Is NVIDIA Becoming the Intel of Graphics Cards?

[Gregster]

For the past four years, NVIDIA (NASDAQ: NVDA ) has maintained a roughly 60% unit market share in the discrete graphics card market, with the rest going to rival Advanced Micro Devices (NASDAQ: AMD ) . New product launches and seasonality over that time drove some small fluctuations, but NVIDIA has been able to hang onto its lead.

The third quarter of 2014 marked a distinct change in this dynamic. NVIDIA saw a large increase in its market share, up to around 70%, and it appeared as though NVIDIA was starting to pull away from AMD. This could have just been a fluke, of course, but in the fourth quarter of 2014, NVIDIA's market share rose again, this time to 76%. That's about 11 percentage points higher compared to the fourth quarter of 2013.


Chart created by author; data from Jon Peddie Research

The graphics card market is starting to look an awful lot like the PC CPU market, where Intel dominates and AMD struggles to turn a profit. AMD needs a huge win with its upcoming launch of new graphics cards, expected sometime in the first half of this year. If it fails to claw back the market share that it's lost, the company risks becoming a bit player in the GPU market, leaving NVIDIA as the undisputed leader.

How did this happen?
NVIDIA has benefited from launching an extremely popular pair of graphics cards last September, the GTX 970 and GTX 980. This forced AMD to slash prices across the board, as NVIDIA undercut existing AMD GPUs on price dramatically. The GTX 970 in particular, priced around $350, has proven extremely successful.

According to the Steam Hardware and Software Survey, the GTX 970 is used by more Steam users than any AMD family of GPUs, gaining this lead in the five months since its release. There has been some controversy surrounding the card; whether it ultimately affects sales or benefits AMD is an open question.

An AMD GPU doesn't show up on the survey until the 14th spot, behind eight NVIDIA GPUs and five Intel CPUs with integrated graphics. The AMD R9 200 series, which is AMD's latest high-end family of GPUs, is the 48th most popular graphics card. While this survey isn't a perfect representation of market share, it's likely a very good one, given that Steam users are by definition PC gamers.

The launch of the GTX 970 and 980 certainly contributed to the massive market share gains NVIDIA has enjoyed in the past two quarters. But this kind of thing didn't happen following other major product launches in the past. Instead, NVIDIA's market share stayed roughly the same at around 60%.

Part of this can be explained by the temporary demand created by cryptocurrency miners at the end of 2013 and the beginning of 2014. AMD's GPUs are more efficient for mining cryptocurrency, and this helped drive GPU sales for AMD at the time. This demand is now gone, though, and that means a big market has dried up for AMD. This sudden loss of market share may have been more spread out over time had it not been for this temporary surge in demand.

Another component is that AMD has likely fallen behind technologically. The company has been slashing its research and development spending for years, and NVIDIA now outspends AMD despite the latter's far broader portfolio of products. NVIDIA's Maxwell graphics architecture is extremely efficient, and AMD still doesn't have an answer.

AMD needs a big win
AMD has a lot riding on its upcoming GPUs. There have been plenty of rumors regarding the cards, but they still haven't been officially announced by the company. The high-end versions will reportedly use a new kind of high-bandwidth memory, giving them an advantage at high resolutions. Whether this leads to higher sales, given the tiny fraction of gamers currently using 4K displays, remains to be seen.

Originally, it was expected that AMD's new cards would be built on a 20nm process, but it's now rumored that both NVIDIA and AMD are skipping 20nm completely. This means any efficiency gains will need to come from AMD's new graphics architecture. This could prove to be a problem, as a new rumor suggests that only the highest-end variants from AMD will be built on a new architecture, with the rest using the current one. What this means if true is unclear, but it does seem strange, and it will make it much more difficult to compete with NVIDIA's midrange Maxwell offerings.

AMD doesn't just need to produce good products, it needs to blow away NVIDIA, both on performance and price. This is starting to seem unlikely, although these rumors could certainly prove incorrect.

If AMD doesn't end up winning back a considerable chunk of market share from NVIDIA when it launches these new cards, it may be time to conclude that NVIDIA's lead has become insurmountable, much like Intel's lead in the PC CPU market.

NVIDIA doesn't have the same advantages that Intel has; both NVIDIA and AMD rely on third-party foundries for manufacturing, unlike Intel. But slashing R&D spending typically doesn't lead to market dominance, and that's exactly what AMD has been doing. The company's PC segment is losing money as it continues to bleed market share to both Intel in CPUs and NVIDIA in GPUs, and the game consoles are the only thing keeping the company afloat.

If AMD doesn't have a smash hit with these new cards, and if NVIDIA doesn't make a huge mistake, NVIDIA could end up becoming the Intel of the graphics card market.

http://www.fool.com/investing/general/2015/02/27/is-nvidia-becoming-the-intel-of-graphics-cards.aspx

An interesting read and some valid points.

 

[Wizzfizz]

Lets hope not, as we'll all get shafted even more. Not to mention even worse stagnation than what we're experiencing already

 

[Rroff]

I actually disagree with the comment "AMD doesn't just need to produce good products, it needs to blow away NVIDIA, both on performance and price" - while in the long run they want to pursue performance dominance they could do very well in the short term concentrating on a good robust budget offering in the 260/270 type area and 290/970 type area.

 

[ShivP]

I don't think so either.

With AMD/Intel CPUs, Intel CPUs are basically the only high-end option out there let's be honest (at over £200 ish) - with GPUs this isn't really the case, as you have the 290X which competes very well with the GTX 970, so it's not a case of a lack of innovation/progress like the CPUs
But on the economics side it may well be

 

[eyetrip]

Wasn't there an thread posted about this just the other day?

 

[Minstadave]

Gregster likes a good troll thread.

 

[Davedree]

If Amd pulled their fingers out, and managed to execute and mass produce an apu that actually improved both cpu and gpu performance over their first offering in 2011, then they'd have an influence on that market share graph up above in this thread.

4 years after Llano, we'll see Carrizo and Kaveri refresh but on the gpu side that performance has been been pretty much capped since Trinity in 2012.
They've had the perfect chance to push Nvidia down, especially in the mobile notebook,htpc/ steambox sector , instead they let Nvidia walk over them with a anorexic Maxwell and a continually failing Tegra.

 

[triss]

The fact that AMD hasnt released a new card for while does skew the results some. I'm sure after the next new gen release AMD sales will increase again and some of the increase will come right out of the 970/980 market share.
Personally i hope AMD come out with a blinder and give us all a nice boost. If Nvidia became truely dominant it would be a very black day for pc gaming indeed

 

[Kaapstad]

I think that the graph in the OP will take a dip in the next few months as 970 and 980 sales have probably peaked and 290 sales are going up.

If you discount the last 2 quarters the graph is pretty flat without the 9 series sales.

Will the bean counters who did the graph be doing another for GTX 970 returns.

On a more serious note does their graph count a 970 which is later returned and a 980 it is replaced with as two separate sales giving a false total ?

 

[Mei]

i duno about other sectors but with gamers they seem to lose it mostly with marketing,

nearly everyone ive spoken to online who streams use nvidia cards, im not sure they even knew another make existed, and ofcourse their viewers will copy, thats many million right there, AMD releasing a faster card doesnt change that

maybe it will win over 10% i duno, AMD already has good products tho, for some to not even consider AMD a option is a problem lol

 

[Orangey]

I actually disagree with the comment "AMD doesn't just need to produce good products, it needs to blow away NVIDIA, both on performance and price" - while in the long run they want to pursue performance dominance they could do very well in the short term concentrating on a good robust budget offering in the 260/270 type area and 290/970 type area.

We keep seeing these monster games like LoL coming around, that can be played on laptops, APUs etc, I'm sure that's part of the reason they're so popular. I think PC gaming is going to become huge as we approach 2020, so there'd even be room for more players but that's unlikely.

edit: literally just saw this after posting

http://www.overclock3d.net/articles/software/pc_now_viable_platform_for_konami/1

 

[MrMD]

maybe it will win over 10% i duno, AMD already has good products tho, for some to not even consider AMD a option is a problem lol

This is a big issue for AMD imo,a lot of people dont even realize that AMD cards are just as good as nivida ones,most of them just assume bad drivers,and cards that run incredibily hot(mostly from the joke of a referance cooler for the 290/x).

A lot of people also think that AMD cards use significantly more power than nvidia cards,but up until maxwell they didnt,it was like 10% or so on a like for like basis.

In the GPU market AMD have a perception problem.But when it comes to performance ect they are more than just competitive,they are equal imo.

 

[gpuerrilla]

Gregster likes a good troll thread.

Surely this is just an open debate!

This is a big issue for AMD imo,a lot of people dont even realize that AMD cards are just as good as nivida ones,most of them just assume bad drivers,and cards that run incredibily hot(mostly from the joke of a referance cooler for the 290/x).

A lot of people also think that AMD cards use significantly more power than nvidia cards,but up until maxwell they didnt,it was like 10% or so on a like for like basis.

In the GPU market AMD have a perception problem.But when it comes to performance ect they are more than just competitive,they are equal imo.

There really is not much in it contrary to what you read or people post in here. When pushed you can see either company can drop a driver update to increase performance by more than 10% if they need to. The only swaying aspects if you are a gamer is the diluted features of physx, mantle if you will actually use them in the odd title. Most smearing is between owners wanting to downplay the other side - much like childish football rivalry.

 

[SiDeards73]

I can see AMD getting bought by someone soon, and then either split up and sold off or possibly invested into, probably from China.

I hate the fact that to get top end performance currently from a cpu you pretty much have to buy Intel as the AMD offerings fall behind in most areas and overall are an inferior product now, it pains me to say that as I dream of using a competitive AMD cpu again

Should their GPUs go the way of their CPUs which lets be honest is probably going to happen, and we end up in the same scenario where it's Nvidia or nothing, then I'm selling up pc gaming and going back to consoles full time lol

It's not healthy to have 1 dominant player in a sector as they can bend you over any barrell they feel like and shaft you with whatever you want as they know you have no other options

 

[Freddie1980]

They are and already were. They charge more for equivalent products and people still snap them up.

The only difference is the descrete aib market is so small you only need to have one killer product to get huge swings in market share no doubt Nvidia bringing a new product range to the market helps when there rivals didn't have anything to counter with helps a lot. AMD will no doubt have regained its lost market share by the end of the year once there new cards hit the market.

 

[CAT-THE-FIFTH]

I just hope Intel don't have a core2 moment in graphics since with their process node advantage,and the shrinking aib market that would cause a lot of problems.

 

[Jono8]

I hope AMD keep up as we need competition.

The delay in AMD getting anything new to the table is concerning though (6 months since the 970/980 release now isnt it?). I suspect as soon as AMD release the 390x (which will no doubt be fast), Nvidia will have GM200 ready to go, and i reckon the GM200 cards will not only match or beat the 390x, but also draw a lot less power and run cooler.

This long delay from AMD is only helping Nvidia continue to reap the rewards of getting the cut down maxwell cards out early.

 

[StrongSad]

I am sure the it will swing the other way, a bit, when the new cards are released, as long as it is something new AND in a sweet spot price bracket.

I do think the longer AMD hold back the more likely Nvidia will counter with an updated 9 series, putting those who might switch sides, with more choice and perhaps, be more enthused about brand loyalty.

 

[Gregster]

The biggest problem I see AMD face is winning over nVidia owners. When you look at the 2 companies together, from a complete neutral POV, why would they choose AMD over nViida? The high end enthusiasts (most of us in this subsection) are generally clued up on what is what and what both offer.

I always remember the 7970 Vs the 680 being something of a victory for the 7970 and even the 7950 could beat the 680 at certain higher end resolutions and some games and that was a peach of a price, so AMD must have done well with both those cards??? Well, they should have done but then when you look at drivers from the off, they were not the best and the 680 and 670 beat out the 7970 and 7950 pretty much as a standard but then 10 months in, AMD released the super drivers (which they sure were) and took a nice lead. They had the extra 1GB of VRAM and the bigger bus, so it was appealing to those with higher resolutions however, 10 months to get the performance drivers out is a long time in the tech world and I imagine that most had already made their choice of what to buy long before they were released. I myself had wanted to swap out for the faster cards but I couldn't be bothered to drain loops for a marginal gain in fps.

Then we move to now and people who keep up with the GPU news can see that AMD last released a driver back in early December 2014 and we are now about to start March. This isn't a good advert and regardless of what the fanboys say, that doesn't help on gaining new customers.

You look at the 290/X and they are great cards. They are cheap compared to the competition and they should be selling really well but when you look at the latest figures from JPR, it is clear this isn't the case.

I am not overly clued up on the 285 Vs 960 but from my understanding, the 960 beats the 285 in some games and the 285 wins in others. Now the 960 costs ~£150 and the 285 costs the same. When you look about, it is the 960 that gets the publicity for some reason and is more current, so this can't help AMD sales.

I don't give two hoots what people accuse me of and it is all water off a ducks back but I want to see AMD do well and see year on year profits for both companies. I want to see both investing in future products, I want to see both giving customers a dilemma on what to buy. There is no two ways about it, if AMD want to compete in the GPU market, they have to up their game. It can't have helped having to cut 7% of the workforce either and I just hope they didn't cut in the wrong places.

 

[shankly1985]

Zzzzz

All this market share will never make me think what GPU I will buy..

I buy what does me, I don't care if a 980 is 10fps faster than a 290x so long as the 290x is hitting my needs then am more than happy..
I could go and buy sli 980s right now but tbh what gain would I get over what I have now for the much extra price? Answer is very little..

In most games so long as am over 120fps I don't care.