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UPDATE: Adding comments from Chris Evenden, ATI's head of PR department.

The second quarter of 2005 was pretty positive for graphics solutions suppliers, as the overall market was up 15% annually, according to Mercury Research. Market leader Intel Corp. remained the top supplier of graphics sub-systems without gaining or losing its overall share, so did top graphics company ATI Technologies, whereas NVIDIA Corp., who has the world’s fastest graphics chip now lost a bit of its share.

Intel Leads, But Stays Flat

While the whole market was up slightly – several points – compared to the previous quarter, the seasonal trends conditioned lower sales in the high-end desktop segment, but allowed inexpensive solutions to regain market acceptance.

Due to aggressive penetration of entry-level and mainstream discrete graphics processing unit (GPU) markets and successful sales of chipsets with integrated graphics cores by ATI Technologies, it managed to sustain its market positions despite of eroding sales of high-end graphics chips, which conditioned lower gross-margins for the company in the most-recent quarter.

In overall, Intel Corp. supplied 43% of all graphics products, flat with the previous quarter; ATI Technologies shipped 26% of graphics solutions, also flat sequentially; NVIDIA commanded 16% of the market, down 2% quarter-over-quarter.

Desktop Segment Soars

ATI Technologies supplied the majority of standalone GPUs for desktop and mobile PCs – 56%, NVIDIA Corp. shipped 41% of discrete graphics chips, whereas the rest 3% were shared by companies like 3Dlabs, Matrox Graphics, S3 Graphics, XGI and so on. Both leading suppliers of discrete GPUs sustained their market positions compared to the previous quarter.

NVIDIA's Mad Mod Mike and ATI's Minotaur. Click to enlarge

The desktop segment grew 4% sequentially, but due to seasonal trends inexpensive graphics solutions – both standalone and integrated – were the most popular. Intel remained its leadership with 40% (down 1% from the Q1 2005), ATI was up slightly to 24% due to exploding sales of integrated chipsets for AMD64 platform as well as moderate success with its integrated Intel platform, NVIDIA down to 18% after losing 3% of the market.

The desktop discrete segment also did not show any changes from the previous quarter: ATI led with 56%, NVIDIA remained at 41%.

NVIDIA Gains in High-End DirectX 9.0 GPU Market

Event though the seasonal patterns lowered the unit sales of high-end DirectX 9.0 visual processing units, NVIDIA again managed to capture a part of the market and now commands 73% of high-end shipments, which is 3% higher compared to the previous quarter. ATI was down 3% to 27%, according to Mercury Research.

Given that during the Q2 2005 NVIDIA began volume shipments of its latest GeForce 7800 GTX product, the world’s fastest GPU to date, higher market share and average selling prices for the company were natural.

In the DirectX 9 (DX9) mainstream market ATI was up to 54%, NVIDIA down to 46%, according to the research firm.

Mercury’s estimates on DX9 and DX9c accelerators differentiate value and performance by transistor count, with devices at and about 100 million transistors being considered as “performance”. Since enthusiasts and media typically consider pricing and performance as two main measurements of a products’ market positioning, Mercury’s estimations may be regarded as not absolutely precisely reflecting reality, but definitely replicate the overall trends.

Intel Dominates Mobile Graphics with Centrino, Entry-Level Notebooks

Due to shift to value mobile computers, ATI saw shipments of its RADEON XPRESS 200 core-logic components featuring integrated graphics core rising 4% and standalone mobile graphics chips up slightly 1%.

Currently Intel commands 52% of mobile graphics shipments, ATI’s market share is 35%, whereas NVIDIA’s is 8%.

In the mobile discrete market ATI’s shipments were up 1% to 73%, while NVIDIA’s were down 1% to 22%. The remaining 5% were controlled by companies like S3 Graphics and XGI.

ATI also managed to moderately improve its shipments of integrated chipsets for mobile computers and now commands 15% of portable integrated market. By contrast, Intel’s share is down 2.5% to 79%. SiS and VIA control 2% and 4% of the market respectively.

ATI, NVIDIA Comment on the Results

Both ATI Technologies and NVIDIA Corp. remain optimistic about the future and believe that the Q2 2005 was successful.

“It was a decent quarter for Q2 – we’re entering the Q3 with a strong Shader Model 3.0 lineup with support for HDR and SLI. New notebook products are on the way to attack the notebook market and other announcements are coming to bolster the high end,” Andrew Humber, a spokesman for NVIDIA in London, UK, told X-bit labs.

“From the release of the RADEON 9700 PRO and later generations, such as RADEON 9800- and RADEON X800-series, ATI has consistently led the market in terms of both price and performance. With that in mind it is no surprise that market demand for ATI is at the all-time high. Just imagine, what CrossFire will do,” Andrzej Bania, a representative for ATI in London, UK, said.

“We’re maintaining share in desktop – in fact, we’re slightly up, and we’re seeing huge growth in our integrated business. These position us very well as we ramp up our new enthusiast desktop and motherboard products,” said Chris Evenden, Director Public Relations for ATI Technologies.

The whole market study which describes the market in the Q2 2005 is available from Mercury Research.


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