When the GTX 680 was released last week at $499, many thought that AMD would trim a few bucks off of the HD 7970. Cuts to its $549 price tag yet haven’t happened and if what we hear is true don’t expect any movement on that front — at least not yet.
Before NVIDIA introduced their Kepler architecture, AMD was in a place of dominance within the GPU market. It was an enviable position and as a result we saw enthusiasts begin a headlong rush towards the HD 7970 and HD 7950. Unfortunately, AMD’s production of these $549 and $449 cards wasn’t able to keep up with demand and availability suffered. The GTX 680 rained on that parade in a big way by consistently beating the HD 7970 in performance benchmarks while retailing for “just” $499.
But right before NVIDIA’s momentous launch party something odd happened. After weeks of limited to no availability, AMD’s board partners suddenly –and some would say mysteriously- received large shipments of the Tahiti GPUs they were previously begging for. As a result, the HD 7970 is actually available these days while the GTX 680 consistently sells out in a matter of moments wherever stock can be found.
Naturally, with a performance shortfall that can be measured in double digits, many expected AMD to begin trimming their high end lineup’s prices. From several sources within the industry we now hear that won’t happen unless NVIDIA puts on a full court press against AMD’s entire lineup or the GTX 680’s retail presence drastically improves. You see, due to that sudden influx of HD 7900-series cards a little more than a week ago, the Radeon lineup has the luxury of being widely available and AMD seems to be counting on that to drive sales of their $549 card.
This leads us to a number of possible conclusions. It could be that AMD expected NVIDIA to continue the trend of pricing higher performing cards at a premium and simply wasn’t ready for the GTX 680’s $499 price and associated performance. Among the other possibilities is one that was widely discussed when NVIDIA first introduced Fermi: they just can’t afford to cut the HD 7970’s price. Due to its size and complexity, the Tahiti core is an expensive piece of silicon and availability didn’t improve until a few weeks ago, leaving sales volume well short of where it should have been.
Another problem AMD has is their current pricing scheme which stems directly from somewhat unaggressive pricing. With $100 separating every HD 7900, HD 7800 and HD 7700-series card (with the exception of the HD 7750), reducing the price of one would have a cascade effect upon the entire lineup. For example, dropping the HD 7970 by $50 would effectively render the HD 7950 overpriced, knocking the Tahiti Pro-based card down by $50 would have an adverse effect upon the HD 7870’s sales and so on. It looks more and more like NVIDIA has pushed the high end Radeon lineup into an untenable position for the foreseeable future and with Kepler poised to make the jump into lower price points, things could get ugly if AMD tows the same line.
Nonetheless, the HD 7000-series (particularly in the $250 and higher categories) is highly appealing for gamers in all walks of life and AMD knows this. Standing firm with the HD 7970 saves the rest of their lineup from becoming sacrificial lambs and that makes perfect sense from a business standpoint. Plus, the $549 price won’t stick around forever and is largely dependent on NVIDIA’s next move.
But has this strategy paid off? Through a few well placed sources in the retail chain we hear that backorder queues for the GTX 680 are filling up faster than AMD can sell HD 7900-series cards. At this rate it wouldn’t be surprising to see some retailers shift certain GTX 680 versions to “not available” status until the massive backlog clears. If that happens, AMD’s strategy may actually start paying dividends, especially considering the HD 7970, HD 7870 and HD 7850 are selling like gangbusters.