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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: 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.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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