by Josh Walrath

Competition from Intel

The integrated Intel graphics have always taken up a large portion of the market for any pre-built computer from a major OEM.  Even though the Extreme Graphics from Intel were anything but Extreme, they were essentially "free" with the motherboard.  This of course enables OEM's to save money by not buying a separate video card.  Most motherboards with integrated graphics also feature an AGP slot, which allows the end-user to upgrade the video themselves.  ATI has also made up ground in the integrated graphics market, but they are still nowhere close to what Intel does.  NVIDIA continues to not pursue a Pentium 4 bus license, so that arena is still closed to them.  It does appear though that NVIDIA is preparing an integrated version of the NV4x technology for an upcoming nForce based part for the AMD Athlon 64 market.  The latest i915G series of integrated graphics from Intel were not released until the very end of the 2nd quarter, so those products should not have had any impact on NVIDIA's financials.

With the release of AMD’s Athlon 64 product line last October, sales of Athlon XP based computers have decreased accordingly.  The nForce 2 was a solid product for NVIDIA, and the nForce 2 with the integrated GeForce 4 MX video also sold well in its heyday.  However, with the decrease in sales the Athlon XP has experienced, and the lack of an integrated part for the Athlon 64 from NVIDIA, their marketshare in integrated graphics has been steadily decreasing.  On the bright side, NVIDIA has released the nForce 3 150 and nForce 3 250 for the Athlon 64 market, and those products are starting to make an impact.  Again, since these parts have no graphics component, they have certainly not helped NVIDIA’s overall graphics marketshare.

Lack of GeForce 6800 Parts in 2Q

Even though the GeForce 6800 line was released in early April, these parts did not reach the market until late 2Q.  Until that time, NVIDIA had to rely on their earlier GeForce FX line.  This of course proved costly to NVIDIA, as the majority of users who would consider buying an NVIDIA based card would want to wait to get the new technology.  This cut down significantly the retail presence of high end parts like the GeForce FX 5950.  During this time NVIDIA did release the GeForce FX 5900 XT series of cards to the $200 price point, but this was an expensive move as the FX 5900 is still based on the NV35 chip, and that is definitely not considered a value or midrange chip.  At approximately 125 million transistors on TSMC's 130 nm line, it is still fairly expensive to produce (as compared to the 9600 XT from ATI, which is around 80 million transistors on TSMC's 130 nm Low-K line, or even the 115 million transistor 9800 Pro on TSMC's 150 nm line).

The 6800 series is divided into three parts: the 12 pipeline GeForce 6800 running at 325 MHz, the 16 pipeline GeForce 6800 GT running at 350 MHz, and the GeForce 6800 Ultra running at 400 MHz.  The 6800 series of chips are produced on IBM’s 130 nm FSG process, and as stated before, this process has had more than its fair share of problems.  Add to that IBM has its own 130 nm parts that it is also producing at the Fab in East Fishkill, these take priority over 3^rd party designs.  The exact terms of NVIDIA’s agreement with IBM are confidential, so the above is only speculation.  In fact, if the agreement was well written by NVIDIA, those parts could take priority, but this is exceptionally unlikely.  Again, IBM is a very big company with a wide array of products that utilize the 130 nm FSG process, and even though IBM wants to utilize the 130 nm line to the fullest, IBM’s parts will most likely take priority over other outside designs. 

Next: 6800 Continued

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