One of the problems that graphics card manufacturers have is that they are out of touch with reality, since they do not want to admit, due to some strange complex, that their biggest buyers are not professionals who are dedicated to a trade, but are devices for a playful utility. While they can be used in certain markets, sacrificing the PC gaming market for customers with more capital is a mistake. And it is that many users are already making the leap to consoles in reaction to the bad policies of NVIDIA and AMD with the price of their graphics cards.
PlayStation, Xbox and Nintendo sell below the real price
Video game consoles are often sold at a “loss” because the way to make money from them is through game royalties. That is, for each game we buy, whether in physical format or purchased online. Which allows the price of the video game console to be much lower. The level of subsidy on the real price? Well, it depends on the hardware, but we can count between €100 and €200, although we really don’t know the exact figure.
Of course, a video game console includes more things than a graphics card, among other things we have to take into account that: a console is a complete computer, while a graphics card is not. Although the latter have larger GPU chips and performance capacity. If we take into account the rest of the elements that a console has and not a graphics card, then the difference in cost ends up being offset and the dedicated video game system ends up having a higher cost for the manufacturer and this is where we get into the big problem. . In other words, greed breaks the bag.
Why is the price of graphics cards so high?
In the price of graphics cards there are several participants that end up affecting their final cost.
- On the one hand, the designer who are AMD, Intel or NVIDIA. They design the chip, but do not manufacture it.
- The foundry or chip factory, which can be TSMC, Samsung and even Intel. What they do is manufacture the chip and sell it to the designer.
- The graphics memory vendor.
- The assembler of the card, which are brands like ASUS, GIGABYTE, etc. Which are responsible for mounting the graphics card with all its components.
Each and every one of them and without counting wholesalers and retailers, have to take their share of the slice and it will not be exactly small. The problem comes from the fact that NVIDIA, Intel or AMD do not sell you the graphics card, but rather they sell the components to assemble it to the assemblers, so there is an additional level of added cost. Suppose we are ASUS and we want to build an RTX 4070, because NVIDIA is going to sell us a PCB that will include the GPU and VRAM memory at the price they want.
Put another way, when you buy a GeForce or Radeon, you’re paying the brand of graphics card, the exception being things like NVIDIA’s Founder Edition. If you add to this that neither party has the ability to subsidize the hardware as it happens in consoles, it is normal for the cost to increase.
The dark secret of the price of consoles
So far good, but the financing of hardware through games and services is not the only secret behind video game consoles, but the fact that the cost structure is different. If we think regarding it, console manufacturers should be the equivalent of assemblers, but what happens is that they pay for an exclusive design, for which AMD, NVIDIA or AMD will take a royalty per unit sold, but it will be their own console creator who asks to build the chip.
Let’s see, a comparison with the real world:
- The chip designer would be the architect.
- The manufacturers of the GPU and memory would be the builders and contractors.
- The final assembler would be in charge of giving the final touches and selling the house.
The difference would be that in consoles the architect sells the plans to the manufacturer of the console and he is in charge of hiring the people to build the house. On the other hand, in PC we have that the architect is also a builder and sells the components of the graphics card to the assembler. Causing a huge rise in the final price of it.
The trick to raise the price of graphics cards
It can take days, weeks, or even months for a store to sell a graphics card, but as long as it doesn’t sell, it will continue to be a liability on their accounts. What happens when two generations of graphics cards coincide in time and you can’t reduce the price of the older one? Well, the one that is younger is going to have a much higher price due to its performance, which creates a dangerous precedent.
Quite simply, there is a lack of control between the launch of new models and what exists on the market, which serves as a ruse to launch increasingly expensive hardware. The problem is that this is a ruse to keep the price of graphics cards as high as possible and we cannot forget that the end user has a purchasing power and that video game consoles compete for the interest of the end user. They are not the best products, but the public does not go to the most expensive restaurant in the city every weekend and that is for a reason.
