Graphics cards sales down more than 12%

Tiburon (CA) - Just a few days before the official release of Windows Vista, which many consider an important factor to convince PC users to upgrade to better graphics hardware, a market research firm says that graphics cards sales have slowed significantly in the first three quarters of the year.

According to Jon Peddie Research (JPR), third quarter graphics boards revenues came in at about $4.97 billion, which translates into a 4.4% decline over Q2 and a 12.2% decline over Q3 2005. For comparison, graphics add-in-card sales hit a high of $5.88 billion in Q1 of this year.

JPR analyst Alex Herrera attributed decreased sales to the fact that both Nvidia and AMD/ATI were at the "tale-end" of the graphics chip generation in Q3 and needed to knock down prices in order to clear out their inventory. JPR estimates that 21.8 million graphics boards were sold in Q3 - a 10.6% increase sequentially and a 7.7% increase over the same period the previous year.

Revenues are expected to pick up for the seasonally strong Q4. "Although the market value has been declining, we expect to see the fourth quarter show a rise due to the holidays, new products from Nvidia’s partners, and the increased gains in dual add-in board systems," JPR said. Nvidia was able to expand its market share in the graphics card market to 59% in terms of units and 56% in terms of dollars, according to the market research firm. ATI held about 43%. Other suppliers, such as S3, accounted for just $29.4 million or 0.6% of total graphics cards sales in Q3.

The strongest graphics card market continues to be the performance segment between $200 and $300 with a revenue share of 75%. Mainstream cards (below $200) accounted for 13% of units sold, followed by workstation cards (5%), enthusiast devices (4%) and entry-level cards (below $100, 3%).