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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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How many percent...
By 325hhee on 7/3/2008 1:46:29 PM , Rating: 2
Of gamers really buy those high end $1000 cards? I've always been on a budget, and the most I ever spent on a card was about $300 on the 2900Pro, which I semi regret, but thank goodness for the bios flash. Gave me a bit of a better value.

That said, I swore, I'll never spend that kind of money on a vid card ever again. Though my next purchase will be a 4870, when I can get it for $250 or less after instant and mail in rebates.

As much as I hear people touting the 8800 Ultra, in the games I've played, there were many 3 people that said they own the card, then again, they say they have money to burn. Who knows, but 3 MMoRPGs, tons of FPS games, and it's weird with the people I've played with, there were that little people that said they owned that card.

So it makes me wonder, who out there has the money to buy those cards, and how many Ultra high end card Nvidia sells. And is there truly a profitable market for those cards. I think the thing ATI got right, outside the card, was the budget gamer market. Keep the prices low and affordable. Many people don't want to spend more than $100-$150 on a vid card, and when I go back and look at the amount of money I've spent on vid card, it scares me.

I'm ready to pick up a 4850, but I'm going all in for the 4870, only at a sale price. Nvidia needs to rethink it's market and target the mid level cards, and they have to stop forcing price gouging, as that leaked memo proved that's they were doing. Perfect example, that 9600GT should have, and would have sold fast if they kept it at the $100 price range. Instead they went greedy.

RE: How many percent...
By Inkjammer on 7/3/2008 2:20:11 PM , Rating: 1
As a person who bought a 9800 GX2 three months ago... let me assure you, even those of us with money often regret it. It's a great card, don't get me wrong, but I'd honestly rather have gone with a 4870 or 9800 GTX+ if I could do it again.

And honestly? Yeah, most of the people I know are the kind who buy $600+ cards. Or were, I should say. We used to rush out to buy the 8800 GTXs and whatnot. I went from SLI 7800 GTXs to an 8800 GTX SLI to the 9800 GX2. In fact, over my time I've had three 8800 GTXs (one I fried while modding). But the days of us spending that much are over. All the people I know are looking at the mid-range for a better value. In their minds, they'd rather buy the best mid-rage for $300 and upgrade to the next best card every time it comes out. The high end isn't offering the performance lead it once was.

It's just cheaper in the long run. Buy the best mid-range card for $300, then upgrade to the next best card down the line and sell your old one. You can play in the cutting edge longer while not burning your bank account.

RE: How many percent...
By suryad on 7/3/2008 2:51:47 PM , Rating: 2
Fair point. I have 2 Ultras in SLI, 8800 series of course and even seeing all these benchmarks of these new cards, in SLI, my setup trumps them. All that means though is that I do not have to upgrade my cards for a while. I am looking forward to the 280 die shrink and see if they have any highly oclocked versions released at that time and I am going to grab a pair and give my current ones to my brother. I think if you buy an expensive graphics solution once technically you can last a really long time than buying a mid range and buying one at ever new generation.

RE: How many percent...
By MrBungle123 on 7/3/2008 3:13:55 PM , Rating: 2
I think if you buy an expensive graphics solution once technically you can last a really long time than buying a mid range and buying one at ever new generation.

lets say you're trying to game with high settings at a relatively high resolution and for the sake of argument that "high end" video cards cost $450.

You go and buy SLI for $900 and I go and buy a single card for $450 during the first year both of us can play all the games at playable frame rates for year 1. During year 2 my card starts to lag so I go and buy a new video card for $450. Now my new card is faster than your SLI rig since I don't suffer from the driver issues and extra CPU overhead that comes along with SLI plus I get all the new features that have been added to graphics cards over the past year. The other thing is that I technically spent less money for it then you did since infalation has occured since the first round of video card purchases making the next years $450 a little less painful than it was the first time.

Personally I'll go with option 2 since it requires less investment up front and I don't see removing a couple screws to replace a video card as being all that much of a hassle.

RE: How many percent...
By MrBungle123 on 7/3/2008 3:00:45 PM , Rating: 3
I went from SLI 7800 GTXs to an 8800 GTX SLI

OK that makes sense...

8800 GTX SLI to the 9800 GX2.

Don't you read up on what a product is before you plunk down like $500 on something? IMO you kind of deserve to regret that decision.

RE: How many percent...
By Inkjammer on 7/7/2008 4:43:48 PM , Rating: 2
Yes, I did... which is exactly why I bought the 9800 GX2. I have a high end 3DS Max station, and wanted the power of gaming and 3D graphics.

Due to the layout of recent motherboards like my 780i you are forced to sacrifice valuable PCI-E slots with that second card. I needed the power of both cards... in one. That lost slot impacted me over time from building an idea workstation.

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