In the last few days, both Mercury Research and Jon Peddie Research published their estimated market share numbers for the graphics processing industry. The figures are rather unusual for a Q4 though, and not exactly what some might have been expecting - this warrants a good bit of analysis, so let's jump right in.

First of all, here are the various market share numbers for both AMD and NVIDIA in the different market segments. Please note that multiple numbers are listed when Jon Peddie and Mercury don't agree on the exact figures; also, in some case, only one of the two firms publicly released data for a specific segment.

  • Desktop discrete: NVIDIA went from 56-57% share in Q3 to 52-53.8% in Q4. AMD gained share, on the other hand, and went from 42-43% to 47-46.2%. The shipments dropped by 6-9% compared to Q306, even though Q4 is traditionally a strong quarter.
  • Notebook discrete: NVIDIA gained share, from 52-53% to 58-59.1%. Simultaneously, AMD went from 47% to 40.9-42%, while the market grew by 13.8% according to Jon Peddie.
  • Notebook integrated: AMD's went from 19% to 20%, and NVIDIA from 8% to 12%. Meanwhile, Intel kept 66% of the market, down from 71% in Q3.
  • Desktop integrated: AMD's market share grew from 7% to 10%, while NVIDIA had 20% of the market and Intel 52%.

Desktop Discrete GPUs

So, the first big surprise in these numbers is that discrete GPU shipments for the desktop market are down. And that's in Q4, which is traditionally the strongest quarter of the year. This seems quite strange, and especially so given that the Vista Effect is supposed to be boosting up the GPU industry right now. And yet, the opposite seems to be hapening - so, what's going on there?

We believe the proper explanation to this phenomenom is that Vista has been negatively affecting the PC industry's sales in general throughout the holiday season, as consumers have been delaying their purchase intentions to match Vista's release schedule. This makes particuliar sense in the performance-sensitive part of the market which would be buying discrete graphics cards in the first place, because they want to make sure any new PC or graphics card they buy is up to the job.

At the same time, AMD's graphics division is gaining share in the desktop discrete GPU segment. This is possibly because of their key strategic advantage with OEMs there, which is that they can bundle the GPU and the CPU together. Given that other analysts have been reporting that AMD is growing in the desktop x86 market, it would make sense that their GPU business is also benefiting from this. Furthermore, AMD's new 80nm GPU offerings might be gaining some momentum in the market, especially so with AIBs.

It will be interesting to see if NVIDIA has any comment during their Q406 financial conference call on which parts of the market they believe they have lost share in. Presumably, AMD's share gains should have been roughly uniform, but it is not impossible that they would have benefited more in either the low-end or the mid-range segments. They have been quite aggressive in the mid-range with RV560 and RV570, while it might also be assumed that CPU-GPU bundling is even more attractive in the lower-end parts of the market.