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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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Its not just graphics.
By Mitch101 on 7/3/2008 12:26:40 PM , Rating: 2
Its not just the GPU's. Factor in the Mobo chipsets as well.

On the AMD side you have the 780G which is much better than Nvidia 7100 lineup on motherboards.

On the Intel side Intel is making the best motherboard chipsets in a long time and the NVIDIA high end mobo chipsets 780i are overpriced. Try finding one under $250.00. If you have to spend that much more you might as well get the next step up video card instead.

Lastly Intel still hasn't granted NVIDIA a license to produce chipsets for Nehalem. This is huge because benchmarks of Nehalem are pretty amazing and to not be able to sell mobo's with it.

NVIDIA bread and butter in graphics is getting beaten by ATI because of bang for buck.

NVIDIA is in the PS3. ATI is in the XBox 360 and Wii. The 360 is going to drop the price $50.00 soon and a new 360 is supposedly on the horizon. Not sure if it will be Blu-Ray or the Rumored Toshiba Return to HD media.

One small item of hope but I dont think it will be enough is that NVIDIA will be in the supposed iPhone killer however really what are the odds of selling enough of these to make a real difference since anyones marketing has yet to really push a true iPhone/iPod killer. Sure it might be better but better hasn't overthrown the iPod/iPhone devices or remotely come close yet. If that were true Sandisk would probably be king.

Like I said in another thread about NVIDIA - Even a god king can bleed.

"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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