Chicago (IL) - In previous years, no other segment of the computer component manufacturing industry has seen such a dramatic level of price gouging as the graphics cards business. In late 2004, paper launches, low production yields, and artificially inflated demand pushed street prices for Nvidia's 6-series and ATI's X800 close to the unprecedented $1000 mark. Promising a bit more restraint in its pricing policy, Nvidia launched the GeForce 7 in volume, bringing graphics card pricing back to a more reasonable level.

Back in October 2004, readers of Tom's Hardware Guide reported being stunned by the prices ATI and Nvidia cards were fetching. Despite confirmations from both ATI and Nvidia that their high-end X800 XT PE cards and GeForce 6800 Ultra cards, respectively, were shipping in volumes of tens of thousands per month, availability of both models in US markets was virtually nil. The few boards that did trickle into North America were almost immediately sold by Web retailers, and then just as instantly resold on eBay, with some auctions closing just below $1000.

Remember, these were just graphics cards , not complete computer systems. We at Tom's didn't hesitate to express our opinion that this marketing environment - whether intentionally or accidentally - was artificially created by graphics processor manufacturers, and that it hurt the interests of their customers as well as erode their credibility.

So it was a surprise to us, when Nvidia launched its 7800 series last June, that the company proclaimed it to be immediately available in volume . Avoiding shortages at launch time has proven to be a good strategy for companies wishing to hold street prices closer to MSRP. This allows consumers to actually purchase a product for at or near the price they were promised. At two months into the Nvidia 7800's life cycle, inventory on-hand appears to be ample, giving us good reason to check the current price levels for ATI and Nvidia boards in the high-end and upper mainstream segments, starting at the $150 price point. For our Trendwatch evaluation, we are using the Market Reporter tool provided by PriceGrabber.com, which is also the comparison shopping service for tgstores .

Nvidia offers six cards in this price range based on different chips, all of which are SLI capable. These include the 6600 GT, which currently retails for an average of $162, along with the 6800 ($164), 6800 GT ($310), 6800 Ultra ($487), 7800 GT ($407) and the flagship 7800 GTX ($505).

Whereas all Nvidia GeForce 6 cards experienced a substantial retail price increase right after launch (Dell, for instance, raised its price for 6800 Ultra from $499 to more than $600), the two-month-old 7800 GTX exhibits a retail pricing behavior that is more in keeping with the patterns we expect from other component categories. Introduced with a suggested retail price of $599, 7800 GTX cards today can be purchased for an average price of $505, a drop of 16.5% - which is about 36.5% above its estimated manufacturer cost ($370). 7800 GT cards were launched in early August, also in volume, and channel availability of such cards is indicated to be slightly above demand. As a result, prices for the 7800 GT have dropped about 8% in the two weeks since its introduction.

ATI currently offers four upper mainstream and high-end different available graphics card models through Web retailers, according to PriceGrabber.com. Radeon 9800 Pro sells for an average price of $203, along with X800 XL ($271), X850 XT/PE ($416), and X800 XT / PE ($431, with some as low as $330).

While ATI cards currently maintain relatively high price levels, all four of these models were clearly affected by Nvidia's launch of 7800 GTX on June 22, compelling Web retailers to immediately respond by discounting ATI cards. On the low end, ATI 9800 cards were reduced by an average of 24%, with X800 XL discounted by an average of 9%. ATI's high end was hit especially hard, with discounts of 24% for X800 XT, and 39% for X850 XT. Some Web retailers dropped X850 XT prices from $580 to $350 in a span of just three days.

Today, Nvidia clearly controls the standalone desktop graphics chip market, according to data from PriceGrabber.com. In-volume availability is responsible not only for driving down Nvidia prices to a level the market finds reasonable, but for forcing ATI prices down in response. After years of consumers paying premiums for new graphics chips, these price drops represent a positive development for enthusiast customers who keep up with the newest technology. Yet bargain hunters, too, may find their patience paying off, as prices for high-end GeForce 6 and Radeon X800 cards have plummeted by over 25% in just the last three months.