Nvidia calls Intel's graphics chip tactics 'aggressive'
Advanced Micro Devices is not the only large Intel competitor to rail against Intel's alleged strong-arm tactics.
Nvidia has also complained loudly for years about Intel business practices in the graphics chip market, where Intel commands about 50 percent of the market.
Nvidia is the world's leading supplier of "discrete," or standalone, graphics chips but takes a distant second place in overall market share to Intel, which supplies "integrated" graphics built into the chipsets that accompany all of its processors. Mercury Research estimates the total market for graphics chips, including integrated graphics, at almost $10 billion in 2009.
In the third quarter, Intel had 53 percent of the graphics chip market, up from the 49 percent share in the same period last year, according to Jon Peddie Research, which tracks the graphics chip market. Nvidia took about 24 percent, down from the 28 percent in the third quarter of last year.
These figures get even more lopsided for Intel when the market is segmented into integrated graphics only. "Put your seatbelt on. They've got 80 percent of the notebook integrated market," said Jon Peddie, president of Jon Peddie Research. Though this is a much smaller and more segmented market than overall PC processor market, which was at the center of last week's $1.25 billion settlement between Intel and AMD, it still shows the level of Intel's dominance, according to Peddie.
Nvidia has taken to lampooning Intel. Here, CEO Paul Otellini is the object of satire on Nvidia's 'Intel's Insides' Web site.
(Credit: Nvidia)Nvidia claims these latter market share figures reflect Intel's "bundling" tactics--the same carrot-and-stick tactics that AMD has cited for years and that were spelled out in a complaint filed by New York's attorney general earlier this month.
Intel is trying to impede competition on two chipset fronts, according to Nvidia. One front is the burgeoning market for chipsets in Netbooks--tiny, inexpensive laptops that are typically priced around $350. In this market, Nvidia sells its Ion chipset, which competes with Intel's integrated graphics product.
"Intel's tactics with Ion have been the most aggressive we've seen from a competitor. They have offered the Atom [a total of three chips] for $25, but when the one-chip Atom is used with Ion, it sells for $45," Nvidia CEO Jen Hsun Huang said in a statement provided to CNET. "A customer can't even choose to resell the chipset and use Ion instead. What's the point of Nvidia getting an Intel bus license if it's impossible to overcome Intel's pricing bundles?" he asked, referring the licensing fee that Nvidia pays Intel.
"We'll keep growing as a company, but further action needs to be taken to protect consumers," Huang said.
Intel disputes this. "He's playing a trick of numbers, said Intel spokesman Chuck Mulloy. "He's giving you a $45 list price--that nobody pays--for a part and then a negotiated price (which is more realistic). He's mixing apples and oranges. We have scrubbed and continue to scrub our pricing practices as it relates to chipsets and processors. It's all above cost. And that meets the legal standard worldwide."
In Netbooks, Nvidia has made some headway this year; its Ion chipset has been used in Netbooks from Hewlett-Packard and Lenovo, among others--and Huang concedes this. But Peddie said Nvidia still faces a formidable challenge. "They're nibbling away it at. But it's a pretty big hill to climb," Peddie said.
In the second front of Nvidia's most hotly-contested feuds with Intel, the former has halted development of chipsets for Intel's new "Nehalem" processor technology (marketed as the Core i series of chips), following a complaint filed by Intel in February--which Nvidia then countered in March. Intel alleged in its motion for a declaratory judgment that the 4-year-old chipset license agreement with Nvidia does not extend to Intel's future-generation processors with "integrated memory controllers," which includes Intel's newest Nehalem Core i processors.
"It's meant to get Nvidia to cease and desist from citing that they have a license," Peddie said. "That's an interesting tactic because if the court rules in favor of keeping Nvidia from saying they have a license, it also creates the burden on the OEMs [PC makers] of not wanting to get in a crossfire between Nvidia and Intel," he said.
Intel again disputes this. "It's not seeking to prevent them from doing anything. For well over a year and including mediation, we argued with Nvidia about their rights under that agreement. And we tried multiple times to reach an agreement. And we could not," Mulloy said. "We asked the court to tell the parties what the agreement means. At the end of that process, we'll work with them and try to figure out what to do next."
Note: Mercury Research numbers were provided by Nvidia.
Brooke Crothers has served as an editor at large at CNET News, an editor at Dow Jones' Asian Wall Street Journal Weekly, and a senior editor at InfoWorld. His CNET blog covers chip technology and computer systems, and how they define the computing experience. He also contributes to The New York Times' Bits and Technology sections. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. Follow Brooke on Twitter @mbrookec. 
You can muscle people out of business by making a better product than them... you cannot do it by telling people that unless they buy THIS product instead of another one, you will not be able to buy this other product at the cheapest price.
That is illegal whether it is Wal-Mart doing it, Sears, whatever.
Anyways, Intel has done this crap for years and gotten away with it. The only company who has stood up to them is AMD. It's ironic that Intel claims they do not pull this crap, yet they just gave AMD 2 billion dollars and a promise not to do it anymore... uhmmm ok.
Here's also a little tidbit for you, I used to work for a gaming publication. They are currently the largest print pc gaming magazine out there. Intel used to give gifts out the wazoo to editors to promote Intel chips over AMD, they still do.
Ever wonder why they promote an Intel chip for a "gaming rig" that cost $600 when a AMD BE 955 cost half as much and benchmarks better? :)
The 8800's where also a lot of smoking crap.
Yes Intel is muscling around, but Nvidia is not helping themselves with some of the horrible horrible product they have brought out.
The higher end performace board makers have moved from Nvida, and AMD for reasons other then the strong arm. Nviida has a perfect opportunity to bury ATI, but now ATI is now moving back up in the market.
People buy when something is good, and if the price is a few bucks different people will pay for the quality (ALA APPLE) although I expect them to decline over the next few years.
When Nvidia puts out good chips, the world beats a path to their door (same with ATI). Maybe if Nvidia stopped stumbling around in the dark, they might get somewhere again.
Then again, I think Nvidia is just wanting to get a piece of the money-action that AMD (and more importantly, Nvidia's competitor ATI) got.
sounds to me like your vocabulary should include graphzilla, chipzilla, and D.A.M.M.I.T. maybe the vole just to make it easy.
I am a Linux :) and I wouldn't touch Intel over AMD.
1) AMD didn't have a roadmap worth a damn in 2005, and
2) AMD chips of equivalent performance were notorious room-heaters - Apple was already abandoning the G4/G5/G6 route (esp. for laptops) because of thermal issues.
intel and Microsoft...
dont ever touch a PC again.
Still prefer Nvidia chips though. Using their onboard and loving it.
That is fixed with RivaTuner settings, however you have to run them as a administrator, which gets annoying when more than one user has an account on the same computer and some are using standard user accounts.
I have always used AMD CPUs, and for the last 3 or so years, I have been happily using ATI Radeon video cards. They have worked 99% of the bugs out of the Catalyst drivers and their performance is great. I have an XFX ATI Radeon 4870x2 Dual Core 2GB PCIE in the system I am using now, and it's the best card I have ever used. Intel's chipsets are a snail with bad eyesight compared to it.
Short version. Intel Reeks, Nvidia is not the best, but not the worst either, ATI is top of the heap.
Also as far i know, ati still has a crappy linux driver, and even worse a non practically non existent BSD driver.
NVIDIA has always had the edge on drivers.
Nvidia didn't give a rat's behind about the integrated market until just a few years ago and now they want someone to level the playing field for them? I want to win the lottery, but all these other people keep buying tickets. Maybe the government should give them a hand...
...I hear the EU likes sticking their nose into the market on a regular basis, especially for European companies. Maybe Nvidia should move their Corporate Office to France.
I stopped using nvidia when i bought a nforce4 ultra that came with a bad hardware firewall, and the bios doesnt even run the correct timmings on my memory.
Then i had 3 6800's burn out!
the aiw9800 that was supposed to be dead is still kicking, and that thing is just a thermal bomb imo.
AMD is ahead of Intel in the server space with performance per watt
on the consumer end I have to agree with you though
Also my opinion that Intel should not be punished for early adopting a netbook strategy. NVidia could always make a competing netbook board and integrate their own adapter. I don't even see why this would be an unfair expectation since NVidia already sells branded motherboards.
That being said Intel's graphics chipsets have improved dramatically. I would still recommend a dedicated card for serious gaming, but the GMA4500 will support a 24" (1920x1200) without feeling too unresponsive. For people running smaller monitors (eg. 1280x1024) the GMA 4500HD is adequate for the vast majority of tasks. It typically gets twice the performance of the GMA x3100 to say nothing of the older GMA 950 or older chipsets that were not only a tiny fraction of the performance, but also suffered from seriously incomplete DirectX 9.0 support.
I hate to break the critics of Intel's anemic integrated solutions, but the current generation are capable of a *lot* more than browsing the web and creating a word document.
Graphics chip business been a part of strategy to make the most out of expensive capital investment they make into building fabs and developing process technology. Their primary product, microprocessor, needs the latest and the greatest fabs (multi-billion dollar per fab).
A new fab can run microprocessor products typically 2-3 years, 4 years in extreme cases. Then they need to be written off. The accounting situation is a lot better if you can keep the factories running with non-CPU products, that do not require the cutting edge technology. Many of their non-MPU products filled this role: NOR flash, chip set, low-end integrated graphics, etc. In fact, high-end graphics processor was not desirable, since it would take fab capacity away from CPU, which has higher profit margin.
You can look at it 2 ways. Either that these non-CPU products get fabs already paid for by CPU business, or that because fabs are utilized for other products, CPU business doesn't foot the bill for building fab alone.
The important thing is to look at the whole picture: how much total revenue comes into company wallet, and how much you spend on building fabs. This metric looks a lot better if Intel makes basic integrated graphics in old CPU fabs, than if intel only made CPUs and tossed fabs afterwards. it's just good business.
In summary, there is a good reason why Intel's integrated graphics doesn't hold up to top-of-the-line discrete graphic processors: it was never meant to be. It was meant to be usable, low price product that improves their utilization of investment in fab and process technology.
...sort of. You can, as you mentioned, re-purpose a fab to run non-bleeding-edge chips, and make it last for decades (the Aloha, Oregon fab campus has been around since 1976 - it produces flash memory chips today). OTOH, you can also take an existing fab, and replace the tools in it as well. Believe it or not, this a lot cheaper than simply building a new site. For example, there are Intel fab sites up in my neck of the woods that have been producing CPU chips for years on end.
The CPU end of the biz usually pays for the fab, though these days the ROI takes longer than it did back in the early 486-Pentium days.
My source tells me that Intel's accounting practice is to fully devalue fab process tools in 4 years. In other words, they regard 4 year old production lines as completely valueless. (That's what I meant by 'written off' - I should have made it clearer) So after 4 years, they can either make non-CPU products, which then would include no capital cost component, or invest to re-tool the fab and continue making CPUs.
Wafer size conversion was a special case where re-tooling a fab was more expensive than to build new ones. But as you point out, re-tooling is the usual practice. (I think their development/pilot production fab is an exception, and has always been a 'green field' fab - they build a new one every 2-3 years.)
80% of the workstation market. Fermi will eat ATI's lunch just like the 8800 series did to the 2900xt.
Until Fermi comes out as an installable GPU it is "vaporware".
- by NWRockets November 16, 2009 9:08 AM PST
- NOTHING stops GPU development -- that is all PCI Express based and is based on an open standard.
- Like this Reply to this comment
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Showing 1 of 2 pages (51 Comments)The license in question is CPU-to-PCH and will only inhibit development of PCH-based graphics....which is junk anyway -- this is a don't care and just whining.