NVIDIA suffers massive GPU market share slide

Chip maker NVIDIA saw a massive GPU market share slide during Q1 '11 according to estimates released by graphics research and consulting firm Jon Peddie Research.

The estimates show NVIDIA sliding over 28 percent, year-on-year. Where there are losers, there are winners. Jon Peddie Research predicts that AMD has seen its market share by over 15 percent, while Intel has seem a market share growth of just under 10 percent.

Not only has NVIDIA slid well into third place, if this latest data is correct, NVIDIA is rapidly sliding out of the game. Sure, it has been a tough quarter for the PC sector, with shipments slipping 5.4 percent, but a slid of this magnitude means that NVIDIA has problems.

So, what's gone wrong at NVIDIA? Well, the company did have that GPU overheating debacle back in 2008, which shook OEM and consumer confidence. Then NVIDIA got ousted from Apple hardware (which was bad for NVIDIA because while the PC market was shrinking, Apple was experiencing a growth spurt).

NVIDIA needs to regroup before its market share slides even further.

[UPDATE: This in from an NVIDIA spokesperson:

The topline report only covers overall graphics shipments, which is no longer a relevant metric for NVIDIA since we exited the chipset business. Jon Peddie and Dean McCarron of Mercury Research both indicate that the reason for NVIDIA's decline in overall share is simply because we no longer compete for integrated graphics.

NVIDIA competes in the discrete graphics market, where we remain the market leader with more than 50% market share. We have a strong position in the desktop market, particularly in the high-margin segments, where our DX11 desktop GPUs are experiencing rapid growth. In discrete notebook graphics, we're at the beginning of a significant share gain, as the industry transitions to Sandy Bridge.

It's a fair point, but it still doesn't convince me, and here's why. First off, integrated graphics are in because integrated means cheap and right now cheap sells. Integrated will become even more important as AMD and Intel increasingly make "GPUs on the CPU' a norm. This still leaves room for discrete, but that sector will undoubtedly shrink.

Another issue here is that I see the discrete GPU market shrinking as the gaming PC (which needs a new graphics card at least once a year if you want to keep up) gives further ground to the games console. Relying of discrete graphics, in particular high-end, high margin is dangerous when money is tight and consoles are cheap.]