"Less is more"
The issue that’s dominated the news on HEXUS this week has been the launch of AMD/ATI’s new generation of GPUs: the Radeon HD 4800 series.
As our own reviews show, the 4850 and 4870 are excellent products at very competitive price points. What’s more, the 4850 is already available in quantity and the 4870 isn’t far behind.
What makes the launch particularly intriguing, however, is that it’s the first time for years that AMD/ATI has given arch-rival NVIDIA genuine cause for worry.
This is the key point made by AMD VP of worldwide GPU and chipset sales, John Byrne, speaking to HEXUS.channel. “At last we’re making a dent in NVIDIA,” he says.
This was specifically in reference to the apparent success of AMD’s strategy of producing the best performing product at the $199 price point, which was the price of the 4850 at launch. As Byrne explained, this prompted an immediate reaction from NVIDIA, which had its similarly performing GPU, the GeForce 9800 GTX, priced at $290.
“NVIDIA was anticipating a launch date of June 25th and they had prepared to drop the price of the 9800 GTX to $199 and launch the GTX+ at $229,” he says. “However, at the time of the early launch NVIDIA only had a $30 channel rebate scheme in place so they had to offer an additional $60 discount. A $90 price drop equals tens of millions off the bottom line.”"A $90 price drop equals tens of millions off the bottom line.”
So the AMD/ATI launch has cost NVIDIA in the short term, but as BFG president Scott Herkelman reminded us at the start of this week, NVIDIA has pretty deep pockets these days and can afford it. This big question is whether this is just a temporary blip or the start of a long term shift in favour of AMD/ATI.
Byrne thinks AMD/ATI’s aggressive pricing is just one of its current problems. “One of NVIDIA’s challenges is how to bring a new series to market when you already have so much stock out there,” he says. “Also we have a ‘less is more’ partner strategy whereas NVIDIA’s is ‘more is more’ and that doesn’t work when times are tough.”
NVIDIA has roughly three times as many board partners as AMD/ATI, which can help it maximise sales when its GPUs are heavily in demand but can complicate matters when adjustments are needed, such as when your competitor gets its act together.
For a look at how AMD has gone about getting its act together on the GPU front, read on...