Do Xilinx Fix Their Prices?

[Steve]

I've been looking for historical prices of FPGAs to try and get an
idea of what I might expect to get for a given price for small
quantities and came across this post:

http://tinyurl.com/36blb

which has a price table for small quantities (<=25) for January 2000:

Spartan
XCS05 3PC84C 10.00
XCS10 3PC84C 18.10
XCS20 3PQ208C 40.40
XCS30 3PQ208C 45.35
XCS40 3PQ208C 49.15

Virtex
XCV50 4PQ240C 55.40
XCV100 4PQ240C 104.00
XCV150 4PQ240C 128.00
XCV200 4PQ240C 157.00
XCV300 4PQ240C 244.00
XCV400 4HQ240C 344.00
XCV600 4HQ240C 581.00
XCV800 4HQ240C 860.00


I compared the above prices with the prices on these web pages, that I
assume are up to date because they stock up to date chips:

Spartan: http://www.plis.ru/price.html?ID=121
Virtex: http://www.plis.ru/price.html?ID=111

and all of the prices on the Russian website are exactly the same
price today as they were from a different supplier in January 2000.

Why are they exactly the same price?

Do Xilinx tell their resellers what to charge? And if so, isn't this
illegal?

Also, why is there such an enormous price difference per part between
massive quantities and smaller quantities? Xilinx make X million of
part Y, so why do they charge so many hundred percent higher prices
for small quantities than very large quantities?

As there is such a huge difference in prices between large and small
quantities, why isn't there a supplier that buys largish quantities to
sell in smaller quantities so that the supplier makes a profit and the
purchaser of small quantities gets chips cheaper?

Also, what does happen to FPGA prices over time? Do they just reach a
final value and they never get any cheaper? That would explain why
prices would be very similar in 2000 and 2004, but not why they're
identical. You can get a Spartan 2E XC2S150E-6PQ208C for $20.45 from
the above Russian website today. What might you expect to be able to
get for $20 in, say, 2 years' time?

--
Steve

 

[Austin Lesea]

Steve,

As for older parts, they do not get any less expensive to make. So the
price drops until the yields are stable, and then stops dropping.
Happens to everyone. At some point, they get more expensive to make as
their quantities go down, and the fab line equipment gets more expensive
to run (obsolete processes). That is why we send out notices for the
end of life of a product (eventually).

That is also why we then go to a new and less expensive technology as
soon as we can! If we can make an FPGA for less, our business increases
as the number of applications that can afford FPGAs increases.

If the ASIC business had 20,000 ASIC starts in a 20 billion dollar
market three years ago, and only 2000 starts least year, you can easily
see where increased business for FPGAs comes from.

The parts you mention here, in Peter's scale of FPGA 'life' of 15 years
for every 1 year makes these parts very old (>90 years) and just plain
old (75 years). Definitely parts that are in the "retired" phase (still
playing golf actively, but not recommended for new designs).

As for why things cost less in quantity, that is Econ 101 (for non majors).

Austin

 

[Peter Alfke]

Let me answer some of your questions:
The IC business is not so much different from other businesses.
We ( i.e. any IC manufacturer, this is all not Xilinx-specific) sell
largely through distributors, who are independent companies. We tell
them a recommended retail price ( in the US auto stores this is called
MSRP), but -just like the car salesman- they can sell it for any price
they think is appropriate to optimize their profit. (Same as every
grocery store does, too)
Selling in large quantity is always cheaper than selling in small
quantity. The world is full of examples.
Somewhat unique to the IC business is the fast-paced innovation that
allows us to make better and faster new chip designs at ever lower price
per function. But that is due to smaller geometries, larger wafers,
better defect density etc.
Once a specific device has been in production a few years, there is
little chance to lower its manufacturing cost, once the ramp-up problems
are overcome, the yield has been stabilized and the testing effort has
been optimized.
The cost per quare inch of silicon is not going down. Cost reduction
comes from smaller geometries and thus higher packing densities possible
in the new designs.
That's why you see no cost reductions for mature chips. Real old ones
actually go up in price, as their manufacturing volume decreases. (You
pay more for a 74161 today than we did 30 years ago).
This is a very competitive business.

Peter Alfke


Steve wrote:

I've been looking for historical prices of FPGAs to try and get an
idea of what I might expect to get for a given price for small
quantities and came across this post:

http://tinyurl.com/36blb

which has a price table for small quantities (<=25) for January 2000:

Spartan
XCS05 3PC84C 10.00
XCS10 3PC84C 18.10
XCS20 3PQ208C 40.40
XCS30 3PQ208C 45.35
XCS40 3PQ208C 49.15

Virtex
XCV50 4PQ240C 55.40
XCV100 4PQ240C 104.00
XCV150 4PQ240C 128.00
XCV200 4PQ240C 157.00
XCV300 4PQ240C 244.00
XCV400 4HQ240C 344.00
XCV600 4HQ240C 581.00
XCV800 4HQ240C 860.00

I compared the above prices with the prices on these web pages, that I
assume are up to date because they stock up to date chips:

Spartan: http://www.plis.ru/price.html?ID=121
Virtex: http://www.plis.ru/price.html?ID=111

and all of the prices on the Russian website are exactly the same
price today as they were from a different supplier in January 2000.

Why are they exactly the same price?

Do Xilinx tell their resellers what to charge? And if so, isn't this
illegal?

Also, why is there such an enormous price difference per part between
massive quantities and smaller quantities? Xilinx make X million of
part Y, so why do they charge so many hundred percent higher prices
for small quantities than very large quantities?

As there is such a huge difference in prices between large and small
quantities, why isn't there a supplier that buys largish quantities to
sell in smaller quantities so that the supplier makes a profit and the
purchaser of small quantities gets chips cheaper?

Also, what does happen to FPGA prices over time? Do they just reach a
final value and they never get any cheaper? That would explain why
prices would be very similar in 2000 and 2004, but not why they're
identical. You can get a Spartan 2E XC2S150E-6PQ208C for $20.45 from
the above Russian website today. What might you expect to be able to
get for $20 in, say, 2 years' time?

--
Steve

 

[Larry Doolittle]

In article <4022ACEF.80E375D4@xilinx.com>, Peter Alfke wrote:

The IC business is not so much different from other businesses.

Well, not many other businesses see their products' performance/cost
increase exponentially with time.

[ snip lots of stuff I actually agree with. ;-) ]

Once a specific device has been in production a few years, there is
little chance to lower its manufacturing cost, once the ramp-up problems
are overcome, the yield has been stabilized and the testing effort has
been optimized.

I don't doubt this is true, but it only covers the supply half
of the equation. You also have to look at the demand side,
because if a successful business model demanded cost reductions,
that could probably be arranged on the supply side.

Once an FPGA has been designed into a circuit, engineering
costs of changing to a different part are high (and has non-zero
risk -- management hates that!). This is a natural form of
"lock-in", or monopoly. So, without multi-vendor competition
for an existing chip footprint, and prices _can_ stay unnaturally
"high" (or in this case, not drop).

Where competition does kick in is for _new_ designs, which
(duh) involve _new_ parts. Here the competition is, as Peter
wrote, fierce. "Design wins" are a very big deal to both brand
A and X. After a brief period of (they hope) high volume,
high profile success -- part of which is leading-edge cost
effectiveness from the buyer's perspective -- the business system
settles down to the operating scenario of the previous paragraph.

So the fundamental difference between FPGAs and, say, SRAM
(that leads to the effect that Steve noted and found unnatural),
is the lack of cross-vendor competition for pin-compatible parts.

- Larry

 

[Kolja Sulimma]

Austin, there also is another effect:
I do not recall that nuhorizons for example ever changed the prices
listed on their website for any FPGA. I see a similar effect when
asking for low quantity quotes with insight in germany.

But when the chips get older, it becomes easier to make the distri
agree on a lower price for medium quantities.

For short: The distributors buy at lower prices over the lifetime of a
an FPGA but this does not mean that they change the price lists.

Kolja Sulimma

 

[Steve]

Austin Lesea <austin@xilinx.com> wrote in message news:<bvu1ml$7s71@cliff.xsj.xilinx.com>...

Steve,

As for older parts, they do not get any less expensive to make. So the
price drops until the yields are stable, and then stops dropping.
Happens to everyone. At some point, they get more expensive to make as
their quantities go down, and the fab line equipment gets more expensive
to run (obsolete processes).

So why are the prices *identical* to the cent, at different suppliers,
in different countries, 4 years apart?

That is also why we then go to a new and less expensive technology as
soon as we can! If we can make an FPGA for less, our business increases
as the number of applications that can afford FPGAs increases.

As for why things cost less in quantity, that is Econ 101 (for non majors).

I must have missed Econ 101, so could you explain why there's such an
enormous difference in price between the following?:

From:

http://www.ebnonline.com/showArticle.jhtml?articleID=4400089&_loopback=1

XC2S400E & XC2S600E for $27 and $45, respectively, in 250,000-unit
quantities, end 2002, and from:

http://www.plis.ru/price.html?ID=124

the cheapest you can get them for is $55.45 and $170.00 respectively,
for <100 units.

When we did accounts at uni we were taught that the larger the batch
size the cheaper the product is because you spread the manufacturing
setup charges across more units, but Xilinx aren't going to do a batch
size of 100 for an order or 100 units. Distribution costs can't be
much either because it only costs ~$9 to get a book sent to teh UK
from amazon.com. The cost of wages for sales people is a fixed cost
anyway, and the cost of the silicon itself is a variable cost which is
independent of the batch size if you take the manufacturing setup
costs separately.

So why are your small quantity prices so inflated?


--
Steve

 

[Austin Lesea]

Steve,

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.

See below,

Austin

Steve wrote:

Austin Lesea <austin@xilinx.com> wrote in message news:<bvu1ml$7s71@cliff.xsj.xilinx.com>...

Steve,

As for older parts, they do not get any less expensive to make. So the
price drops until the yields are stable, and then stops dropping.
Happens to everyone. At some point, they get more expensive to make as
their quantities go down, and the fab line equipment gets more expensive
to run (obsolete processes).



So why are the prices *identical* to the cent, at different suppliers,
in different countries, 4 years apart?

They use the "manufacturer's suggested retail price." As mentioned,
these were very old parts, and the pricing was now stable.

That is also why we then go to a new and less expensive technology as
soon as we can! If we can make an FPGA for less, our business increases
as the number of applications that can afford FPGAs increases.

As for why things cost less in quantity, that is Econ 101 (for non majors).



I must have missed Econ 101, so could you explain why there's such an
enormous difference in price between the following?:

From:

http://www.ebnonline.com/showArticle.jhtml?articleID=4400089&_loopback=1

XC2S400E & XC2S600E for $27 and $45, respectively, in 250,000-unit
quantities, end 2002, and from:

http://www.plis.ru/price.html?ID=124

the cheapest you can get them for is $55.45 and $170.00 respectively,
for <100 units.

When we did accounts at uni we were taught that the larger the batch
size the cheaper the product is because you spread the manufacturing
setup charges across more units, but Xilinx aren't going to do a batch
size of 100 for an order or 100 units.

You learned the right stuff. Still applies. If a disti orders 100
parts (and they do) we have to process just that many parts for that one
order. Disti's don't want to stock anything anymore, so that makes
costs go.

Imagine Xilinx' dilemma: what do we build? and when do we build it?
If we have an order for 100K parts spread out over a year, everything is
trivial, and less costly. But if we have seemingly random orders
popping in all of the time, we have to build ahead (risk) and sometimes
scrap parts that are not moving.

If you have any optimism about your business at all, it would be best to
enter into a agreement and let the disti (and us) know where you think
you are going, and how many you will need.


Distribution costs can't be

much either because it only costs ~$9 to get a book sent to teh UK
from amazon.com. The cost of wages for sales people is a fixed cost
anyway, and the cost of the silicon itself is a variable cost which is
independent of the batch size if you take the manufacturing setup
costs separately.

We can't seem to convince disti's to work for free, however, so they
charge what they feel they need to in order to make a profit. Disti's
also have 200+ FAEs of their own on their payrolls to support their
products, as well as order entry systems, stocking(?), unsold inventory,
stocking losses, uncollectable accounts (deadbeats), etc.

As for the book business, I was an author, and if an author gets 1 cent
on their book, they are lucky. Ruthless business, with all of the money
going to the publisher and retailers. Like perfume, or music CDs, cost
of book: $3, price of book $75...... the $9 shipping is a complete
rip-off, they already made their profit, now they are icing their cake.

So why are your small quantity prices so inflated?

Because they are a fair representation of the costs associated with
small numbers of parts ordered through distribution to allow for a
profitable business by the distis and reps. They also represent the
unwillingness of a customer to enter into a contract which would allow a
scheduled delivery of parts over the long term, which is where the real
savings start to kick in.

You commit, we commit. You do not commit, we supply product at a fair
price based on the fact that you will go away after the one order.

--
Steve

 

[Peter Alfke]

As Larry points out correctly, the real battleground is for the new design-in.
But that is not only over price, availability, and features.
Whenever the two competitors ( it's mainly the X vs A battle) look equal
or similar, then other factors come in: Previous good ar bad experience
with pricing, quality, and support, both commercially and technically,
hardware and software.
That's why we at Xilinx put a lot of effort into technical support, and
that's why we are so attentive in this ng. The hearts and minds of the
user (customer) can only be won over and then kept by offering and
maintaining a "positive experience".
Nobody is perfect, but we really try...
Peter Alfke
============
Larry Doolittle wrote:

I> Where competition does kick in is for _new_ designs, which
(duh) involve _new_ parts. Here the competition is, as Peter
wrote, fierce. "Design wins" are a very big deal to both brand
A and X. After a brief period of (they hope) high volume,
high profile success -- part of which is leading-edge cost
effectiveness from the buyer's perspective -- the business system
settles down to the operating scenario of the previous paragraph.
- Larry

 

[Thomas Womack]

In article <c00e21$77m1@cliff.xsj.xilinx.com>,
Austin Lesea <austin@xilinx.com> wrote:

Steve,

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.

I've often priced the parts for building a computer, and they add up
to something within 15% of the price of buying the computer from Dell.
Moreover, the price for Intel CPUs in the shop is the same to within
about 15% as the price stated for thousand-unit quantities in their
press releases.

I believe FPGAs are comparably complicated to Intel CPUs, and I don't
think there's as much as an order of magnitude difference in production
quantity.

Is the market volatility for FPGAs that much greater?

If you have any optimism about your business at all, it would be
best to enter into a agreement and let the disti (and us) know where
you think you are going, and how many you will need.

I can understand that attitude for people buying ten thousand chips;
but where do you expect people to get the experience with FPGAs that
they have with microprocessors, when state-of-the-art FPGAs are two
orders of magnitude more expensive and an order of magnitude less
convenient to acquire?

Because they are a fair representation of the costs associated with
small numbers of parts ordered through distribution to allow for a
profitable business by the distis and reps.

But, again, why doesn't the same argument apply to CPUs, for which
there are half a dozen distributors in most towns, fairly happily
distributing the things for a couple of percent profit margin.

Tom

 

[Rene Tschaggelar]

Thomas Womack wrote:

In article <c00e21$77m1@cliff.xsj.xilinx.com>,
Austin Lesea <austin@xilinx.com> wrote:

Steve,

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.


I've often priced the parts for building a computer, and they add up
to something within 15% of the price of buying the computer from Dell.
Moreover, the price for Intel CPUs in the shop is the same to within
about 15% as the price stated for thousand-unit quantities in their
press releases.

I believe FPGAs are comparably complicated to Intel CPUs, and I don't
think there's as much as an order of magnitude difference in production
quantity.

Is the market volatility for FPGAs that much greater?

An Intel cpu doesn't cost 4.70$ on whatever quantity.
And the margin on intel cpus is sufficient on all levels.

If you have any optimism about your business at all, it would be
best to enter into a agreement and let the disti (and us) know where
you think you are going, and how many you will need.


I can understand that attitude for people buying ten thousand chips;
but where do you expect people to get the experience with FPGAs that
they have with microprocessors, when state-of-the-art FPGAs are two
orders of magnitude more expensive and an order of magnitude less
convenient to acquire?

The cost is at the FPGA representative, distributing the stuff.
They get the questions asked.

Because they are a fair representation of the costs associated with
small numbers of parts ordered through distribution to allow for a
profitable business by the distis and reps.


But, again, why doesn't the same argument apply to CPUs, for which
there are half a dozen distributors in most towns, fairly happily
distributing the things for a couple of percent profit margin.

You say it. There are half a dozend shop selling cpus per town.
You go there, get a cpu, no questions asked, no questions answered.
They wouldn't be able to answer anyway.


There may be one FPGA representaive per state. And you ask a lot of
questions. Not because you're more stupid than a cpu buyer, but
because placing a cpu and applying an FPGA are completely different.

Rene

 

[Kolja Sulimma]

Austin Lesea wrote:

You learned the right stuff. Still applies. If a disti orders 100
parts (and they do) we have to process just that many parts for that one
order.

Buying XC2V6000 at nuhorizons I get a 600$ discount going from 24
pieces to 100 pieces.
You really think that there are than 14.000$ distribution cost for
distributing 24 FPGAs? (24 times 600$)

Disti's don't want to stock anything anymore, so that makes
costs go.

Imagine Xilinx' dilemma: what do we build? and when do we build it?
If we have an order for 100K parts spread out over a year, everything is
trivial, and less costly. But if we have seemingly random orders
popping in all of the time, we have to build ahead (risk) and sometimes
scrap parts that are not moving.
[...]

We can't seem to convince disti's to work for free, however, so they
charge what they feel they need to in order to make a profit. Disti's
also have 200+ FAEs of their own on their payrolls to support their
products, as well as order entry systems, stocking(?), unsold inventory,
stocking losses, uncollectable accounts (deadbeats), etc.

Austin: Some of these are self made problems.
In germany for example Avnet and Insight are the only Xilinx
distributors for your FPGAs. These are huge distributors that have an
organization tailored for large customers with large orders.
(My last insight order involved about a dozen emails from me and
three letters from Insight. I can see that that is costly, but it is
unecessary)

Both are reluctant to even talk to me about 2.000€ orders and I have
prove that they outright lied to me about stock at least twice.

Why don't you get yourself a small distributor in addition to these?
One without hundreds of FAEs. Without trade fair appearances that cost
hundreds of thousands of dollars. One that is happy to stock a number
of standard parts and make a 30% profit with them?

Kolja Sulimma

 

[Eric Smith]

Austin wrote:

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.

Thomas Womack <twomack@chiark.greenend.org.uk> writes:

I've often priced the parts for building a computer, and they add up
to something within 15% of the price of buying the computer from Dell.

You may have priced the subassemblies such as the motherboard, CD-ROM
drive, etc. Try pricing the actual components (chips, passives, etc.) in
small quantity. You'll be lucky if you can get a total BOM cost less
than five times Dell's price.

The car example is even better. If you buy all the parts from Toyota (or
any of the manufacturers) to assemble a new car, you'll pay ten times
the price of the car.

Moreover, the price for Intel CPUs in the shop is the same to within
about 15% as the price stated for thousand-unit quantities in their
press releases.

This is because the distribution chain is willing to accept very low
margins on the CPUs, because they can move such high volume. Try buying
a north bridge chip and see how that experience compares.

 

[Tim]

Austin Lesea wrote:

We can't seem to convince disti's to work for free

So why don't you sell off your web pages for people
who don't want FAE support and the rest?

 

[Austin Lesea]

Kolja,

Now you bring up another interesting factor: are we interested in small
business, or big business, or both? Are our distributors interested in
small business, big business, or both?

I think everyone would say they are interested in ALL business, but...

Not so much different than when you go to a store, buy one can of
Coca-Cola, and then ask for a discount, and help with your other bags as
you leave the store.....not to mention you would like it a little
colder, please.

Do you go to the store often? Is your business worth it? Are they
losing money for such a small service? Serious questions.

Small business is not afraid to innovate, and sometimes wildly
suceeds(or at least they do here in Silicon Valley on occasion).

I remember a paper by a certain tiny company on networking in San
Francisco in 1988 that was laughed at by the attendees of the conference
(it was Cisco -- who is laughing now?).

Austin

 

[Jon Elson]

Steve wrote:

I've been looking for historical prices of FPGAs to try and get an
idea of what I might expect to get for a given price for small
quantities and came across this post:

http://tinyurl.com/36blb

which has a price table for small quantities (<=25) for January 2000:

Spartan
XCS05 3PC84C 10.00
XCS10 3PC84C 18.10
XCS20 3PQ208C 40.40
XCS30 3PQ208C 45.35
XCS40 3PQ208C 49.15

Virtex
XCV50 4PQ240C 55.40
XCV100 4PQ240C 104.00
XCV150 4PQ240C 128.00
XCV200 4PQ240C 157.00
XCV300 4PQ240C 244.00
XCV400 4HQ240C 344.00
XCV600 4HQ240C 581.00
XCV800 4HQ240C 860.00

I just got some XCS30-3TQ144C for $24, although there was another

broker who assured me that $67 was a really great price for them.
(Yeah, a really great price for HIM!)

I also got a quote a while ago for these parts from a Chinese
supplier that was so low, they had to be either bootlegged or
Chinese copies of the Xilinx part. I decided not to buy from that
supplier, as they wanted a bank wire transfer in advance, too.

Also, what does happen to FPGA prices over time? Do they just reach a
final value and they never get any cheaper?
No, they get more expensive! I have found that the prices of 5 V

Spartan chips is going UP, and maybe going up wildly! (Like the
guy who though I'd pop for the $67 chips.)

Jon

 

[Andy Peters]

news@sulimma.de (Kolja Sulimma) wrote in message news:<b890a7a.0402061442.675b0195@posting.google.com>...

In germany for example Avnet and Insight are the only Xilinx
distributors for your FPGAs. These are huge distributors that have an
organization tailored for large customers with large orders.
(My last insight order involved about a dozen emails from me and
three letters from Insight. I can see that that is costly, but it is
unecessary)

Avnet and Insight are the two biggies here in the states, too, and
you're right -- they don't wanna talk to you unless you're buying
multiple trays. Nu Horizons does have some stock of CoolRunners and I
was able to buy a handful, but maybe I just got lucky.

Arrow is usually much better about smaller quantities, but they don't
handle Xilinx.

DigiKey has a very limited stock of Xilinx stuff: smaller 95xx CPLDs
(all CoolRunner stuff is non-stock, mutliples of a tray), old XC3K and
XC4K parts (still very expensive, but if you need 'em they got 'em).
They do have some Spartan 2 stuff, but it's really hit or miss.
DigiKey really oughta be selling the CoolRunners.

Why don't you get yourself a small distributor in addition to these?
One without hundreds of FAEs. Without trade fair appearances that cost
hundreds of thousands of dollars. One that is happy to stock a number
of standard parts and make a 30% profit with them?

Or just let us buy small (prototype) quantities direct from Xilinx!
Yeah, X offers only three CoolRunner parts, 32 (real cheap), 64
(cheap) and 384 (expensive)! I actually didn't care too much that the
384 was expensive, but my design needed only a 128 and the 384 isn't
available in the package I wanted.

Yeah, yeah, yeah, complain complain complain. It's great if you have
a relationship with a distributor, but once they find out that you
only want to build a handful of prototypes or whatever, they're not
interested. There has to be a way for the small garage shop guys to
get parts.

--a

 

[Steve]

Austin Lesea <austin@xilinx.com> wrote in message news:<c00e21$77m1@cliff.xsj.xilinx.com>...

Steve,

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499!

I don't know about the US PC prices, but in the UK you can make your
own PC for not that much more than you buy a new ready-built PC from a
shop. Compare that to Xilinx where small quantities are a few hundred
percent more expensive than in large quantities.

Or even your car, just go price the parts
individually some time.

It's called mass production. I thought someone who works at Xilinx
would have heard of mass production?

Steve wrote:

Austin Lesea <austin@xilinx.com> wrote in message news:<bvu1ml$7s71@cliff.xsj.xilinx.com>...

Steve,

As for older parts, they do not get any less expensive to make. So the
price drops until the yields are stable, and then stops dropping.
Happens to everyone. At some point, they get more expensive to make as
their quantities go down, and the fab line equipment gets more expensive
to run (obsolete processes).



So why are the prices *identical* to the cent, at different suppliers,
in different countries, 4 years apart?

They use the "manufacturer's suggested retail price." As mentioned,
these were very old parts, and the pricing was now stable.

You use the example of car prices above, and it's interesting to note
that in the UK some of the big car companies were found guilty of
price-fixing because they were applying pressure to their dealerships
to sell at the price the car manufacturer wanted them to sell at, and
if the dealership disobeyed the manufacturer then they faced losing
the ability to sell their cars.

This sounds awfully similar to the Xilinx pricing policy...

When we did accounts at uni we were taught that the larger the batch
size the cheaper the product is because you spread the manufacturing
setup charges across more units, but Xilinx aren't going to do a batch
size of 100 for an order or 100 units.

You learned the right stuff. Still applies. If a disti orders 100
parts (and they do) we have to process just that many parts for that one
order. Disti's don't want to stock anything anymore, so that makes
costs go.

Take the other end of the scale; what about your highest volume chips?
Unless your production managers are extremely bad at planning then
you're never going to do make 100 parts when that part sells X million
per annum. But all your, say, Spartan IIE chips seem to follow a nice
monotonically increasing price vs size graph for a single package
type. Why? Because there seems to be very few distributors, so there's
little competition, and no true competition if Xilinx order the
distributors to sell the products at set prices.

Imagine Xilinx' dilemma: what do we build? and when do we build it?
If we have an order for 100K parts spread out over a year, everything is
trivial, and less costly. But if we have seemingly random orders
popping in all of the time, we have to build ahead (risk) and sometimes
scrap parts that are not moving.

Yes, but the fastest selling chips are still expensive in small
quantities.

If you have any optimism about your business at all, it would be best to
enter into a agreement and let the disti (and us) know where you think
you are going, and how many you will need.

What about companies that are starting off? It just seems that if
you're a big company that can place vast orders then you're alright;
if you're small then you're not interested.

Distribution costs can't be
much either because it only costs ~$9 to get a book sent to teh UK
from amazon.com. The cost of wages for sales people is a fixed cost
anyway, and the cost of the silicon itself is a variable cost which is
independent of the batch size if you take the manufacturing setup
costs separately.

We can't seem to convince disti's to work for free, however, so they
charge what they feel they need to in order to make a profit.

Do they though? Or do Xilinx have a say in the prices?

Disti's
also have 200+ FAEs of their own on their payrolls to support their
products, as well as order entry systems, stocking(?), unsold inventory,
stocking losses, uncollectable accounts (deadbeats), etc.

As for the book business, I was an author, and if an author gets 1 cent
on their book, they are lucky. Ruthless business, with all of the money
going to the publisher and retailers. Like perfume, or music CDs, cost
of book: $3, price of book $75...... the $9 shipping is a complete
rip-off, they already made their profit, now they are icing their cake.

Books are a good example of mass production though because bestsellers
sell at Ł5 or less, whereas slow selling books like niche engineering
books sell at very high prices. You don't see this kind of thing with
Xilinx's prices though because despite some of your fastest selling
chips selling hundreds or thousands of times faster than your slower
selling chips the price vs size curve of the chips is monotonic.

So why are your small quantity prices so inflated?


Because they are a fair representation of the costs associated with
small numbers of parts ordered through distribution to allow for a
profitable business by the distis and reps.

Compare that with bestselling books, which are cheap wherever you go,
from the biggest to the smallest booksellers. This seems to be the
biggest problem, because there seems to be so few places that you can
buy Xilinx parts from in small quantities that they can effectively
charge whatever they want. And from some of the posts to this and the
other thread it seems that the distributors aren't interested at all
in small quantities, so they price them at levels that discourage
people to buy in small quantities.

You have to wonder whether Xilinx limits the number of suppliers in
order to keep prices artificially high?

They also represent the
unwillingness of a customer to enter into a contract which would allow a
scheduled delivery of parts over the long term, which is where the real
savings start to kick in.

When do the "real savings start to kick in"? When you order 50,000 per
annum? How can start-up companies do this?


--
Steve

 

[Steve]

Rene Tschaggelar <none@none.net> wrote in message news:<402405f0$0$714$5402220f@news.sunrise.ch>...

I can understand that attitude for people buying ten thousand chips;
but where do you expect people to get the experience with FPGAs that
they have with microprocessors, when state-of-the-art FPGAs are two
orders of magnitude more expensive and an order of magnitude less
convenient to acquire?

The cost is at the FPGA representative, distributing the stuff.
They get the questions asked.

Xilinx have a revenue of $1.2bn according to this:

http://finance.yahoo.com/q/is?s=xlnx

Are you seriously trying to say that the cost of an FPGA
representative being asked questions has anything other than a
negligible effect on the prices of FPGAs?

But, again, why doesn't the same argument apply to CPUs, for which
there are half a dozen distributors in most towns, fairly happily
distributing the things for a couple of percent profit margin.

You say it. There are half a dozend shop selling cpus per town.
You go there, get a cpu, no questions asked, no questions answered.
They wouldn't be able to answer anyway.

You don't expect such shops to be able to answer your questions, but
the problem is that there just aren't any shops that you can buy FPGAs
from.

There may be one FPGA representaive per state. And you ask a lot of
questions. Not because you're more stupid than a cpu buyer, but
because placing a cpu and applying an FPGA are completely different.

See above.


--
Steve

 

[Steve]

Eric Smith <eric-no-spam-for-me@brouhaha.com> wrote in message news:<qhvfmjde2i.fsf@ruckus.brouhaha.com>...

Austin wrote:
Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.

Thomas Womack <twomack@chiark.greenend.org.uk> writes:
I've often priced the parts for building a computer, and they add up
to something within 15% of the price of buying the computer from Dell.

You may have priced the subassemblies such as the motherboard, CD-ROM
drive, etc. Try pricing the actual components (chips, passives, etc.) in
small quantity. You'll be lucky if you can get a total BOM cost less
than five times Dell's price.

The total BOM cost in small quantities is irrelevant because you can
buy motherboards from as little as Ł40 (~$60) in the shops. The issue
is that if you buy Xilinx parts in large quantities then you're
alright, if you don't buy in large quantities then you have to put up
with high unit prices so those that want to buy high volume chips in
small quantities don't benefit from the economies of scale for these
parts.


--
Steve

 

[Rene Tschaggelar]

Steve wrote:

Rene Tschaggelar <none@none.net> wrote in message news:
402405f0$0$714$5402220f@news.sunrise.ch>...

I can understand that attitude for people buying ten thousand chips;
but where do you expect people to get the experience with FPGAs that
they have with microprocessors, when state-of-the-art FPGAs are two
orders of magnitude more expensive and an order of magnitude less
convenient to acquire?

The cost is at the FPGA representative, distributing the stuff.
They get the questions asked.

Xilinx have a revenue of $1.2bn according to this:

http://finance.yahoo.com/q/is?s=xlnx

Are you seriously trying to say that the cost of an FPGA
representative being asked questions has anything other than a
negligible effect on the prices of FPGAs?

I buy my FPGAs through a distributor. Not Altera direct.
Somehow it took me longer to grasp certain ideas.
I was talking on the phone with a FAE several times for
half an hour or so. This FAE is likely getting a bit more
than $5.95/hour. And this service somehow has to be paid.
The fewer chips a customer purchases the more expensive he
is, assuming the setup-cost per customer to be constant.
So obviously the lower the chip count the higher the prices.

Rene