Graphics Market Defies CPU, Sales Trends, and Keeps Going Up

by Andy Patrizio

The non-Apple PC market went south in Q4, traditionally its best quarter of the year, but it didn’t take down the graphics market. While Gartner estimates 2011 PC sales rose an anemic 0.5 percent over 2010 numbers, the graphics market grew 8.9 percent year-over-year and have returned to normal seasonal sales, according to Jon Peddie Research.

Graphics make a good indicator for the health of the PC market, argues Jon Peddie, president of the company, because there is one or two GPUs in every PC sold. Intel and AMD are shipping a GPU in many of their CPUs now and many PCs, desktop and laptop alike, come with an add-in board.

Year over year this quarter, Intel gained about 7 percent market share, AMD gained 2.6 percent, and Nvidia slipped 7 percent in the overall market. Nvidia's decline was partially attributable to the company exiting from the integrated chipset market, since the integrated GPUs on the Sandy Bridge and Fusion processors from Intel and AMD, respectively, made integrated chipsets redundant and therefore unnecessary.

There is also a healthy add-in board aftermarket for people who upgrade their PC, since GPU technology tends to advance faster than CPUs and gamers are more concerned with a faster video card than CPU.

Well, it's normally healthy. In the fourth quarter, consumers bought 16.1 million add-in boards, down from the 18 million sold in Q4 of 2010. Peddie chalked it up to the weak economic environment and the Thai floods that have impacted the entire PC industry.

But the integrated GPU of Intel's Sandy Bridge and AMD's Fusion processors is not hurting the market. People are still buying boards because the GPUs in Sandy Bridge and Fusion just can't match the discrete cards, said Peddie.

"The thing so many people seem to miss on this subject of integration is Moore’s Law works for everyone including ATI and Nvidia. 'Good enough' isn’t. Do you want to buy a new computer that can only play a five year old first-person shooter? That can’t drive multiple screens? That can’t do physics and play the game?" he said.

Even the low-end graphics card market – cards under $99 in price – have not taken much of a hit. "Europeans, Asians and the other BRIC countries value the performance difference you get with discrete, but still have limited budgets and so will by low-end to midrange add-in boards," he said.

The explosion in the tablet market doesn't seem to be impacting the GPU business, even though there is the suspicion that tablets will eat into PC sales and tablets don't come with a discrete GPU. But Peddie said the impact is mostly at the lower-end of the PC spectrum.

"Folks who had low usage of a PC have put off buying a new low end machine in favor of a tablet," he said.