Price cuts effect Nvidia, not Partners

Hexus recently posted this little piece of gem, listing the prices Nvidia charges to their partners; pre and post price cuts. Traditionally Nvidia likes to keep atleast a 50-60% profit margin its discrete graphics products, that gives us an idea of how big of a hit the latest round of price cuts are having on Nvidia's bottom line.

Nvidia's Margin
(Click to enlarge)

Note that the 9800GTX based products on the market right now use the 65nm GPU (G92). Once the 55nm GPU (G92b) based 9800 products are on the market, Nvidia will stop taking losses and will make some decent profit on it. As it stands right now, the GTX260's main purpose is not to bleed marketshare to AMD. This is why the transition of the GT200 to 55nm asap is so crucial. They can still afford to have a premium on the GTX280 until the 4870X2 hits retail.

AIB Partner Margin
(Click to enlarge)

In contrast, the margin for Nvidia's AIB (Add-in-board) partner margins havent taken such a nose dive. This is Nvidia's way of protecting their partners and in a way Nvidia is taking the bullet for them. While this might not seem like an intelligent move to their stockholders, it will be beneficial in the long-term. Unlike AMD, Nvidia financials for the last two years have been record-breaking that they can afford these sort of situations. As the graphics industry is very competitive, the slightest of hiccups could become difficult to forget.

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