Nvidia on unfamiliar territory

The latest word on the street is the price cuts from Nvidia to its AIB partners; $90 on GTX280 & $30 on GTX260. Although it was a much anticipated relief to Nvidia's partners after a slow start to the sales of the GTX 200 series, a lot of shuffling around has been done behind the scenes and Nvidia is taking the brunt of it.

It comes without surprise that the sales of the GTX 200 series was not as good as Nvidia's previous launches. The problem was two faced; the performance wasnt up to par and the chip was too big and expensive to produce that Nvidia had to price it as high to keep its margins. This meant that the majority of reviewing media didnt give it an outright recommendation like they did on previous launches.

Another major problem plauguing Nvidia right now is their uneven product stack. Following is Nvidia's product stack above $199:

Even though the 9800GX2 is going EOL (End-of-Line) shortly, it still doenst make the stack correct. Either the GTX280 & GTX260 need another significant price drops or the G92b needs to be priced relatively higher such that their SLI solutions are more expensive. Another significant price drop is out of the equation as Nvidia is unlikely to give more cutbacks to their partners without taking significant hits for their investors. The only solution to this problem is the GT200b; whose details will be coming up in our next article. As it stands right now, Nvidia has a lot of cannibalizing products in their portfolio.

Comparitively AMD has a much nicer product stack. Note that the 3870X2 is EOL very shortly, making their product stack look picture perfect.

Nvidia has suddenly found itself in unfamiliar territory of producing very high cost parts while their competitor has outdone them with a smaller, cheaper to produce chip (G71 vs R580 anyone?). Terming this as 'doom & gloom' is an exaggeration, however its not the rosy red times Nvidia has been having for the past couple of years either. Nvidia is a big cash cow, they can easily afford this sort of situation. Analysts expect a gain in marketshare by AMD, AIB partners not staying exclusive and more potential problems with the stock market. Interestingly Nvidia is capable of handling all that and bouncing back strongly as we have seen in the past.

Stumble it!