Yeah, ATI has won a lot of share by offering comparable products for about 20% less than NVIDIA, as well as having a fairly robust IGP out in good numbers that NV doesn't.
NVIDIA really missed the holiday product cycle with their 6100/6150 chipset, both for desktop and more importantly mobile. NVIDIA is really trying to get stronger in mobile, and those product cycles are typically much longer than any desktop cycle. In fact, we won't be seeing any real design wins on the notebook side with the NV series until late winter/early spring. If NVIDIA would have been able to release this integrated chipset by June of this year, then we would have seen quite a few notebook products on shelves featuring this technology. As it is, ATI was able to offer a solid product at a bargain cost, and many manufacturers bought these chips up like mad.
Remember that the margins stated on these products are the gross margins, which is the amount of profit each chip gets from the base cost of just being produced. For example, if a IGP theoretically costs $15 to produce, and ATI makes a 7% margin on it, that means they are making a profit of $1.05. Now, that "fat" margin needs to pay the salaries of the people working on the product, as well as contribute to the cost of the tools and R&D for the product as well. So basically ATI looks to be taking an overall loss on each chipset they sell when you consider the larger picture. NVIDIA certainly isn't having that issue, and while their Gross margin on their products are approaching 40%, they overall profit for the past quarter was around 12%.
So, ATI is getting a foothold in the market, but at a big price.
NVIDIA really missed the holiday product cycle with their 6100/6150 chipset, both for desktop and more importantly mobile. NVIDIA is really trying to get stronger in mobile, and those product cycles are typically much longer than any desktop cycle. In fact, we won't be seeing any real design wins on the notebook side with the NV series until late winter/early spring. If NVIDIA would have been able to release this integrated chipset by June of this year, then we would have seen quite a few notebook products on shelves featuring this technology. As it is, ATI was able to offer a solid product at a bargain cost, and many manufacturers bought these chips up like mad.
Remember that the margins stated on these products are the gross margins, which is the amount of profit each chip gets from the base cost of just being produced. For example, if a IGP theoretically costs $15 to produce, and ATI makes a 7% margin on it, that means they are making a profit of $1.05. Now, that "fat" margin needs to pay the salaries of the people working on the product, as well as contribute to the cost of the tools and R&D for the product as well. So basically ATI looks to be taking an overall loss on each chipset they sell when you consider the larger picture. NVIDIA certainly isn't having that issue, and while their Gross margin on their products are approaching 40%, they overall profit for the past quarter was around 12%.
So, ATI is getting a foothold in the market, but at a big price.
