The new chips are some of the most impressive pieces of silicon ever produced--sporting more than half a billion transistors and hundreds of processing engines, and accompanied by more than half a gigabyte of memory.
The magic lies in their ability to run games using DirectX 10, the latest version of the software from Microsoft, enabling games to run on its Windows operating system.
Only a handful of games take advantage of DirectX 10 now, but the most anticipated releases later this year--jungle shooter Crysis, online role-playing game and --all use it.
"People are buying the new cards because you buy with a degree of headroom to support games coming down the pipeline. People want to buy today knowing they can maximize that experience," AMD spokesman Jon Carvill said.
AMD brought its newest Radeon chip to the table last month, giving it a powerful product to compete with Nvidia's GeForce lineup, which it refreshed in late 2006.
Reviewers have praised the $400 Radeon 2900 XT's specs and said that although initial tests showed it underperforming a comparable Nvidia card, the results should improve as AMD's engineers tweak its software.
"Fortunately, AMD's driver team has a very solid history of delivering steady performance improvements as they become more familiar with the architecture. A month or two from now, the performance picture could be drastically different," FiringSquad, a game hardware review site, recently said.
Nvidia has had six months to flesh out the GeForce family, which is now capped by the 8800 Ultra, whose $800 price tag essentially limits it to hard-core gamers who don't blink at spending as much on a PC as other people would spend on a car.
"That's for the guy who has everything. Amazingly enough, we sell a ton of them," said Derek Perez, head of public relations for Nvidia. "It's a lot like the car industry--you've got to have the fastest hot rod."
At the other end of the spectrum is the 8400, which goes for well less than $100 and puts next-generation gameplay within reach of the mass market, albeit with images that are less sharp and motions less smooth than pricier cards produce.
All that has helped Nvidia grab market share from AMD. In the market for standalone graphics cards--rather than the low-power integrated graphics chips in many inexpensive PCs--Nvidia saw its share rise to 59 percent in the first quarter, up from 47 percent a year ago.
"Nvidia's 8 series is competing against AMD's prior generation right now. The competition will likely heat up in the second half as AMD fleshes out its 2000-series product line," said Dean McCarron, head of market research firm Mercury Research.
AMD promises that midrange and low-end Radeons will be coming out in time for the crucial back-to-school PC-buying season.
"Right now, what we're focusing on is getting our mainstream products to market. These are the big-volume sellers for us and will drive mainstream adoption of DirectX 10," Carvill said.