September 7, 2007

Graphics Add-in Board Market Rebounds in Q2 of 2007

Tiburon, Calif. - Jon Peddie Research reports that in the second quarter of 2007, the graphics board market bounced back with nearly the same vigor with which it had nose-dived the previous quarter.
JPR places much of the blame for Q1’s particularly poor ASPs on the clearing of inventory as both AMD and Nvidia were at varying stages of product transitions. The research firm’s expectation – and industry’s hope – was that Q1 was likely just a temporary adjustment rather than an indication of a longer-term trend. Fortunately, Q2 results appear to confirm just that.
Not only were units up, but ASPs experienced a strong recovery after the dismal Q1. In all, Q2 2007 saw 21.1 million AIB units shipped, along with roughtly $5.8 billion in revenue (street value). The rebound in revenue represented an increase in sequential growth over the disappointing Q1. But Q2 was more than just a rebound making up for the Q1 drop, as the quarter looked respectable viewed in the year-to-year context as well, with units up 10.6 percent.
With Q1 now appearing as an anomaly, JPR sees a healthier short-term outlook on the market. Both Nvidia and AMD have recently released more mainstream-priced product derived from their latest generation GPUs.
Nvidia has pushed out the cost-reduced GeForce 8600, 8500, and 8400 series to complement the top-of-the-line GeForce 8800 models. Meanwhile, AMD has the Radeon HD 2600 and 2400 out, offering up its latest R600 generation technology at lower price points as well. However, the long-term, big-picture trend that will continue to pressure the AIB market is the encroachment of graphics processors integrated in chipsets (IGPs).
IGPs have vaulted Intel to the top of the graphics heap, taking a big chunk of the market formerly owned by add-in boards housing discrete graphics processing units (GPUs). And beyond IGPs, the market will also have to deal with pressure from the impending combination of CPU+GPU coming in 2008.T
he Q2 2007 edition of Jon Peddie’s Market AIB Report is available now in both electronic and hard copy editions. The report provides an in-depth look at the PC graphics market and includes unit shipment and segment market share data, and trend analysis.