Terratec, a well-known European maker of multimedia components, announced this week its intention to cease retailing its Mystify graphics cards. The company believes that the market is over-heated and thus is not likely to bring strong gross-margins to the company.

Nettetal, Germany-based company entered the market of graphics cards in late September 2002. That time the company only offered NVIDIA GeForce-based solutions, but in late 2003 the firm added some Powered by ATI RADEON graphics cards into the lineup with the aim to server larger market segment with its graphics products.

While the company said it had made some money on its Mystify graphics cards, the gross margins have been eroding amid escalating competition between Santa Clara, California-based NVIDIA Corp. and Markham, Ontario-based ATI Technologies.

Earlier this year Guillemot Corporation elected to progressively withdraw from the graphics card and monitor markets, which have been producing very weak gross margins, in order to mobilize all of its resources towards the development of markets with strong potential, according to the official statement. In view of the success of the new Hercules music lines and the sizeable demand for its Thrustmaster gaming and mobile accessories, Guillemot Corporation has decided to focus on these product ranges with high added value.

Terratec is well-known for its professional audio cards and other audio-related equipment, including consumer audio cards, as well as additional multimedia equipment, such as digital video and mp3 players, cameras, home entertainment applications and so on. The company will concentrate on these product lines in future.

Additional commentary from official and unofficial sources was not available at press time.