Computex 2003 - Day 3: ATI and NVIDIA

So it continues, after a long day of hitting the show room floor, we found a bit more time to talk with other video card manufacturers. It seems that this time NVIDIA and ATI are a bit both to blame for shortcomings that users will needlessly experience. It is likely you are already familiar with our Day 1 coverage and know about how NVIDIA has been reassuring video card partners that newer and better graphic drivers will fix performance issues for DX9 games. Just to reiterate, manufacturers are skeptical that NVIDIA will be able to accomplish this, but nevertheless, they want to wait it out. Actually, one manufacturer surprised us a bit by saying something to the effect, “If they can pull this rabbit out of the hat, it will be the best rabbit pulled out of a hat ever.” NVIDIA’s emphasis on driver support seems to be the proverbial million dollar question, and by all accounts, it probably will be resolved as soon as the drivers get publicly released.

Today, the interesting thing is that the strategic planning of NVIDIA hasn’t seemed to change in light of any of the DX9 controversy nor has ATI’s. Traditionally, NVIDIA and ATI have gone after the volume market and those tier 1 manufacturers that have the brand name and the production volume to push forward in that market. This is the expected norm since the pure volume basically translates to higher profits per investment. However, according to non-volume vendors, NVIDIA and ATI have been casually ignoring them, which some are attributing to a disjoint between sales and marketing. While we need not go into full details, this does not particularly bode well for the consumers and end-users. If [significant] non-volume market players are reporting they are finding it hard to deal with NVIDIA, ATI has a strategic opportunity to build more alliances and try to bring their product to the market across the board, but at this point, ATI’s developmental support for such companies is said to be reluctant. Remember, one big factor in a contract negotiation is developmental support, basically technical support for manufacturers. Manufacturers run into problems when producing early designs, and in order to fix whatever issue it may be, they need prompt service from the graphic or chipset makers. If they can’t do this, it means that manufacturers are going to get product launches delayed, which means they can’t come to the market on a competitive timeline.

Actually, one manufacturer went as far as to say that they would have switched to ATI earlier this year had the developmental support been there. For them, they still feel that ATI is ignoring a large market by focusing on only volume. NVIDIA, on the other hand, has not been coming back to them with the willingness they would like to see. Those same non-volume players collectively still make up a significant market share, so their view of NVIDIA prioritizing them as second place isn’t good. Non-volume market players are still in touch with their respective niches and the overall market, and have the ability to disseminate information to the rest of the market though the niches. Basically, this means that consumers in niche markets may be left “holding the short end of the stick,” because free market competition hasn’t been fully permitted. If NVIDIA is alienating market players, irrespective of size (volume or non-volume), one can quickly deduce this is an opportunity window for ATI. On the flip side, if ATI is not providing the developmental support and everything else that encompasses partnership then, NVIDIA can refocus on this as part of a collective package that comes in partnership. At the moment, we are receiving conflicting reports on NVIDIA market strategy for the future. There is some speculation that NVIDIA would shift primary focus away from graphics, but this is a gamble, since all of their market perception: multimedia, chipsets, etc… derives from their graphics’ name. Behind closed doors, we have not heard reports from manufacturers suggesting that NVIDIA will shift primary focus away from graphics, so we will have to wait to see on this too. As far of all of this goes, we are only sure of one thing: there are unsatisfied [volume and non-volume] video card market players, and now there is an opportunity window for something to happen.