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Despite of loud talks about high-performance GeForce and Radeon graphics cards by their respective developers, the market of add-in graphics adapters was down both sequentially and annually in the fourth quarter of 2006. Even though there are logical explanations concerning the sales slash, the market of add-in-cards still seems to have hard times.

Recently released figures by Jon Peddie Research indicate that graphics add-in-board (AIB) vendors shipped approximately 21.1 million units in Q4 2006, accounting for roughly $4.5 billion in revenue. Unit shipments were down 2.9% sequentially and down 5.7% year-to-year.  Moreover, average selling prices (ASPs) and revenue were down even more substantially: total AIB revenue was down 9.6% sequentially and 15.1% year-to-year.

In the prior quarter vendors of add-in cards faced increase in demand towards units (21.8 million were shipped), but decrease in ASPs and revenues. It is an alarming sign that even with pre-Christmas sales both revenues and prices dropped once again, especially in the light of the fact that Nvidia introduced a brand-new family – the GeForce 8800 – of high-end products, which were available for $500 - $650 in the retail.

According to Jon Peddie Research, the lower-than-expected demand towards standalone graphics cards was conditioned by release of Intel’s new integrated offerings, which were good-enough even for those who would prefer add-in-board several years ago.

Despite ending the year 2006 “on a sour note”, the big two graphics processors developers have reasons to be optimistic in 2007, thanks to Microsoft’s Windows Vista, according to the research firm. Windows Vista was fully released in January, and while Vista is not the obvious upgrade that XP was over Windows 98, most buyers of new PCs will choose Vista and also be a bit more likely to choose a higher performance add-in board over integrated graphics.

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