Do Xilinx Fix Their Prices?

Perhaps you should take an econ class, all kidding aside. I had a very brief one in high school and the most basic concept (next to guns vs. butter) is that of fixed costs vs. marginal costs. Even though they don't *make* the parts in 100 unit lots, there are fixed costs associated with selling them in 100 unit lots. This mainly has to do with support, I would expect.

But there is also the issue of motivation. If you are running a company that has customers buying literally millions of parts a year and customers buying 100's of parts a year, are you going to give the small customer anywhere near the same prices as the big customer? No, you are going to shave every possible penny on the price you must to keep the big customer from buying the competitor's parts. The 100 unit customer is not even a consideration.

Besides, if you are buying only 100 of a part, is it a big issue if you pay 2x for the part? If you are building a product, you are likely selling the product for 3, 5 or even 10x your parts cost. Otherwise you will be losing a little on each one you sell, and will be out of business soon.

That is not the relevant point. FPGAs (which mostly cost much more than $4.70) have a very different business model which requires significant costs for each customer of the product. Support on FPGAs is very high. There is also the cost of tool development which is nearly zero for the CPU and very high recurring cost for FPGAs.

No, the distis only have as much markup as the maker allows. I have been though the quotation cycle and nothing gets done without Xilinx authorizing it.

That part is true, but I think most of the expense is by the maker, the disti only has one support person for any given manufacturer. It is not that much of a cost burden for them. And they will very much limit the amount of support they give you if you are not a large customer.

There are a large number of costs associated with a customer. Mainly it is in the support, but there is also the cost of the tools which must be spread over all customers. They learned a long time ago that it is better to make each customer pay equally for the tools and keep that cost out of the chip price as much as they can. Otherwise they favor the small customers over the large ones. It is the large customers that make money for them.

Maybe not brick and mortar, but you can buy FPGAs from Digikey which is not much different from any other online retailer.

On a sunny day (6 Feb 2004 22:12:21 -0800) it happened snipped-for-privacy@yahoo.com (Andy Peters) wrote in :

I agree with an other poster that Xilinx needs to improve on this, and make a website where yiou can order any quantity of anything they make. That would bring prices down, as distributors are taken out of the chain. More and more companies sell directly via the internet. I do not see how this would reduce sales for Xilinx, unless all there sales are stocking the distributors.

Unfortunately this as wrong, as you can get wrong. This may have been this way years ago and it proved wrong. The distributors realized that luckily. The business works a bit different. There are companies who want a new product and pay for the development. There are those who do a development and there are others who actually manufacture the parts. The first mentioned company sells the final products then. Now who needs the support, and who buys the most parts ? As developper, I seldom buy more than 10 pieces. But also I introduce the new technologies into many other companies, be they my costomers or may they become my customers. Meaning there is no sense in flooding those who buy the most parts with PR materials. The decisions are done long befoe they buy the parts.

Rene

The price curves are all political/Marketing decisions.

Sometimes IC makers promote ICs through disti's at (say) the 10K price for ALL lower volumes.

Why ? - It's a great marketing ramp tool, and gets their device onto designers radar. For those design-ins that hit 10K, it has real benefit, and for the others that did not, what did it REALLY cost them ? - In silicon terms very little, and maybe a couple of lunches for the Distis to convince them this will actually seed sales, and maybe some coverage/support payments.

Another sales-seed path is web sales. Microchip do this very well - Xilix could learn there...

Now, all that activity occurs mainly in devices looking to push growth.

I've seen it with Motorola and their newest FLASH uC, and also IIRC with the Coolrunner made by - oh yes, Xilinx. Now, of course they CAN do the same with FPGA's, but as they don't NEED to, until Altera does, not much will change....

-jg

Sometimes I feel that X would get a better result by using distributors whose primary business was distributing computer cases or bananas or other low-tech stuff. Ego-free distribution.

And the low-tech/web/... distribution should sell only the fastest speed grade, cutting the parts count by two or three.

I think we may have a bit of a language barrier, so your points are not completely clear. I am sure the salesmen know the difference between a small company building a small volume product and a small company building a large volume product for another company. On the other hand, I have been told point blank that it can be very hard for the FAEs and salesmen to track a project between companies in this way and as a result, they do not get the credit (or the profit) from the ultimate sale. So they are very reluctant to devote much time to such projects. I got this straight from the horses mouth (so to speak).

They are much more inclined to assist the companies who design the products they sell in large numbers and as a result you can count on both support and a good parts price.

Ok. My points. It may work the way you described where there are plenty of big companies doing big projects. Over here, many big companies are a mere shaddow of themselves after the new economy took over and they were rationalized to death or near death. Many new small businesses took over the lead in applying technology. I'm lucky that my distributor, selling Altera parts (amongst others), takes the time to provide me with, compared with my sales volume, excessive support. Yes, we may talk about who the project is for.

Rene

But _every_ big customer started as a small customer, and if you can get people trained up and familiar with your P&R software and design process it's a big risk for them to change to a competitor.

The problem is that if X does this A will _have_ to follow suit. It's an oligopoly, it's in both their interests to keep low volume prices up.

It depends what the product it. If it's a custom product for someone the BOM cost is probably insignificant in the overall product development cost.

If you're a small company trying to get a novel product out it can be a very big issue, FPGA pricing is likely to dominate your overall product cost, making the product viable or not.

Nial

------------------------------------------------ Nial Stewart Developments Ltd FPGA and High Speed Digital Design

So Xilinx /do/ fix their prices. Surely this is against competition laws??

-- Steve

In-state factory FAEs, Disty FAEs. Sales teams that must be incentivized to drum up demand for new parts. Then customers who go out and convert their FPGA to CGAs as soon as production ramps up.

FPGAs are not like CPUs. They are often prototype platforms. Low volume, abandoned by the customer as soon as the design is stable and can be converted to a CGA or ASIC.

FPGAs are inexpensive in my view, and the software tools are amazing. It's a good time to be an engineer.

But if you know a way to bring the equivalent of a Xilinx offering for 25% of the price, join the marketplace, please.

Oh really?

You can layout the motherboard, buy all of the components, fab the motherboard, get all the eproms programmed, etc etc etc.

Sure.

Austin

If Xilinx colluded with other FPGA manufacturers to have a fixed price where each competitor agrees not to undercut the other, they would be guilty of price fixing -- this is not the case. When you go to the store to buy Tostitos (a different form of chips) you often see the price is pre-marked on the bag - surely this is a form of price fixing! In reality, this is setting a suggested price; some stores have a different price sticker on top of the pre-printed amount. Semiconductor manufacturers provide their distributors and sales people with price books that give parts and grades for what is available. There is no harm in this. Better prices can be had, but only if you TALK with the people involved, either the Xilinx sales folks or the distributor's sales people.

Ask your distributor how they will be compensated for the sales that go into the product you are designing. If they are lucky, you have been able to identify both the company you are doing this for as well as the product name. I was told that this information is "registered" with the manufacturer and they get credit for the sales no matter which distributor actually makes the sale. But if the product can not be tracked this way, they get nothing.

There is also some incentive on your part (or your customer's) to provide this tracking info. If they quote you a better than list price to get the design win, this better price will only be good through that distributor since they get a price cut from the manufacturer. But other distis who are not on the registered design win will not get the better price and will likely have to charge a bit more.

At least this is how it was described to me.

I think I misspoke (or is it mistyped?). I should have said, the distis only have as much *markdown* as the makers allow. This is just a matter of the manufacturer giving a discount on a qualified design win. The disti is not going to sell the parts at a loss. So to get a better price the manufacturer has to agree to a lower price to the disti for this customer.

I don't think that is illegal. Heck, they do this for the government all the time.

can

in

"The motherboard price is irrelevant because you can buy computers for as little as $299." The point WAS that buying the individual parts cost significantly more. The motherboards DO have huge production runs that push the cost of the bare board below $10 - a value I had considered absurdly low when I worked on projects with 25-125/mo production levels. With 1k-10k per month production levels now, we're seeing prices around $10 bare-board prices for our motherboard-sized assemblies. The motherboard manufacturers get large discounts because of volumes. The technical support goes to very few engineers for a short time to produce the massive quantity. The "Cost of Sales" is a very big factor in any industry and isn't much different for selling to a small company versus selling to a conglomerate for similar products (at very different volumes).

The market works because small companies still make money (if they're properly managed by people who understand what it takes to build and sell products profitably). If small companies are mismanaged, they will fail. If large companies are mismanaged, they will go bunkrupt without management intervention. Weeding out the people with unrealistic ideas of what the market should do for them so they can make the profit they need (on a product that isn't worth what it *should* cost for the appropriate margins) will help to elevate the overall quality of products offered.

Again, see Economics.

Really. If you bought all the components from a relatively cheap place like:

I'd bet you could make the same spec PC yourself for a similar price to what you'd pay for a built one from the UK's leading PC retailer:

Why would I want to lay the motherboard out, buy all of the single components etc etc blah blah when I can buy them from a shop??

The problem with Xilinx products is that unless you buy in large quantities you can't get them at a reasonable unit price.

What irrelevant "analogy" are you going to come out with next; FGPAs in small quantities are excellent value for money because try making your own out of individual transistors??...

-- Steve

Read the statements that the Xilinx suits say about ASICs vs FPGAs, they say that ASICs are frequently being *replaced* by FPGAs.

In large quantities, not in small quantities.

Do you work for a large company that buys FPGAs in large quantities by any chance?

My point is that unless you buy in large quantities then small or start-up companies can't put Xilinx parts in their products because they're too expensive.

-- Steve