AMD Radeon Vega Gets Company Back Into High-Value GPU Markets And Does It With A Single Chip

By Patrick Moorhead - July 30, 2017
Radeon RX Vega 64 card Advanced Micro Devices has been on a roll as of late, and I believe many are starting to notice. In the last three months, AMD's Ryzen desktop led to a 51% CCG revenue increase, Epyc server chips were announced with broad ecosystem support, and Radeon 400/500 graphics are gaining unit share in the mid and entry level space. Ryzen is following up soon with its highest-end enthusiast part, Threadrippper, followed by the ASP-rich Ryzen notebook parts in December. AMD is executing well. So when do AMD graphics make their big moves into the premium space like Ryzen and Epyc? Well, today, as AMD’s Radeon Technology Group (RTG) officially announced availability for all Vega-based GPUs for premium gaming and workstations and deep learning- and they are doing it with one piece of silicon, not a small feat. I wanted to drill into today’s announcement and the implications for the market and AMD. AMD before Vega To see where AMD’s Radeon Technology Group, RTG, is going, it is important to know where they are today. AMD’s RX 400/500 line, based on Polaris, is solidly in the mid-range and low-end market priced from $99 to $249. Bitcoin mining is pushing prices well-beyond MSRP in some models upwards of 80%, but AMD is not capturing that increase. At AMD’s latest financial analyst day, AMD reported that with Polaris, AMD gained 8% points of desktop market share and increased desktop share 10% points above $299. AMD’s RTG did this by focusing on the basics by increasing focused resources to deliver more competitive hardware and higher quality software.
The story for AMD’s professional products for workstations was very similar to that of the gaming product in that they played at the low end and mid-range, but not the premium space. There have been many debates on where the “premium graphics” market starts and ends, but it does not matter for AMD’s Polaris, it did not play there at all.
At AMD’s FAD (financial analyst day), RTG lead Raja Koduri was very clear that with Vega, he wanted AMD to compete in that premium space as that is where AMD believes 70% of the margin dollars are. That space has three distinct markets, premium gaming, workstation and machine learning. Koduri was very clear to position that this round his intent was not to dominate the premium space, but rather compete there as RTG had not been there in a while. I liked this more conservative approach as I wrote here, as it gives you a chance to under-commit and over-deliver, just what RTG needs. New Vega products for workstations and gaming Unknown to some, AMD already launched “Vega” to early adopters under the brand “Frontier Edition” at FAD and with it a new physical design and a machine-learning software stack. We write about the Radeon Vega Frontier Edition here. Today, RTG filled in the remaining Vega cards for the professional workstation space and gaming and by doing that also re-entered the margin-rich premium space. For workstations, AMD announced the Radeon Pro WX 9100 and Radeon Pro SSG professional graphics card working on content creation, targeted to engineers, artists, and designers. The WX 9100 performs up to 12.3 TFLOPS of peak single precision compute performance, and AMD says compared to the previous model, AMD FirePro W9100, the new card runs models twice as fast with 50% more memory bandwidth, 1.5X performance per watt, and more than 2X the compute performance. The WX 9100 comes with 16GB of the fastest HBM2 Error Correcting Code (ECC) Memory and as I wrote about here, leverages all of Vega’s new architecture goodies like the new High Bandwidth Cache Controller (HBCC), Next-Gen Compute Units with Rapid Packed Math and an Enhanced Geometry Pipeline.  Priced as high as $2,199, the WX 9100 puts AMD back in the workstation performance space. The Radeon Pro SSG has a massive 2TB of flash memory on the card and is targeted at workstation professionals who work with massive data sets, like an 8K video pipeline.  While flash memory is not as fast as HBM or GDDR, data does not have to cross the PCI-E bus if it runs out of memory, limiting latency and improving workflow performance. The new SSG card is priced as high as $6,999 and is obviously premium.
For the gaming market, AMD launched three Radeon RX Vega graphics cards, all leveraging the architectural elements as Vega Instinct and Pro.
Radeon RX Vega is available as part of a pack and as an individual card at a wide range of price points. Two versions of the cards are available at:
  • $499 – Radeon RX Vega 64 with air cooling and 64 compute units
  • $399 – Radeon RX Vega 56 with air cooling and 56 compute units
Three versions of RX Vega are available in what AMD terms "Radeon Packs":
  • $699 - Radeon Aqua Pack featuring the Radeon RX Vega 64 Liquid Cooled Edition, with 64 compute units,
  • $599 – Radeon Black Pack featuring the Radeon RX Vega 64 with air cooling and 64 compute units
  • $499 – Radeon Red Pack featuring the Radeon RX Vega 56, with air cooling and 56 compute units
As you can see, these cards are priced well above the Radeon RX 500 at $249 and well into premium starting at $399. However, what are these “Packs”? Radeon Gaming Packs provide $420 in total discounts or free games- a $200 discount on a 34” Samsung CF791 curved ultrawide FreeSync monitor, a $100 discount on a Ryzen 7 1800X (or Ryzen 7 1700x) processor and a 370X motherboard. Each pack comes with two games- Wolfenstein II: The New Colossus and Prey for free, a $120 value. Radeon Packs, real value or just slick marketing? There are two things going on in the market that is driving AMD toward Radeon Packs, PC gaming ecosystems and Bitcoin miners. Odd combo, right? AMD is internalizing with Vega that gamers operate in ecosystems. Avid gamers are using special displays with FreeSync and G-Sync features and using the GPU manufacturer’s software to update, capture, edit and broadcast their gameplay videos and stills. I like what NVIDIA has done with their software capture features and settings optimizations and I like what AMD did with FreeSync. As Radeon cards have not played in the premium space for a while, gamers most likely to buy a higher-priced RX Vega probably don’t have the CPU, motherboard, or display to take full advantage of the new card.  For those buyers, if they like AMD Ryzen 7 and that specific Samsung display, this is a good deal for them. For those who do not want any of that or have a NVIDIA card without a G-Sync monitor and not wedded to NVIDIA software, there are options to buy just the card. That brings me to Bitcoin miners, whom today are buying every mid-range to high-performance card they can get their hands on. Miners are not just buying commercial cards; they are buying consumer gaming cards and putting them into rack-mount and pedestal servers. The impact is that the channels are inflating prices by up t0 2X and it is hard to buy an affordable graphics card as supply is low to zero. Only the most high-end cards are still available and in low quantities. This means gamers are having a hard time even finding premium cards and if they do, are paying well over MSRP. Obviously, this is negative for gamers and high-performance gaming as a market.
Gaming Packs will provide a disincentive to many Bitcoin miners from buying RX Vegas and likely leave more cards for gamers even though right now we still don’t know the exact hash rates of Vega. If miners do buy the cards with Packs, AMD stands to make a lot more money. This whole program is not 100% altruistic as AMD will benefit from any coupon “breakage” on the Packs, but still will likely leave more cards for gamers.
Three markets, one piece of silicon
I get many inquiries about AMD’s RTG (Radeon Technologies Group)and how they can compete with NVIDIA with very sizable R&D budget differences. As I said earlier, the last few cycles, Radeon has only played in the midrange and lower-end markets. This would make sense. Now, RTG is saying they will now play in the premium markets with Vega. The simple story is that NVIDIA has created three Pascal chips and AMD has created one Vega chip to go after the same deep learning, workstation and gaming market. Vega silicon From what I have seen, if RTG’s performance numbers are replicated by third-party benchmarks and NVIDIA does not respond quickly as they did with the 1060/1070, AMD will be able to move up the stack. While the Bitcoin mining craze isn't permanent, it is here today and will provide a tailwind for higher performance cards. The new Vegas will not outperform NVIDIA’s newest and highest end deep learning, workstation and gaming chips, but they do not have to for AMD to make forward progress. All AMD has to do to show success is drive volume and profits above $249, and they have moved the needle and moved it to one GPU core. Wrapping up Net-net, AMD’s RTG likely did move the needle today with the official Vega launch. They are positioned much better in the machine learning, workstation and gaming space than they have been in a long time. Although only NVIDIA has perfect knowledge of the competitive moves, it is likely AMD has more runway than they had with Polaris as Polaris only had about 30 days of the exclusive runway. Keep in mind; Vega cards do not have to score the highest of any cards to get a financial and business “win,” they only have to be successful above $249 and I think that is in the bag. Overall, a good launch. Nice job RTG.
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.