AMD seems to believe that simply because it has released a new set of good quality video cards that it suddenly owns the world. This doesn’t jibe with the story going around about more layoffs in a few weeks at the company.

To top that off, the company has been suffering from a lack of product, and though I did not go to business school, I do have a long background in sales – when you can’t deliver enough product, you don’t raise prices on what you do have.

It doesn’t fool anyone, and angers those with money in hand.

But that is exactly what is happening as Bright Side of News reveals –

Even before AMD launched its Evergreen series, we knew the allocation numbers for the ATI 4800 and 5000 series – and the numbers didn’t look good. If the recent rumors about AMD laying off more staff in 1Q 2010 come true, we cannot view them as anything else but a company who has failed to supply enough products to the market.

Marvin the paranoid android or simply - the codename for ATI Radeon HD 5870In case you didn’t know, the codenames for all 5000 series boards were named after characters in the Hitchhiker’s Guide to the Galaxy. The unfortunate part about this is that Radeon HD 5870 carried the name “Marvin” and the worldwide availability is definitely starting to look like something Marvin would comment on.

It looks like Marvin would have a comment or two on TSMC’s “screwing the pooch” in a very big way. We also learned that it is not true that Jen-Hsun went to visit TSMC to discuss lowering prices of the wafers… the matter was much more serious, and it touched the overall yields that TSMC is achieving with 40nm process and what the future holds [32nm, 28nm, 22nm]. We already know the time frame of ATI graphics debuting inside GlobalFoundries and if you ask some of key insiders in AMD, that time cannot come soon enough [but first GF has to ramp up bulk silicon production].

Getting back on the subject, we now know the real figures of just how many 5850, 5870, 5750 and 5770 boards AMD sold to its customers, and the number sure ain’t pretty. Overall, the allocation of 5800 series is in the very low five figures. If we would compare this to the ATI Radeon 4800 or nVidia GeForce GTX 280 or 285 hard launches – the figures would not be “flattering” for the 5800 series. There are many problems in getting sufficient amount of boards, and the “blame game” does not exist here. It is solely laid on TSMC’s inability to manufacture a sufficient amount of chips. One could debate that AMD didn’t order enough chips, but if AMD got enough chips – they would not have this situation on their hands.

Whatever the reason, raising prices to levels above what they were, is stupid. Gamers are not that loyal. If their choice of the hour isn’t available at the price they believe is correct, they’d rather switch than fight. They do their fighting in front of a screen.

In order to address the chronic shortage of 5850 and 5870 boards [we heard multiple cases of backlogs being into millions of dollars], AMD decided to raise up the prices by anywhere between $15-25 per card, so the new prices of 5850 will be up from 279.99 to the originally planned $299 and when the stock refreshes, Radeon HD 5870 should go for $399.

The new prices are set into action with the next batch of cards… thus, expect partners to roll on custom cooling products [such as Sapphire’s Vapor-X] and add additional $10-50 price premium, depending on product being used [custom dual-slot, vapor chamber, liquid cooling]. One thing is certain – if you see a 5870 in store and considered buying it – don’t expect that Black Friday or Cyber-Monday will cut the prices from current levels. They could drop back to this level, but availability will not significantly improve for weeks to come – the backlog is now eating all the [limited] fresh supply.

In a market where your back is against the wall, it would be smart to push out as much product as you can, perhaps not cutting prices to improve flow, but certainly not ever raising them. The market will only bear so much.

Oh, and they better have those drivers dead-on perfect. That’s something that ATi has seldom been able to do, so instead of counting the expected results of raising prices, it would be best to make sure the coders were working at peak efficiency.

Everyone who saw the bulk purchase by Apple as a way for AMD to get into the black was not counting on this. I’m sure AMD was not looking forward to supply drying up, but poking your customers in the eye is not the way to manage supply chains. AMD needs to do all it can to outproduce the rest of the market in all respects. It needs to clobber nVidia while making advances to combat anything coming soon from Intel, in the CPU market, it needs to pull even with Intel in performance, and money for doing that will not come from the paltry raises in price of cards.

The only good thing for AMD in this, is that nVidia is having similar problems. Perhaps this is the perfect time for SiS and S3 to put forth any new stuff they might otherwise think not worthy of the reveal – just to get the tongues wagging and the mouths watering.

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