Why Are Nvidia's GeForce RTX GPUs So Expensive?

[Patrick_1966]

I saw the new Tomb Raider and its 40 fps at 4K. I don't care about Ray Tracing. Most of the games I play are not enhanced by ray tracing since most of the scenes and images are not HQ. I want 60fps to 144fps at 4K to go with my 144Hz monitor. if the cards can even give me 60fps at 4k then these really really expensive cards have no value to me at all. I waited two years for nothing. NVidia is completely lost when it claims to understand the gaming market. Now if I was an engineer rendering cars and car parts this owuld be the card for me for my $10K engineering workstation. This is not a gaming oriented card its an engineering graphics card.

 

[redgarl]

From AdoreTV leak, we are talking about 8% increase over a 1080 TI for a 2080 RTX.

It is honestly on par with previous upgrade from Nvidia. People expecting 100-500% performance increase are fools. It is just impossible with actual technology... and especially at 12nm.

It will be another evolution, not a revolution.

 

[drivinfast247]

I saw the new Tomb Raider and its 40 fps at 4K. I don't care about Ray Tracing. Most of the games I play are not enhanced by ray tracing since most of the scenes and images are not HQ. I want 60fps to 144fps at 4K to go with my 144Hz monitor. if the cards can even give me 60fps at 4k then these really really expensive cards have no value to me at all. I waited two years for nothing. NVidia is completely lost when it claims to understand the gaming market. Now if I was an engineer rendering cars and car parts this owuld be the card for me for my $10K engineering workstation. This is not a gaming oriented card its an engineering graphics card.

What monitor do you have that supports that resolution?

 

[TMTOWTSAC]

This article is silly, it begins not admitting that the reason for a price is ultimately the amount of money the seller wants to make! No, instead it gets presented here as a 'real' cost of the technology and materials - which is not true. In fact if you were to see the cost of one of these gpus for Nvidia it would show that materials and production of these barely comes up to 1/5 of their retail price! Similarly an Iphone X costs 1100 in my country while the actual cost of the phone is maybe 100 - the other 1000 is profit for people who did not conceive of it, did not design it and did not manufacture it, they simply move it from market to market. The article passively admits this when it says that partners will sell the product for less than the manufacturer. That gives an inkling of the actual price. If Nvidia sells the 2080 for 699, and partners for less lets say 600, so at 600 they have covered the card, their boxing packaging, advertizing, design of special cooling etc etc etc and they are making a profit!!! So they probably buy at half price - at that price Nvidia is making profit normally so their cost is likely half that. Long story short - the cost is 99 the price is 699 and trying to convince us that it is because of the super high tech is a deliberate misrepresentation of reality.

It isn't really that simple. If Nvidia really has been working on this for 10 years, then that's 10 years worth of R&D expenses to recoup. AIB partners have significantly lower capital investments, and can choose to simply pass on a given product. Hence the dearth of custom Vega64's. And if Nvidia were to undercut the AIB makers, in addition to closing off a much more reliable revenue stream it would mean assuming exponentially more risk. More of their capital would be tied up in inventory for complete boards, rather than just the chips.

As far as the actual materials costs...

https://fudzilla.com/news/graphics/44401-amd-is-losing-100-on-every-vega

https://www.gamersnexus.net/guides/3032-vega-56-cost-of-hbm2-and-necessity-to-use-it

Does all that justify the final price? Perhaps not, R&D will always be a recurring cost, if the company wants to stay in business. Obviously there is going to be markup. But no hardware tech company, not even Apple, is hitting even 50% gross profit margins.

 

[darkomaledictus]

Question is how well do these cards perform in regular testing without ray tracing. Also, what are the benchmarks of the new NVlink setup. Want to see how 2x 2080 TI perform in sli compared to 2x 1080 ti. That will be the real test for those cards. Who cares about ray tracing... its just going to be another "Real hair" feature that stays disabled because it kills the framerate... I have the cards preordered, but if benchmarks are bad these bad boys are getting returned.

 

[littleleo]

I think Nvidia has gotten a bit over confident since they have been all alone at the top with the GTX 1080 Ti. I think they feel they can sell at higher and higher prices w/o issue. The issue I have is I don't see a game out there that requires me to upgrade to one of these cards to play, that I have to have. So these cards better have to offer some very unique abilities or improved performance so those of people willing to pay these exorbitant prices. I know I'm not but we will see what happens.

 

[10tacle]

This article is silly, it begins not admitting that the reason for a price is ultimately the amount of money the seller wants to make! No, instead it gets presented here as a 'real' cost of the technology and materials - which is not true..

It isn't really that simple. If Nvidia really has been working on this for 10 years, then that's 10 years worth of R&D expenses to recoup. AIB partners have significantly lower capital investments, and can choose to simply pass on a given product.

When I read those comments of people whining about a company's profits (any company) and their price structuring, I just shake my head. It's like they think an expensive item that performs as it was intended was cheap to make. Apparently public education on basic business operation expenses is failing us (you can throw in universities as well for that matter). In most free market capitalist industries/business, R&D is the third largest expense behind operational costs (manufacturing including buildings, equipment, power bills, taxes, etc.) and labor.

 

[Martell1977]

When I read those comments of people whining about a company's profits (any company) and their price structuring, I just shake my head. It's like they think an expensive item that performs as it was intended was cheap to make. Apparently public education on basic business operation expenses is failing us (you can throw in universities as well for that matter). In most free market capitalist industries/business, R&D is the third largest expense behind operational costs (manufacturing including buildings, equipment, power bills, taxes, etc.) and labor.

When it comes to economics, I'd say that most people haven't a clue. Even people with college degrees seem to be clueless. It's because people are running themselves by emotion instead of their brains. It's no different than people not understanding that companies don't pay taxes, their customers do and so raising taxes on corporations is really just raising taxes on themselves.

 

[bit_user]

When I read those comments of people whining about a company's profits (any company) and their price structuring, I just shake my head. It's like they think an expensive item that performs as it was intended was cheap to make.

I agree with you, but it doesn't exactly help that these businesses are so tight-lipped. Even in publicly-disclosed SEC-mandated filings, they don't break down costs and expenses in enough granularity that you can often get a detailed understanding of their pricing structure. Of course, there are obvious reasons for their secrecy, but a big down-side is that public feels pricing is far more arbitrary than the reality.

I would certainly welcome sites like Tom's getting more into the financial aspects of these companies and how it's reflected in their product offerings and pricing.

 

[Martell1977]

I agree with you, but it doesn't exactly help that these businesses are so tight-lipped. Even in publicly-disclosed SEC-mandated filings, they don't break down costs and expenses in enough granularity that you can often get a detailed understanding of their pricing structure. Of course, there are obvious reasons for their secrecy, but a big down-side is that public feels pricing is far more arbitrary than the reality.

I would certainly welcome sites like Tom's getting more into the financial aspects of these companies and how it's reflected in their product offerings and pricing.

There are definitely reasons companies keep things like that close to the vest. If people don't understand standard pricing, then they would go through the roof if they saw that there is actually a profit margin on top if the divided expenses. For some odd reason, some people thing companies should only try to break even, as if profits weren't used to hire new talent or further development of products.

I believe the only way to get a more inside track on how the breakdown works would be to work there or be a share holder, but still, there are varying levels of transparency.

 

[10tacle]

It's no different than people not understanding that companies don't pay taxes, their customers do and so raising taxes on corporations is really just raising taxes on themselves.

Yep. That's the premise behind the Fair Tax which got shot down which both sides of the isle rejected in Washington (THAT should tell you something right there). Companies pay taxes indeed as they have to. That $27 Igloo cooler you bought for example may have only cost you $24 at face value if Igloo didn't pass their corporate tax costs along. Now imagine how that money can add up on daily purchases like food. The US has the 4th highest statutory corporate tax rate in the world at 39% (compared to the EU's 18%), but there are still many ignorants out there who deny it.

I agree with you, but it doesn't exactly help that these businesses are so tight-lipped. Even in publicly-disclosed SEC-mandated filings, they don't break down costs and expenses in enough granularity that you can often get a detailed understanding of their pricing structure. Of course, there are obvious reasons for their secrecy, but a big down-side is that public feels pricing is far more arbitrary than the reality.

Well the obvious is the obvious. They are tight-lipped for a reason on that: if they divulge all their trade secrets when it comes to costs and profits, they may lose their competitive advantage over their competitors as said competition would know where said company is cutting costs just as one example. Then you throw in R&D secrets that could be revealed under such mandatory public releasing and it could be disastrous for said targeted company. One could easily connect the dots on very detailed expenditures and run an algorithm and get trade secrets.

If we are going to go down that road, what I think is more critical regarding divulging full expenditure and outlay costs is how government operates. We have a big black hole in that that we'll never see. But we can at least look at our national debt clock increase daily and see that we are definitely NOT making progress when it comes to tax revenue income vs. outlays/expenditures.

After all - that's how career Washington Politicians keep their jobs. You can say the same about state and city municipality governments for that matter. There is no competition nor oversight in government. Yet for some reason the same people whining about corporate profits never seem to whine about their government taking more and more out of their wallets and flushing it down the toilet. I will never understand that useful idiot mentality.

 

[bit_user]

It's no different than people not understanding that companies don't pay taxes, their customers do and so raising taxes on corporations is really just raising taxes on themselves.

You act like these businesses are not-for-profit enterprises. They're not. The impact of taxation typically affects investors, before it affects pricing.

To the extent it affects customers, if companies are able to use public infrastructure and services without paying the full cost, then that amounts to a taxpayer subsidy of the business' customers (also benefiting its investors and potentially employees). Therefore, the correct amount of taxation is for businesses to pay for the tax-funded infrastructure and services they use. Too much taxation will disincentivize investment and dampen economic development. Taxing businesses too little will create market distortions that ultimately leave those of us who do pay our taxes footing an unnecessarily large bill & starving funds from other needed services and infrastructure.

The idea that businesses are somehow special is the problem. They are economic agents, just like the rest of us. Businesses employ people, but so can I. Businesses buy, sell, and make things, but so do I. The only real difference between businesses and the rest of us is that businesses have lobbyists and we don't. Okay, businesses also (often) have overseas investors and customers who gain disproportionate benefit when businesses are subsidized by taxpayers. Even trickle-down economics won't let you off the hook, on that point.

Determining the correct amount of taxation isn't easy, but that doesn't mean it's not worth doing. Creating jobs is generally a good thing, but you always have to ask at what cost.

 

[10tacle]

^^That's all fine and dandy, but why don't we ever hear this much passion from "the people" when it comes to the government, yes, that government taxing these corporations (and us), being held to a microscope of THEIR spending outlays? The second someone talks about capping the budget, suddenly everyone cries and we get a debt ceiling increase every time. The CBO doesn't reveal every detail of federal government spending and costs. And let's not forget that companies don't get debt ceiling raises to prevent a complete shutdown in operation (they are still always fully funded for the most critical expenditures). They go bankrupt if they can't pay their bills just like we do.

 

[bit_user]

^^That's all fine and dandy, but why don't we ever hear this much passion from "the people" when it comes to the government

There's certainly attention and passion around government spending. Do you recall the "sequester", from several years ago?

I agree that there's not enough focus on government spending, especially in the current budget. In the 90's, when the economy was roaring, we actually ran a surplus and paid down the debt. I'm not against cutting taxes, but tax cuts should be paid for, rather than the current in-vogue idea of "cut first, pay later".

that government taxing these corporations (and us), being held to a microscope of THEIR spending outlays?

I'm all for transparency and accountability.

The second someone talks about capping the budget, suddenly everyone cries and we get a debt ceiling increase every time.

The budget and debt ceiling are two different things. The budget gets drafted without regard to the debt ceiling. Then, when it comes time to pay the checks we already wrote, we have to raise the debt ceiling. It's a stupid process that exists for no other purpose than theatrics and use as a deeply fraught bargaining instrument. This is not a normal thing - other countries don't do it, and it makes us look like a bunch of clowns.

Companies don't get debt ceiling raises. They go bankrupt.

Yeah, there are a lot of problems with that analogy. Countries can't go bankrupt. Argentina tried, and it's going very badly for them. What happens when a country borrows too much money is two things:

■ the interest payments swamp too much of the budget, leaving too little for the stuff they need.
■ borrowing becomes much more expensive.

What to do about it comes down to a choice between bad and worse:

■ raise taxes
■ print money

Either way, you risk falling off of a financial cliff. When the economy suffers enough, inflation becomes the only option. As it spirals, as more money is printed to balance the budget. We all know where that leads (see also: Zimbabwe, Venezuela, and now possibly Turkey). It's a one-way ticket to 3rd world status. Very hard to come back. That's why it's one of those things we need to get right. Unfortunately, the long-term problems are the ones we're very bad at dealing with.

People sometimes like to say: "we'll grow our way out", but they assume growth is indefinitely sustainable and that the US dollar will always be the world's reserve currency. What happens if/when people no longer want our dollars and T-bills?

 

[10tacle]

I agree that there's not enough focus on government spending, especially in the current budget. In the 90's, when the economy was roaring, we actually ran a surplus and paid down the debt. I'm not against cutting taxes, but tax cuts should be paid for, rather than the current in-vogue idea of "cut first, pay later".

Uh, no. We never paid down the national debt under the Clinton Administration. We just cut the budget deficit *increase* in spending as if that was awesome. There was a lot of kicking and screaming for even that to happen which is what I was referring to. We keep going up in overall debt for a reason. That's all that matters in our global US dollar credibility.

What to do about it comes down to a choice between bad and worse:

■ raise taxes
■ print money

Or #3, cut spending on non-necessities like we have to do when our credit cards get out of control. Hence, my comment about detailed audits on government spending which under independent government watchdog group studies has proven to waste hundreds of billions (yeah that's with a B). But again, as I stated, the minute someone in the House brings that up in a budget spending bill proposal, suddenly that means old people will die and children will starve in the streets.

Either way, you risk falling off of a financial cliff. When the economy suffers enough, inflation becomes the only option. As it spirals, as more money is printed to balance the budget. We all know where that leads (see also: Zimbabwe, Venezuela, and now possibly Turkey).

Year over year for a long time now the federal government takes in record tax revenue. Yet year over year our national debt grows. See a pattern here? Spending is the problem, not tax revenue and tax cuts which have proven to return money to the private sector to grow the economy (yes, I know, tax cuts will in fact increase the debt when government can't control spending as a give and take balance - key word there - balance).

People sometimes like to say: "we'll grow our way out", but they assume growth is indefinitely sustainable and that the US dollar will always be the world's reserve currency. What happens if/when people no longer want our dollars and T-bills?

The US dollar has been falling in value BECAUSE of our national debt that keeps growing. Creditors don't give out loans to those who have crappy credit and just continue to add on to their credit card debt who don't even pay their minimum monthly payment.

 

[bit_user]

I agree that there's not enough focus on government spending, especially in the current budget. In the 90's, when the economy was roaring, we actually ran a surplus and paid down the debt. I'm not against cutting taxes, but tax cuts should be paid for, rather than the current in-vogue idea of "cut first, pay later".

Uh, no. We never paid down the national debt under the Clinton Administration. We just cut the budget deficit *increase* in spending as if that was awesome. There was a lot of kicking and screaming for even that to happen which is what I was referring to. We keep going up in overall debt for a reason. That's all that matters in our global US dollar credibility.

Well, it sure looks like 2000 at least had a balanced budget:

https://en.wikipedia.org/wiki/National_debt_of_the_United_States#Recent_additions_to_the_public_debt_of_the_United_States

What to do about it comes down to a choice between bad and worse:

■ raise taxes
■ print money

Or #3, cut spending on non-necessities

I was talking about after that.

tax cuts which have proven to return money to the private sector to grow the economy

You have to look at how efficiently they do that. Money that's not taxed doesn't automatically go into productive use. Some of it goes into bidding up commodity prices, which can actually slow economic growth, as when oil prices spiked in 2007-2008. Some of it goes off-shore, and can spur growth in competing economies. And some of it can go to safe harbors like the very Treasury bills issued to fund the tax cut, in the first place. If your goal is to fuel economic growth, then cut taxes specifically on the kinds of investments you want to promote - not a blanket cut on all capital gains.

I'm not arguing against tax cuts - just the idea that there's no such thing as a bad tax cut. Using tax cuts to spur economic growth makes sense when there's a relative lack of investment capital. Otherwise, we should just try to move towards a more fair and equitable tax code, and focus on closing loopholes so that everybody pays their fair share.

 

[Olle P]

Very large chips at a new process => Low yield. => Very expensive.
New memory type in larger quantity. => Expensive.

I don't see much performance increase where raytracing isn't involved, so probably not worth the money initially.

 

[ern88]

I wonder if the 2080 or even the 2070 will be overkill for 1440 144HZ gaming?

 

[loki1944]

Criminey that's getting just too greedy. Might be time to retire from pc gaming if if nvidia keeps molesting customers because they have a monopoly.

 

[Phaaze88]

I can easily afford a 2080ti, but see little reason to get one if later reviews show that it's a small upgrade over the 1080ti I currently have.
Heck, the 2080 looks to be weaker than 1080ti(as far as # of cuda cores is concerned), and costs about as much as the latter card did at launch...

If one isn't obsessed with getting the latest and greatest, this is one of the reasons to get the highest end models: they can allow you to skip a gen or 2, and not miss out on much.
I already learned my lesson with early adoptions... currently using one of the x299 motherboards with the crap vrm heatsink, although, I'm not really pushing it with just a 4.5ghz overclock.

 

[loki1944]

All I am getting from all these posts are that people are upset that they cannot afford them. Not being able to afford new shiny tech is not really a reason to hate on it.

The cost price IS justified if you know anything about electronics and chip manufacturing, and what it takes to do that. The die size is increasing by 65%, which means that the chip alone is that much more expensive to produce. They have put GDDR6 memory in the cards (not cheap) and have built out what is turning out to be a pretty rock solid VRM with an impressive 13 phases (not cheap). On top of that the FE shroud is made from machined aluminum (including the wrap around the the back plate) and is looking rather nice and high quality right along with the AIB partners. Its not your normal cheap plastic reference cards of old.

Its pretty simple though. If you cannot afford it, get something you can afford. Complaining about a product existing because you yourself are broke does not fix your money problem. The cards are selling more than ok. 2 days in and the things are sold out of back ordered for the rest of the year already (2080ti). We still have a whole month to go of people scrambling to pick up these cards too.

IMHO those who want the card, but have decided to not preorder like its some "protest" will regret the move. After what the PC market has been through the last year I expected people to have learned some lessons here... I fully expect those people who refused to get their orders in early enough to get one in the first 5-6 months to be complaining about that too. You can always pre-order and return the darn things unopened if they completely fall flat. That easy.

Those who don't want the cards, or refuse to buy anything from any given company because of some odd bias. These are not for you, and Nvidia doesn't really care about people who wouldn't be their customers no matter what anyway. Opinions of those folks are not worth a whole lot considering their position.

P.S. - "waiting for Navi" will likely work out about as good as "waiting for vega". Raja ran AMD GPUs into the ground, and he will do the same for Intel.

Just because you can afford something doesn't mean you have to be an idiot who gushes over being ripped off.

 

[Olle P]

I wonder if the 2080 or even the 2070 will be overkill for 1440 144HZ gaming?

I think that at best the RTX 2080 Ti might be overkill for 720p with raytracing enabled. At least if you think 50 fps average is good enough.

 

[Rexer]

I wonder if the 2080 or even the 2070 will be overkill for 1440 144HZ gaming?

I think that at best the RTX 2080 Ti might be overkill for 720p with raytracing enabled. At least if you think 50 fps average is good enough.

I think you're right. I think Nvidia's just trying to prove a point. I think they're trying to say, "I'm king of the Hill". -which is O.K. with me because I usually turn down all graphics nunsenses to hasten the pace. I find in 1st person shooter games, the details hide, are somewhat distracting and provide camouflage to opponents in a game. Reducing the pretty and lush details helps take away their advantage and help gpu processing do less work.
In multiplayer, if I were using a RX580 gaming against 1080's and 1080ti's, I'd be in the land of giants. I'd have to do everything in my power to lessen that advantage.

 

[littleleo]

I think Nvidia is worried about this launch. They paid Tom's to write that "just Buy it" piece. They are requiring reviewers sign a 5 year NDA to be able to review the cards early, who does that? A company needing to control the narrative on a product like this. Is usually because the product is not the great product they are saying it is. They don't want the public told the truth on its performance ahead of the launch. Why else all the heavy handedness. I'm advising all my customers to ignore any early posting on specs because of the NDAs and to wait until after launch to get real results from sites that aren't bought and paid for like Tom's.

 

[bit_user]

I think Nvidia is worried about this launch. They paid Tom's to write that "just Buy it" piece.

You really shouldn't sling such accusations without evidence. If there is evidence, then let's see it.

They are requiring reviewers sign a 5 year NDA to be able to review the cards early, who does that?

Referring to this?

https://www.hardocp.com/article/2018/08/28/nvidia_controls_aib_launch_driver_distribution/

Everyone should read it. I even tipped them on patreon for it.

Based on that, a plausible story would be that Nvidia contacted Tom's after they published Why You Shouldn’t Buy Nvidia’s RTX 20-Series Graphics Cards, informing them they would not receive review samples. Avram then published Just Buy It: Why Nvidia RTX GPUs Are Worth the Money as damage control, to try and repair the relationship with Nvidia.

For a site like Tom's, pre-launch review samples of hot products are virtually their lifeblood. So, in this way, I think you could suspect some sort of quid pro quo. I have no evidence to support this, but at least it fits the narrative of Hard OCP's piece about Nvidia maintaining a list of approved reviewers. However, I do not think money literally changed hands between Nvidia and Tom's. That's a big line to cross, and there's no real coming back from it.