with roughly twice the performance of the RTX 3080 isn’t that great when it also costs almost the double. In fact, the 16GB 4080 would have to be 2.3 times faster than the 3080 to get even 30% more performance. Sure, the 40-series has better ray-tracing performance and more Tensor Cores than the 30-series, but we’re not yet at the point where that kind of technology is truly standard.

There are also other reasons to worry about price, even if the value is good. First, the cheapest RTX 40 card announced was the 12GB RTX 4080, which has less memory and fewer cores than the 16GB RTX 4080. It should actually be called the RTX 4070, but maybe Nvidia didn’t want to call it that because of its $899 price tag, which is higher even than the RTX 3080. It’s quite obvious that these GPUs are not affordable for the vast majority. of PC users, even those who once bought Nvidia’s flagship products like the 1080 Ti.

Three graphics cards on a gray background.

Of course, Nvidia will release lower-end GPUs with lower prices, and that brings me to my second point. Because we can see how expensive the higher-end 40-series models are, it’s hard to see Nvidia not raising prices across the stack. We typically only see $50-$100 between each GPU across the entire product stack, so it seems highly unlikely that the RTX 4070 will launch at $499 like the RTX 3070. of the 4070 with an MSRP of $699 or even $799. Will there even be a series 40 card for less than $300?

Nvidia wants to eat their cake and have it too

In addition to Nvidia wanting to increase their margins and profits, the high price of the RTX 40 series is possibly also motivated by the glut of 30-series cards still on the market, particularly the high-end cards from the RTX 3080 to the RTX 3090 Ti. These cards have been falling in price because demand has dropped, and that’s bad for Nvidia’s bottom line. If Nvidia had lowered the price of the RTX 40 series, that could have pushed the price of its old flagships even lower.

This is Nvidia’s problem, and in the past, when Nvidia or AMD made too many GPUs, they just had to put up with them. For example, after the release of the RTX 20 series, Nvidia enjoyed a single quarter of record revenue and profit, followed by a year-long slump caused by a glut of GTX 10 series cards still on the market.

Nvidia probably remembers this all too well and doesn’t want it to happen again (even though it’s responsible for making too many GPUs in the first place), so the company’s solution is simply that consumers will have to pay more for the new series. RTX 40 cards or buy older RTX 30 series cards at prices that are still higher than they should be. It is certainly a bold stance given that the world is not exactly in prosperous times.

This can really only go one of two ways for Nvidia. In one scenario, Nvidia gets exactly what it wants and everyone agrees to the RTX 30 and 40 series GPU prices. Nvidia doesn’t have to take lower than desired profit or loss for RTX 30, and RTX 40 sells for huge margins. . In the other scenario, people balk at prices and old and new cards don’t sell as well as they should, which would be worse than Nvidia simply allowing prices to fall so demand could rise.

The AMD Radeon RX 6900 graphics card hovers against a red and black background from AMD.

Nor can we forget about AMD, which will announce its RX 7000 series GPU on November 3. AMD has been following Nvidia’s lead in price gouging in recent years, and the next-gen RX 7000 series is on TSMC’s cutting edge and expensive 5nm process, which is nearly identical to TSMC’s 4nm process. which uses the RTX 40 series. AMD has every reason not to price the RX 7000 particularly competitively, so Nvidia probably feels pretty confident in its strategy. However, AMD has the power to price the RX 7000 competitively if it wants to, and doing so would be disastrous for Nvidia. Setting prices this high is certainly risky in multiple ways.

Disappointing but predictable

The top of the Nvidia RTX 4080 cooler.

Personally, I’m not surprised by the price of the new Nvidia GPUs. Back in August, I detailed how CPUs and especially GPUs have been getting worse in value improvement each year and how it wasn’t just because of COVID or supply shortages. The RTX 40 series is just the next step in a trend that has been going on for years.

In all likelihood, the trend will continue for years to come and could hurt desktop gaming a lot. We always see reports that desktops are dying and the show is over, and those reports always end up being wrong. But it’s hard not to worry when the cheapest GPU of a new generation is significantly more expensive than the most expensive flagship from just a few years ago.

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