Nvidia forces Swedish retailers to bear the cost of price-reduced graphics cards

There has been talk lately of overflowing layers of graphics cards, as a result of the hysteria surrounding the mining of cryptocurrencies (English mining) has cooled. According to reports, the channels are filled with millions of graphics cards that are not sold and Nvidia has hundreds of thousands of circuits from the architecture Pascal that partner manufacturers do not want to receive.

► The price of graphics cards is expected to fall by 20 percent during the month of July

The overlays and the fact that Nvidia has a new architecture in the pipeline are expected to lead to sharply reduced prices in July, something SweClockers has dug deeper into. The answer to what concerns the Swedish market is not simple. Lower prices are imminent, but to what extent is the big question.

In conversations with resellers, it appears that Nvidia has not provided any general price protection for the current stock of the Nvidia Geforce GTX 1000 series, which means that Swedish stores, despite growing stock, cannot reduce prices. Price protection is something stores normally receive when they buy products and is there to cover either all or part of the amount in price adjustments.

The sources describe Nvidia as an easy company to work with historically, but that the company over the past two to three years has gradually begun to pay less and less attention to its partners. Partly because they have become worse at providing price protection, which is required so that retailers do not have to sell the current stock at a loss. At the same time, Nvidia does not have as good foresight for upcoming launches as before, which makes it difficult for stores to plan their purchases.

The dilemma retailers and distributors face is thus that they are sitting on large stocks of old graphics cards that are difficult to sell. A store representative describes it as one chicken race, where Nvidia, for its part, is waiting until the last minute to make any commitments on price protection. On the other side are the stores, which have no more than a few percent in margin and do not want to depreciate the value of outstanding inventory.

The situation is similar to when the Geforce GTX 900 series was on its way out, but as more extreme. In connection with the transition to the Geforce GTX 1000 series, Nvidia also waited with price protection, which meant that most retailers panicked and dumped their prices and made a crash loss on every graphics card sold.

While price protection shines with its absence, a new feature is that Nvidia comes with what is described as “hidden threats”. Distributors and resellers are urged to buy even more graphics cards from the Geforce GTX 1000 series if they want some decent volumes from the next generation. In this way, stores are forced to buy even more Geforce graphics cards.

The reason why Nvidia is postponing the costs of resellers is believed to be the lack of competition, as Nvidia has had more or free rein in the market since the launch of the Geforce GTX 1000 series. Nvidia’s actions are described as something that has created a lot of badwill and that they may therefore invest extra in AMD the next time the company releases a competitive graphics card.

The question of who should pay to lower the price of graphics cards is just one reason why stocks are growing. Sales of graphics cards are generally worse now than they usually are, which is explained by the fact that the Geforce GTX 1000 series has two years on its neck and that the market for today’s graphics cards is simply starting to saturate.

Overlay delayed Geforce GTX 1100/2000 series

In SweClocker’s talks with resellers, the image is also strengthened that Nvidia has postponed the next generation due to current stock status. Already this spring, Nvidia will have flagged that the next generation will start with the Geforce GTX 1180 or GTX 2080, “depending on what we choose to call the series”, in July. First with the reference design Founder’s Edition to follow up the following month with models from partner manufacturers.

This would be followed by replacements for the Geforce GTX 1070 and GTX 1060 in August and September respectively. Few people know what the plans look like today, but most believe that Nvidia has completely sonic postponed the plans and will launch this trio of graphics cards in the autumn at one-month intervals.

As recently as Computex 2018 in early June, Nvidia’s CEO Jensen Huang made a proposal that the next generation is delayed. In retrospect, it can be seen as an attempt to dampen expectations of an imminent launch, to get customers to buy today’s graphics card instead of waiting for new products.