NVIDIA’s Interest in GeForce Founders Edition Graphics Cards Continues To Grow – Will Be Competing With Add-In-Board Partners

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Jan 26, 2017
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Something pretty interesting has been happening lately, NVIDIA’s interest in its own line of Founders Edition graphics cards has been steadily rising and it has plans to continue producing them in 2017 going forward. This will of course mean that NVIDIA will be competing with its very own add-in-board partners for the market share of GeForce graphics cards. The Pascal Founders Edition variants of the GTX 1080 and GTX 1070 were more expensive than the custom variants but still managed to be wildly successful.

NVIDIA planning to take a bite from the market share of its own AIBs in 2017, Founders Edition graphics cards will continue to be made

The company plans to continue its foray into self-manufacturing a complete GeForce graphics card in 2017 (NVIDIA is primarily a chip designer and has traditionally supplied the GPU to AIBs who then build their own graphics card). Since the market has a limited size, it basically means that any additional profit NVIDIA makes from its Founders cards will have to come from the market share of their AIBs. Needless to say this will affect their profitability and I assume they wont be too happy about this.

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NVIDIA’s attempt at re-branding its reference series lineup into something much more palatable for the average prosumer started with the Founders Edition lineup of graphics cards. The primary reason was of course to increase their sales in a DIY PC market that has been continuously on the rise (not to be confused with the OEM PC market). AIBs have been enjoying this growth in terms of increasing sales and a market that is shifting towards the high end as is evident by the impressive sales figures of the GTX 1070 and GTX 1080.

In fact, according to estimates, the AIB GPU market makes a profit (net income) of a few hundred million US dollars every quarter – and this is just for the top 10 graphics card manufacturers including Taiwan-based ASUSTeK Computer, GIGABYTE Technology, Micro-Star International (MSI), Palit Microsystems, Hong Kong-based ZOTAC and China-based Colorful – and NVIDIA wants a piece of the pie. If the success of the Founders Edition is any indicator, it would appear that people are very much willing to buy from NVIDIA directly – and even pay a premium for it.

If the company is able to slowly but surely break its way into its own subsidiary market, then it will be able to up its bottom line by quite a few million bucks. What this really shows us is that NVIDIA is quickly becoming a company that is constantly and consistently diversifying away from its usual product line while staying within the bounds of its core competencies. As I mentioned before in one of my financials, the chip maker is well on its way to blue-chip status.

So what does this mean for the average gamer or prosumer? Well, if their past actions are any indication this would mean that NVIDIA would continue to release the Founders Edition graphics cards to the market first, only allowing AIBs to reveal their custom variants once a certain guarantee period of sales (for NVIDIA) has passed. On the other hand, this isn’t the first time NVIDIA has used tactics like this to increase profits.

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Restricting the release of custom variants for a given period of time is a fairly common thing to do for the company. The only thing that’s changed this time however, is that the Founders Edition is produced entirely by NVIDIA and is one of the glowing indicators of the company’s excellent strategic and risk management. That said, we are also fairly sure that the amount of market share NVIDIA will be able to acquire is significantly smaller than the market size and quite limited in size.

This is because Founders Edition cards are usually not built to an exacting and demanding specification (even though they may look like it) and enthusiasts will usually wait for their favorite AIB to produce a custom variant than risk buying a reference one from the green team.

 

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