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The Rising Cost of Graphics

 

Yet Another Glass Ceiling?

 

by Josh Walrath

 

            A few weeks back NVIDIA released their GeForce 7800 GTX 512 MB card to great acclaim as well as stupendous sticker-shock.  This monster had a massive cooler, redesigned PCB, ultra-fast 1.1 ns GDDR-3 memory, and a core clocked much higher than anyone was truly expecting.  This all came at a hefty price of course.  NVIDIA set the MSRP at $649, but during the first week we saw the lowest prices for these cards hit $699, and now that it is several weeks past the introduction prices have actually increased on these cards to $749 at most online shops.  For the past several years we have seen a steady increase in the price of the performance crown cards, and it doesnít look to hit a ceiling anytime soon.

            High end hardware has always been expensive, and when we look at the beginnings of 3D we see the standard 2D graphics card priced below $200, while the Voodoo Graphics was introduced at $399.  While that $399 price didnít last long due to a massive drop in memory prices that allowed it to be sold for $299, we didnít see a significant increase in high end card prices for the next few years.  $299 was seemingly a magic number that many stuck to, and a large group of enthusiasts were ecstatic about owning the latest and greatest for $299.  Unless of course that user was willing to buy two Voodoo 2 12 MB cards and use them in SLI for $598.

            In the past few years successive cards from both NVIDIA and ATI have pushed that upper price ceiling higher and higher, and now we are looking at products from both manufacturers that retail for well above $549.  Not only that, but with SLI and CrossFire the hard core enthusiast has the ability to spend $1500 alone on the graphics subsystem of their computer (in this case 2 x 7800 GTX 512 MB).  The question we need to ask ourselves is if we can expect to pay upwards of $1000 for a single video card anytime soon? 

Going to the Source

            This question was a definite concern for me.  While prices on computer parts have fluctuated throughout the years, the overall trend has been for more advanced products that hit lower price points.  We are definitely seeing a big change here on a variety of fronts.  To address this I sent off a question to Brian Burke of NVIDIA.  I figured since NVIDIA is on the forefront of offering high end products at pricepoints above $499, they would have an interesting answer, as well as some type of justification for what is happening.  My email is in bold, and Brianís reply is in blue. 

I have to ask thisÖ are we looking to see $1K video cards soon?  With the way prices have been climbing for the past several generations, and how well the CPU guys have gotten away with offering their extremely expensive CPUís, will this be sooner or later?  I know Jen-Hsun talked about product margins hitting 45%, but where do you think the ceiling is?  Or do you think that consumer pressure will remold these pricing tiers?  Donít get me wrong, I have no problem with people offering high priced products, as the general consumers are not under any pressure to buy them.  It seems that these prices are really starting to erode the enthusiast base that once thrived on the pride of buying a top end card for $299.  Those guys seemed to be a great source of advertising and a super fanbase.

People need to look at the price in context to the rest of the line and what it means in the big picture to the gamer. If you want a $299 graphics card, we have one that has a huge amount of technology and performance.

The reason we have that amount of horsepower at that price point is because we also have a $649 card at the top end and drive the technology down in to the lower product segments. We have spent over 1 billion dollars in R&D over the last 3 years to make that happen--the benefit of which goes squarely to the gamer---the consumer. Because of that investment, we have a whole line up of fantastic products at every price point.

Never before has the gamer been in such a fantastic position GPU-wise. 6600 DDR2, 6800 GS, 7800 GT, 7800 GTX or 7800 GTX512.....those are all great options from $100 up to the high-end.

This is a great time to be a gamer. I would be sad for the enthusiasts if we were forced to design GPUs to fit in to a $199 or $249 or $399 price ceiling. In that case, the rapid progression of technology, which NVIDIA is the driving force behind, would slow up.

            All marketing aside, Brian has some very good points.  What really is the price for the tremendous advances and growth we have seen in consumer 3D graphics?  They certainly donít conjure these products out of thin air.  On the GeForce 6x00 series alone, over 100 engineers spent 2+ years working on the core technologies behind those chips.

 

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