The fight between AMD and Nvidia for graphics card dominance is certainly getting heated, with AMD admitting that it has weaponized price cuts in a bid to get Nvidia to over-price its graphics cards.
You may remember that the AMD Radeon RX 5700 and Radeon RX 5700 XT were unveiled with prices of $379 (about £300, AU$550) for the Radeon RX 5700 and $449 (about £350, AU$650) for the Radeon RX 5700 XT.
However, when Nvidia launched its GeForce RTX 20 Super series, which includes the RTX 2070 Super and the RTX 2060 Super, AMD cut the prices of the AMD Radeon RX 5700 and Radeon RX 5700 XT to $349 (around £280, AU$500) and $399 (around £320, AU$570) respectively. This made them considerably cheaper than Nvidia’s new RTX 20 Super lineup.
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While many people assumed AMD cut the prices in reaction to Nvidia’s launch, according to Scott Herkelman, AMD’s vice president and general manager for the Radeon division, the price cut was pre-planned in a bit to get Nvidia to over-price its new graphics cards.
The revelation comes in an interview between Herkelman and Hot Hardware, which you can watch below:
According to Herkelman, AMD had a hunch that Nvidia’s large die size on its Turing boards would mean that the company would struggle to cut prices without impacting its margins. “We know that they [Nvidia] have a tremendous burden on their gross margins, because their die size is big, and so we just game-played suggested retail prices.”
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So, it appears AMD put out original prices for its GPUs, then waited to see how Nvidia would price its new graphics cards.
“Then we made the appropriate move not only to deposition their Super series but also to logjam their 2060 and 2070, because we knew that they’re having slower success,” Herkelman reveals. “And we wanted to do a double [bluff], which was not only to block their Super strategy but also slow down their 2060 and 2070.”
If AMD really did use price cuts as a trap for Nvidia, it’s pretty sneaky. AMD has always been quite competitive when it comes to price compared to Nvidia, but it’s remarkable to hear about such a strategy from a senior staff member.
It looks like the move could pay off. Reviews of the RTX 20 Super cards have been largely positive, but many have pointed out how AMD’s cards now offer much better value.
Nvidia, of course, could counter that its RTX Super 20 cards offer better performance than AMD’s, and therefore justify the higher price.
Regardless, it’s enjoyable to see the two competitors fight over our custom, and it should hopefully benefit consumers by resulting in lower prices and more innovative products.
AMD certainly seems to be enjoying it. “It’s been so much fun these last couple of weeks just playing that out,” Herkelman says. “It’s just fun finally to win.”