I wonder how NVDA stock holders are going to respond to this, their stock has dropped over 50% in 2 days.
Nvidia Corp., the worldâ€™s No. 1 supplier of discrete graphics processing units, plans to further reduce pricing of its high-end graphics cards to sustain its market share, market rumours claim. But there are some problems: customers who have already paid for their expensive graphics boards would hardly be happy with price-cut, moreover, manufacturing costs may be too high and Nvidia may not afford a price reduction.
Citing sources among Nvidia add-in-card partners, HotHardware web-site reported that Nvidia plans to lower the price of its flagship GeForce GTX 280 graphics card to $499 from $649 shortly from now. Presently the companyâ€™s partners sell less expensive GeForce GTX 260 for $399, however, it is unclear whether the developer plans to reduce the pricing of this model too.
â€œ[The GeForce GTX 280 price] may be a little higher, or potentially even a little lower (than $499), but that [is] something definitely in the works,â€ an anonymous supplier of graphics cards said in a brief interview with HotHardware web-site.
The GeForce GTX 260 and GTX 280 graphics cards are based on Nvidia G200 graphics processing unit, which is very large in size and is believed to be very expensive to manufacture. Actual graphics cards utilize very advanced power supply chain as well as 512-bit memory bus, thus, they are pretty expensive to make as well. While the exact price of the chip is unknown, it is believed to be over $100, which is a very high price for a chip. Since the manufacturing costs are very high for Nvidia, it is unclear whether the company will make substantial profit selling its high-end products.
Nvidia needs to decrease pricing of its high-end graphics cards as its arch-rival ATI, graphics product group of Advanced Micro Devices, is finally back with high-performance ATI Radeon HD 4850 and 4870 graphics cards that are priced at $199 and $299, respectively. According to performance benchmarks, two ATI Radeon HD 4850 graphics boards quite frequently outperform the GeForce GTX 280 while costing less, which is why many enthusiasts may prefer two higher-end ATI Radeon HD 4870 models over the offering from Nvidia, even despite of the fact that multi-GPU operation heavily relies on drivers.
Earlier this week Nvidia issued a warning regarding its earnings during the second quarter of fiscal 2009.
Nvidia did not comment on the news-story.