NVIDIA enters retail graphics card market at Best Buy

Subject: Graphics Cards | October 6, 2010 - 06:30 PM |
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It has been an interesting couple of weeks for NVIDIA as far as we are concerned.  The company hosted a handful of press and a huge group of researchers and academics at the GPU Technology Conference to demonstrate the value of GPU computing, CUDA and the programs that NVIDIA has setup to support these programmers.  In this editors view NVIDIA did a great job there and clearly demonstrated that the push with CUDA was worth the effort and the criticism over all these years.  Rumors of AMD next-generation of graphics cards are circling reminding us all that NVIDIA was already well behind AMD in the move to DX11.  And now, we have the very interesting story of NVIDIA deciding to enter the card sales market by offering boxed retail graphics cards at Best Buy.  


What you are looking at is the first boxed retail NVIDIA graphics cards on the shelves at Best Buy; photo courtesy of our buddy Kyle at HardOCP who already wrote extensively on this move and his thoughts/opinions on the subject.  After glossing over the subject for a couple of days I thought it was worth noting where I thought NVIDIA stood in regards to its future, its partners and retail sales at Best Buy.   
For those of you that might not understand the implications, let me give you a quick overview.  Until this card went on sale, NVIDIA has always sold GPUs or unbranded graphics cards built for NVIDIA to its partners (EVGA, PNY, Galaxy, ASUS, MSI, etc) and let them handle the sales, much of the marketing, stocking and all the other pros and cons associated with card sales. This meant that NVIDIA's partners competed with each other, but not NVIDIA directly.  Years ago, ATI used to be in the both the GPU sales and graphics card sales markets but after the ATI/AMD merger they decided to move out of that field and let their partners handle all of that.  NVIDIA is going the other direction in this case and is going to be competing with the likes of Galaxy and PNY on the Best Buy shelves.
I talked with NVIDIA today about this and got some information and background.  First, the company stated that they are only doing this with Best Buy currently, though they of course wouldn't say they were NOT going to be entering other retail or e-tail markets in the future.  When asked about the response from current NVIDIA add-in card vendors, the NVIDIA rep simply stated that all of the partners were made aware of the plans and were generally okay with the idea.  Though I imagine they weren't being asked about it, they were being told.  NVIDIA said that as a nod to their partners they were going to be charging a premium over other retail prices so that partners would still have a competitive edge there.  Based on pricing Kyle at HardOCP saw though, PNY's cards were priced right at the same level as the NVIDIA options.  
 
Also interesting to note is that apparently Best Buy requested that NVIDIA make this move and bring branded retail cards to stores.  The reason is quite complex but it revolves around Best Buy's executives wanting to bring back PC gamers and hardware enthusiasts to retail shopping.  To do this, Best Buy wants to create a branding scheme through out the store, a single cohesive message that can be merchandised in the same way an Xbox 360 or Playstation 3 section can be.  Best Buy and NVIDIA are teaming up to create NVIDIA branding and kiosks showing off 3D Vision, 3DTV Play, CUDA features and more; branded graphics cards as simply a part of this.  
This makes great sense for NVIDIA as a company - can they brand NVIDIA as the "PC gaming" brand while Microsoft and Sony have the console areas?  If so, that leaves two groups out in the cold: AMD and their recently deceased ATI brand and NVIDIA's partners that were previously selling graphics cards in these retail establishments.  
There are a lot more questions about this change in plans from NVIDIA than there are answers now.  How will NVIDIA hold up in the support world?  Will this help NVIDIA's bottom line in the short or long term at all?  But it seems obvious that even though NVIDIA wants us to believe otherwise, this is a direct attack on its partners' profits and markets.  The discrete graphics market is shrinking and we have to believe that NVIDIA has decided that it would rather not sell fewer and fewer GPUs to discrete card manufacturers and divide the sales/profit between a large group of companies when they could constrict and take the entirety of the otherwise shrinking pie for themselves.  
I am not sure how it will work out in the long run but there is a reason ATI, 3dfx and even STB got out of this market and why NVIDIA is the only one heading in.  The partnership with Best Buy (and likely other stores soon) could be a boon for NVIDIA's brand in the coming years and might be able to pay off as we see Tegra devices hitting the shelves at retail next year.  For today though, this story will be complex and likely be fought behind the scenes.  

Source: [H]ard|OCP
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