Power versus value
NVIDIA launches its next generation GeForce GTX 260 and GTX 280 cards today and AMD/ATI’s HD4850 and HD4870 are due to make their debut next week. There will be a ton of buzz, reviews and opinion around the launches but very little of it directed at the channel.
For most of its history, the graphics world has followed a similar strategy to the fashion industry. It has directed most of its marketing and PR efforts into hyping up the latest high-end products in spite of the fact that very few people can afford them.
This is equivalent to those absurd cat-walk shows that the top fashion designers hold, at which emaciated valkyries swagger up and down, adorned in the kind of high-end kit that only they could conceivably wear or afford.
Any graphics card costing more than a couple of hundred quid is only going to appeal to the most enthusiastic of enthusiasts, but regardless most of the tech press are going to focus on the performance leader. The thinking behind the marketing strategy that takes advantage of this is that the buzz and kudos of being the brand behind the performance leader trickles down and drives demand for mainstream products.
Recently AMD/ATI seems to have more or less abandoned this policy. With the exception of the HD 3870 X2, which put two GPUs onto one card, it hasn’t really competed for overall performance leadership for a while – instead focusing on the mid range and trying of offer superior ‘bang-per-buck’, i.e. performance versus cost.
Clear separation
Whether this strategy was born of design or necessity is difficult to say, but what it creates for consumers, and thus the channel, is a clear separation between the brands. The question is: which is the more compelling message, performance or value?
Historically the equilibrium has gone in favour of the performance leader and it seems no amount talk about value or bang-per-buck has been enough to persuade the market otherwise. The current macroeconomic climate, however, may result in the value message having greater resonance.
The credit crunch, price of oil and falling property prices have left everyone feeling skint and, in the UK at least, looming stagflation means that the Bank of England is more likely to raise interest rates than lower them. What better time to be talking value?
Of course, NVIDIA doesn’t just make high-end products and at the competitive £100 segment you can currently get your hands on an 8800 GT or 9600 GT. AMD/ATI’s HD 3870 is a pretty good deal at around that price too.
So here we have the problem with focusing on a value message: you have to keep improving the bang-per-buck offering. AMD/ATI is, for the time being at least, forced to be conspicuously cheaper than NVIDIA to counter the greater appeal that comes from being the performance leader.
It’s believed that the 4850 is likely to target the above segment and it will need to significantly outperform the incumbents, let alone the mid-market GTX 200 series products that are bound to follow for it to be a compelling offering for AMD/ATI’s target market.
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