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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: Ow
By TheJian on 7/3/2008 1:37:19 PM , Rating: -1
You seem to totally forget the 55nm DIE SHRINK of Nvidia's GTX260/280 has already taped out and will be right on the heels of 4870x2. It's probably just over a month away. They already die shrunk the 9800GTX(+). A simple price cut there to $200 and all bets are off vs. 4850. AS for the 4870, AMD already admitted going GDDR5 has causes limited availability. So don't expect to see many floating around. What's that mean? They took the WRONG road limiting sales, while Nvidia took the slighly more expensive Die yes, but cheap ubiquitous memory so they can sell a huge volume of cards, thereby keeping AMD down (even if they do have a better card - but only at current pricing - mind you Nvidia will change that if needed immediately).

AMD made the same mistake with Barcy. "we have the true quad, extra special" and all it got them was low production/speeds. They should have taken the glue together method Intel did for quick to market, high volume sales. AMD did it again with graphics cards. Go the route that limits you (helping your enemy) and claim the high road...LOL. Right into bankruptcy. Nvidia says they'll do whatever is needed to win at $200. Meaning if it can't sell GTX+ at $229, it will drop to $200 :) So 4850 not so good shortly price/perf wise. 4870 boxed into low sales. Nvidia has a bright future, short or long term as long as someone doesn't fire the idiot making these AMD decisions to go for HARD/LOW VOLUME ability to produce chips. You don't gain market share by having constrained 4870's. Nvidia's GTX280/260 Die shrink will be here before 4870x2 is in volume (it also uses constrained GDDR5). What do you buy when you want a card and only Nvidia is on the shelf at $250+? You come home with what you CAN buy. A64 had the same problem; it was better, but couldn't produce enough to steal market share, so Intel gladly sold you boatloads of chips.

RE: Ow
By flipmode on 7/3/2008 1:55:23 PM , Rating: 2
Whom are you responding to?

RE: Ow
By JasonMick on 7/3/2008 2:53:53 PM , Rating: 4
Someone had a busy day at the nvidia koolaid stand I think...

RE: Ow
By TheJian on 7/7/2008 2:57:09 PM , Rating: 1
My reply was to you (sorry flipmode). No koolaid involved. Nvidia already dropped their GTX280 to $459 at newegg (couple cards after rebate, and quite a few under $500). The GTX260 is now $329 at newegg. So what I said has already happened. They'll drop pricing to make AMD's cards worth less. They just did. You can expect more cuts the second 4870x2 comes out. By then 260/280 will have a die shrink just about out the door to easily allow this and add performance. I'm not saying I LIKE nvidia, I'm saying this is what's going to happen. Currently I'd buy a 4850/4870/GTX260 (toss up 4870/GTX260). But I'd also say ATI won't look quite so good after another cut from Nvidia. $460 isn't bad for king of the hill. That's $140 less than quoted in all these reviews of it. Quite a price cut in ONE month eh? The GTX280 doesn't look so bad now. Remember that we used to have $499/$599 cards to get top of hill performance. Right now that's only $460. That's a great buy all of the sudden. My point is, AMD has a great pair of cards, but their performance/buck was only great when GTX260 was $450 and GTX280 was $600. At $329 and $460 things change. The reviews should be updated showing this since it happened so fast.

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