Wednesday, May 23rd 2012

Graphics Add-in Board Shipments Seasonally Down Just 2% From Last Quarter

Jon Peddie Research (JPR), the industry's research and consulting firm for graphics and multimedia, announced estimated graphics Add-in Board (AIB) shipments and sales' market share for Q1'12. The JPR AIB Report tracks computer graphics boards, which carry discrete graphics chips. They are used in desktop PCs, workstations, servers, and other devices such as scientific instruments. They may be sold as after-market products directly to customers or they may be factory installed. In all cases, they represent the higher-end of the graphics industry as discrete chips rather than integrated processors.

We found that AIB shipments during Q1'12 did not behave according to past years with regard to seasonality, and was lower on a year-to-year comparison and on a quarter-to-quarter comparison for the quarter. Overall, and for the PC market in general, 2011 has turned out to be an anomalous year as businesses and consumers take their own path to recovery.


The quarter in general
● Total AIB shipments decreased this quarter from the previous quarter by 2%.
● AMD increased its market share to 37.8%, Nvidia's market share slipped but still retains a large majority at 61.9%.
● Year-to-year this quarter AIB shipments were down 16%.
● Over 88 million PCs shipped worldwide in the quarter, an increase of 1.8% compared to the previous quarter, (based on an average of reports from Dataquest, IDC, and HSI).

Normally, this quarter of the year is down, and this year's quarter was no different, but the decline is less than the 10-year average. The ten-year average change for AIBs in the first quarter is -2.5%; this year it was lower.

AMD introduced the new Radeon HD 7900 series early in the quarter and as a result picked up market share.

Nvidia got off to a slow start in Q1 and cited two main reasons for the significant decline: The global disk-drive shortage caused by the flooding in Thailand had more impact on the mainstream GPU segment than anticipated. Some PC OEMs were reduced shipments. And the higher prices of disk-drives constrained some PC OEMs' ability to include a GPU in their systems.

Matrox has not developed a new GPU in years but has found clever and imaginative ways to leverage the part they have. Selling to the signage and industrial markets, some low-cost white box workstation builders, the company has completely disappeared from the consumer segment.

S3 is similar to Matrox, and is not investing any new R&D in designs since acquired by HTC for its patent portfolio.

The integrated graphics chips appeal to low cost segments of the PC market, namely corporate PCs and very low-end consumer machines. Low cost attracts buyers in these categories rather than graphics capability. Thus, entry-level machines use IGP. Embedded graphics processors are simply replacing integrated chipsets, and not having any impact on add-in graphics boards (AIBs), which are holding steady. However, the new embedded graphics processor from AMD, the A10 (Trinity) has shown very good performance and have replaced entry-level AIBs.

Year to year for the quarter the market decreased. Shipments decreased to 15.8 million units, down 2.95 million units from this quarter last year.
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6 Comments on Graphics Add-in Board Shipments Seasonally Down Just 2% From Last Quarter

#1
cadaveca
My name is Dave
Excellent news. I have suspected as much, but someone asked me about this, and that same day, JP seemed to indicate that things were on a upturn.

Personally, I don't buy into the whole HD shortage affecting sales stuff, but that's just me.

HOwever, this is unit sales, not dollar figures. I wonder how THAT looks....perhaps sales have lessened, but profits increased? That's something i have NO IDEA about.
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#2
Andy77
by: cadaveca
I don't buy into the whole HD shortage affecting sales stuff
Affecting and negatively impacting them are two different things. In this case TSMC's fups lessened the sales of AMD. They could have gotten more out of it and they still can considering the 7900 is overall a better offer.

They mostly publish revenue and nv reported a 6% lower revenue on Q1 for the GPU segment.
AMD states GPU revenue was flat but income was up and saw an increase in what they saw as a generally down Q.
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#3
cadaveca
My name is Dave
I did not see a single store without HDD's in stock, so I cannot agree with there being a real HDD shortage in Q1. There may be less units for sale, for sure, but it doesn't really seem to affect the market that much if on any given day i can buy any HDD I want.

I'd say that the pricedrop on GTX580 when 7970 came out was not sufficient to entice purchases, and THAT and a lack of current products(due to wafer shortages) is what held back nV's revenue, not a lack of HDDs. IF nV did post higher profitability, then blaming HDDs seems..well...whatever.
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#4
Andy77
by: cadaveca
I did not see a single store without HDD's in stock, so I cannot agree with there being a real HDD shortage in Q1.
It's not that they didn't had them in stock, they did, but at an inflated price that made SSD's look affordable. If I was one of those people I would have built a PC without an HDD, gotten and SSD or a used HDD, until prices dropped to normal levels.

Regarding NV's sales epoxied to those of HDD's, NV is a big OEM supplier (the reason for the 62%) and OEM's can't use the logic I laid above. If they put boxes on shelves those boxes need to have HDD's in them or have a higher price for the more expensive HDD's or SSD's alone. Considering that most OEM boxes are cheap builds a good increase in the price of the HDD will wight heavy on the overall price of the box. Then there are the managers who plan these builds... a lot of them would say "I won't plan because it will backfire and I won't be able to sell", hence lower sales for nvidia as well.

It would be helpful if we had research about OEM ready builds as well. How much did this type of business sunk because of HDD shortages. Then we can figure out if nvidia was telling the truth or not.
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#5
Benetanegia
by: cadaveca
I did not see a single store without HDD's in stock, so I cannot agree with there being a real HDD shortage in Q1. There may be less units for sale, for sure, but it doesn't really seem to affect the market that much if on any given day i can buy any HDD I want.
There were other factors for sure, but that does not exclude HDD shortage and inflated prices as one, a big one.

They are talking about sales volumes here and most is OEM low end cards. The number of grapics chips shipped last quarter was 123 million iirc (as posted on TPU frot page 2 days ago), of which 15.8 million are add-in boards (as per the OP). Look at the ratio.

What we are talking about here is OEM vendors deciding to ship more PCs without an add-in board because HDDs cost more. Not much, because the effect of HDD shortage is not so massive, but if in order to balance the sheets OEMs decided to shift just a few of them, that makes a big difference for Nvidia as an AIB supplier and a very little one for PC vendors. They currently sell, bluntly calculated, about 90% of PCs without AIB, shifting to a 92%/8% does not affect their bussiness, but they are cutting the associated AIB market by 20%, see the difference?

Just because you see HDDs in stores, that does not mean that OEMs do not see their bussiness affected and that they will try to balance that out. HDD prices are still a lot higher than before the flood. If that makes their PCs cost 2% or 5% or whatever percent more, they will try to cut those costs somewhere and AIBs is a good place to start.
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#6
HumanSmoke
by: cadaveca
HOwever, this is unit sales, not dollar figures. I wonder how THAT looks....perhaps sales have lessened, but profits increased? That's something i have NO IDEA about.
Haven't seen any market segment breakdown for a while. Mercury Research published figures last year (Q2 2011)


Investor Village has a full summary somewhere. Found the meat of the info on their boards, although you may need to delve a little further for all the relevant details.
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