Do Xilinx Fix Their Prices?

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

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

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

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

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

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

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

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

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 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