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Storm clouds are gathering as NVIDIA faces a reinvigorated competitor

As the old saying goes, when it rains it pours.  NVIDIA was performing beautifully thanks to aggressive pricing and performance of its 8000 series of graphics cards.  It looked poised to leave competitor AMD (formerly ATI) in the dust.  However, the latest round in graphics war has marked a dramatic turnaround with AMD's 4850 and 4870 outperforming NVIDIA's offerings at a lower price

While NVIDIA still holds a tenuous grip on the highest end offerings, with its GeForce GTX 280 GPU, this might soon slip, depending on the performance of AMD's dual processor 4870 X2 (R700) card, likely coming in Q3 2008.  Meanwhile, NVIDIA faces challenges from Intel in its low-end and laptop graphics offerings, and from AMD's PUMA chipset/graphics package in the laptop market.

The economic repercussions of NVIDIA's slippage are already visible.  NVIDIA announced yesterday that it was going to turn in revenue of $875 million to $950 million for Q2 2008, which ends July 27.  This is significantly lower than the current analyst expectations of $1.1 billion.

That was not the end of the bad news from NVIDIA either.  It announced that it was facing a massive recall, due to overheating GPUs in notebook computers.  NVIDIA reported higher than average failures in both the laptop GPUs and in laptop chipsets.

NVIDIA said that the chips and their packaging were made with materials that proved to be too "weak".  NVIDIA passes the blame to notebook manufacturers, which it says contributes to the problem.  Typically notebooks have poorer ventilation and components concentrated in a smaller space than desktop computers.

The result of the recalls is that NVIDIA will be taking a onetime charge of $150M USD to $200M USD to cover the damages.  It plans to use the money to repair or replace defective parts.  It also hopes to collect part of the money from insurers it uses.  However, it has acknowledged its problems and switched the materials it uses.

The news has resulted in NVIDIA taking a beating on the stock market, sliding over 25 percent.

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RE: Gaming recession or diversion?
By HrilL on 7/3/2008 12:05:19 PM , Rating: 4
I would have to agree with you. A few years back we used to have some rather large and small local LANs. No one seems to play the same kind of games as in the past. It is probably due to the consoles and RPG games that you play online. But overall PC gaming seems to be in somewhat of a slump. All the new kids are playing colsoles now days it seems like. And the hardcore PC gamers are sticking with the games they have been playing for the last 8 years. Myself I only play starcraft and counter-strike and I don't need a new computer to do it. What I have plays those games just fine.

RE: Gaming recession or diversion?
By Mitch101 on 7/3/2008 12:38:17 PM , Rating: 3
I would agree that WOW/RPG's probably killed the lan party to a degree. When FPS was king the lan party was on. Instant gratification to gibb a friend and hear them scream.

Our LAN parties were more a reason to drink beer and redbull's gorging on chips and pizza.

I'm hoping starcraft brings the lan parties back a bit.

RE: Gaming recession or diversion?
By just4U on 7/6/2008 4:08:36 AM , Rating: 2
I would think that it has more to do with the adoption of high speed connections as opposed to anything else.

RE: Gaming recession or diversion?
By gaakf on 7/3/2008 12:40:10 PM , Rating: 2
ahh but you will need a new computer for starcraft 2. I have faith that Blizzard will restore some of the passion PC Gamers have lost for the platform over the next couple years. A new game in the Warcraft, Starcraft and Diablo series as well as a brand new is one hell of a thing to look foward to.

By SavagePotato on 7/3/2008 12:46:42 PM , Rating: 4
A brand new battlenet can only mean brand new bnet tards of the next generation.

Kind of a mixed bag as far as calling it a good thing.

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