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ATI/Nvidia Price War Takes Its Toll, Intel Seen As Savior


Taipei (Taiwan) - Taiwanese companies are growing increasingly concerned over Nvidia’s and ATI’s market strategies. Both companies seemed to be more interested in making their partners stamp Nvidia and ATI stickers on their boxes and industry sources we talked to aren’t exactly happy with these two companies. It appears many are already hoping that Intel’s Larrabee will solve their problems.

Larrabee, in fact could become a major hit right out of the gate when it launches in the 2010 time frame, at least if the current market trend continues. TG Daily had a chance to chat with numerous graphics card companies, which combined account for more than 70% of ATI and Nvidia boards on the market, and the general view appears to be the same.

The CEO of one of the largest manufacturers told us that he happily would ditch AMD and Nvidia completely and go for Larrabee alone since he would be able to secure his company’s future with Intel’s design policy.

The apparent problem is a cutthroat price war between Nvidia and ATI pushing add-in-board (AIB) companies into a margin of 2% or less. Most of companies are even believed to lose money with every card you buy, since some ATI and Nvidia parts have a negative margin.

Why negative? Because both AMD and Nvidia push partners to keep the prices as low as possible, and in a lot of cases this means there is no money left for research and development. In the end, AIB vendors may be forced to buy boards from ATI and Nvidia. The result may be that a company is caught in a downward spiral. According to our sources in Taiwan, two current graphics card manufacturers may actually be on the verge of bankruptcy because of this policy.

Some manufacturers suggested that ATI and Nvidia should just reestablish their own brands (Built by ATI, 3dfx) and sell the boards directly to the consumer, but right now, it appears that there is not a lot of motivation for this change. The trend is believed to be clear: Smaller companies will fold and larger players will go somewhere else where money can be made.

If Larrabee is as good as Intel claims it is, that may be good news for graphics cards manufacturers and Intel, since our sources indicated that top tier vendors will happily jump on board. And even if it is not that great, Intel may still have an easy play.

  • Pei-chen
    Wow, stupidest article I've read today. If Intel joins the race, there are three likely scenarios

    1. Intel will ask for premium price and got wiped out because gamer is not OEM buyers and will care about price/performance

    2. Intel competes with ATI and Nvidia at the same price point. Meaning sell their card at whatever price point set by ATI and Nvidia at the time of Larrabee's release.

    3. Intel set Larrabee's price lower than existing ATI/Nvidia cards to gain a market share. This will force ATI and Nvidia to lower price even more to try to squeeze Intel out before it gains a foothold.

    Neither scenario is good for the downstream card markers.
  • w/e sounds interesting... I hope larrabee isn't a complete dud... infact I hope its really good... maybe bring some innovation to the table instead of letting ATI and Nvidia only advance when neccessary to become first again... neither seems to be really advancing when they're in first... if they were though it would be great
  • grieve
    I hope Larrabee is amazing... Then perhaps well have 3 choices instead of 2. I could care less if the mega million dollar companies are losing coin so we can get a great card at a reasonable price (not $500+)

    Go Intel.
  • Balshoy
    From what I read here on tom's hardware, Intel's Larabee is just a processor... so in the long run I believe that while we root for Ati/Nvidia or only Larabee, they will be more than happy to offer a kind of sli/cf configuration for people who will buy both a video capable processor and a discrete graphics card. And in the end Intel will be the one to pull the strings as more and more people (and by people I mean gamers, they are the main market for this) are going to buy a computer the classic way (processor + graphics card).

    But that leaves one question... what about good old AMD processor? :)
  • enforcer22
    I would personaly preffer to buy the video card on the same die as the main cpu. Much faster access to the system. As long as the cpu's were in a price point i already pay now. and the video processors werent stripped down (same with the cpu) just for it being that way.

    The day will be when you see a 16 core cpu with quad crossfire on chip D: i would hate to see the cooler for that.