AMD claims Radeon RX 5700 series pricing was designed to bait Nvidia – Price cut was planned
AMD has claimed its Radeon RX 5700 series price drop hijinks were, in fact, a bait and switch designed to catch Nvidia with its proverbial pants down. The Radeon RX 5700 and Radeon RX 5700 XT were revealed at E3 2019 with price tags of $379 and $449 respectively. Then, right after the launch of Nvidia’s GeForce RTX 20 Super series, AMD slashed these prices down to $349 and $399, offering up a pair of graphics cards with admirable price to performance.
According to AMD’s Scott Herkelman, vice president and general manager for the Radeon division, this wasn’t a reaction to the GeForce Super graphics cards but a pre-planned move designed to bait Nvidia into over-pricing its graphics cards.
He claims AMD was confident the large die size on the Turing boards would leave Nvidia with little room for price cuts without eating into the margins significantly.
“We started modelling different competitive scenarios,” Herkelman said to Hot Hardware during a video interview (the full chat can be viewed here). “Their die size is quite big, and we knew what they could probably afford in terms of margins and pricing and what they were currently pricing their products at.
“We started using this data to say, okay, if they’re starting to see lower sales they’re going to be under tremendous amount of pressure on price, and they’re going to be under a tremendous amount of pressure to figure out what they’re going to do to increase sales once we launch Navi. We know that they have a tremendous burden on their gross margins, because their die size is big, and so we just game-played suggested retail prices.”
With the GeForce RTX 20 Super series then out in the wild, including all the reviews and price to performance comparisons, AMD then chose to announce the slashed prices for the Radeon RX 5700 series just hours before launch.
“The prices that we originally put out, we waited to see what they put out,” continued Herkelman. “And 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. 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. I can’t go into too much more about detail, but it’s been so much fun these last couple of weeks just playing that out. It’s just fun finally to win.”
We’ll have to take his word for it of course, as this could all just be finely executed spin. Nvidia’s take on the matter would probably be that AMD has the inferior performance and wanted to see what it could get away with charging. Once the performance of the RTX Super graphics cards was known, AMD then needed to cut its prices in order to compete.
It’s certainly unusual for a representative to come out and admit such a move, although kudos to AMD as it resulted in a significant swell of traffic and support. Sadly, we’re not privy to the sales figures for AMD or Nvidia, although we’re definitely keen to see whether the RX 5700 series has caused Nvidia any major upsets.