Video card sales slid in Q4 '06 as buyers awaited Vista

Now that the OS is out, sales could rebound

Revenues from the sale of add-on video cards in the last three months of 2006 were down 15% from the same quarter in 2005, as the delayed release of Windows Vista and ever-more-powerful integrated graphics processors took their toll on Nvidia Corp. and Advanced Micro Devices Inc., according to Jon Peddie Research.

In the fourth quarter of 2006, 21.1 million add-on graphic cards were sold, totaling $4.5 billion in revenue, according to figures released last week by the Tiburon, Calif.-based market research firm. The number of units sold was down 3% from the previous quarter and down 5.7% from the same quarter in 2005.

The firm said the "lull" was caused by a number of factors. Windows Vista, which is expected to boost video card sales long term due to higher graphic requirements for games and other applications, caused some buyers to hold off on making purchases during the normally lucrative holiday season, the researcher said.

Nvidia has already released a video chip compatible with Vista's Direct X 10 rendering technology, the GeForce 8800. That caused Nvidia to push down the prices for its older G7X and NV4X processors.

Meanwhile, the No. 2 player in the add-on graphics card market, AMD's ATI Technologies Inc. subsidiary, has not yet shipped its Direct X 10-compatible processor, the R600, missing several deadlines.

Peddie did not reveal the Q4 market shares of either firm. AMD had lost share in Q3 after acquiring ATI.

The final factor was Intel Corp.'s success. A nonplayer in the add-on graphics cards market, Intel is the leading maker of chip sets with CPUs sporting integrated graphics processors (IGP). It saw shipments of its latest, more powerful IGPs grow in the second half of 2006, according to Peddie.

Even so, Peddie said that Nvidia and AMD's ATI have "reasons to be optimistic in 2007." Vista, the researcher said, is likely to cause buyers to "be a bit more likely to choose a higher-performance add-in board over integrated graphics."


Copyright © 2007 IDG Communications, Inc.

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