An expo like the Computex enables us to directly speak with a number of corporate managers and thus to have some rather interesting and frank discussions. It has been some time that Nvidia’s very aggressive strategy in the high end segment has posed problems for numerous partners. We therefore broached the subject with each of them and most did not hold back their criticism.
There has been an infernal pace of new product releases and the launches of temporary "stopgap" cards (like the GX2 models that were until the new high end arrived) which aren’t always too successful and still require the renewing product lines. This prevents graphic card manufacturers from setting themselves apart and innovating in this domain.
Product lives are so short that developing something different in this segment means the risk it will arrive on the market when a new high end has already been launched or it will be so late that its product life will be ridiculously short. Nvidia intends to control everything on these products and besides adding their own logo and begging for sufficient allocations of successful products, they are simple spectators. And here is another problem; Nvidia uses the low availability of successful products (like the future GeForce GTX 200) to force its partners to follow pace.
For several weeks now, different partners have told us the situation has become even more complex for the launch of the GeForce GTX 200 because this time Nvidia isn’t simply deciding on the allocations on a case by case basis per partner but also is choosing the countries in which they are authorized to sell the cards they receive. Thus, certain manufacturers do not have the right to sell these high end cards in France, for example.
For Nvidia, reinforcing its control was necessary given the low availability available at the launch date in order to assure that there would be cards in all countries. Otherwise, partners could have concentrated on the countries that interested them the most and thereby leaving other regions sulking and critical with just a ‘’paper release’’ of the GeForce GTX 200. However, this mismanagement is unacceptable for some which are clearly not happy.
On the other hand, some have benefited from this strategy and are rubbing their hands together. Besides the reason mentioned by Nvidia, it’s obvious that those who play the game the best and have a well established brand are favored. For Nvidia, this involves building loyalty with its most significant partners for each market and limiting competition in order that there are larger profit margins. In the long term, the strategy means reducing the number of partners or keeping them in certain markets. Even if at a recent press conference organized by Nvidia, its CEO Jen Hsun Huang maintained (in beating around the bush) that this was not at all the case, no one is ignorant, especially Nvidia’s ‘’partners’’.
So this group is becoming more and more irate with Nvidia; however, they say that despite everything the success of the GeForce is still the biggest reason for not jumping ship. Nividia knows this very well and is therefore not afraid to be aggressive. Ironically, some are thinking that they could offer better products and make more money if competition from AMD was better.