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Market Analysis 2003

Graphics Wars in 2003: The Big Picture

Talking about the year 2003, I could venture a few suppositions about the results of the year as well as the directions the industry is going to move along:

  • The graphics card market taken at large is shrinking as Intel’s integrated chipsets are quite successful at competing with “lowest-end” standalone solutions (“just show me anything on the screen”). On the other end of the price scale, we see top-end devices gaining in popularity as the more clients consider expensive graphics cards as an option. The tendency may become dangerous for the companies that have a surplus of cheap GPUs. The processor may stick in the storehouse longer than its lifecycle of 6-12 months.
  • Both leaders in the field are walking the same track as neither NVIDIA nor ATI Technologies could create anything principally new in the last year. While it is all clear with NVIDIA – the company was late with its GeForce FX by half a year and cannot now physically offer anything new – ATI Technologies is another question. The R300 was first unveiled in the summer of 2002 and since then the company has created only three graphics chips (R300, R350 and RV350) to power all the range of its graphics solutions. NVIDIA was somewhat more flexible launching 5 new chips since November 2002, but never leaving the framework of the NV3x architecture of course.
  • Although the market itself is growing, both companies are most aggressive in marketing, emphasizing the problems of the competitor’s products. Considering the delays with new GPU architectures, the reason for the squabble is simple: they both don’t have enough money and resources to keep up the development rate.
  • NVIDIA’s attempting to cheat and refusing to explain its position did more harm to the company than the humble performance results of the graphics processors. Many users just don’t believe NVIDIA anymore, the inertness of the company’s PR department even worsening the situation. On the other hand, we’ve seen the same with ATI Technologies when the company’s spokesmen couldn’t definitely answer the questions concerning some rendering errors, which were suspected to be cheating attempts.

The battle of the two graphics giants can be viewed from several points of view, not only with respect to technological superiority/inferiority. Let’s consider things tangible – the market shares.

If take the computer graphics industry at large, we’ll find Intel domineering with its integrated chipsets. So, we’ll only focus on the manufacturers of discrete solutions – ATI Technologies and NVIDIA Corporation as well as a handful of smaller players.

Q1 2003

At the beginning of the year, the biggest share of the standalone graphics chip market belonged to NVIDIA (57%). That’s quite logical considering the company had a solid ground underfoot then. Its reputation was only beginning to be questioned. The Canadian ATI Technologies, a most dangerous rival, came second with 35%. Other players have from 1% to 3% of the total.

Talking about graphics processors for desktop systems, NVIDIA’s share was 64% in the first quarter, while ATI had 25% of the market. It seemed like ATI had nothing to be much optimistic about, but we can view the situation from another point of view. For example, comparing the market distribution of sixth-generation GPUs (DirectX 8-compatibles), NVIDIA has 44% of the market, while ATI – 40%. Very close, as you see.

As for portable graphics chips, ATI was even n the lead with 62% of the market. NVIDIA had 28%.

Time was working for the Canadians. ATI Technologies had an enormous potential which showed up in the second quarter.

 
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