CPU makers like Intel Corporation (INTC) tend to get the attention when it comes to computer components, but graphics cards are increasingly important, and virtual reality is driving a need for upgrades. Nvidia Corporation (NVDA) is coming out swinging in the quest to convince PC owners to upgrade their graphics card, announcing the $249 GeForce GTX 1060.
Rival Advanced Micro Devices, Inc. (AMD) recently launched its own card aimed at mainstream PC owners hoping to upgrade their rig to meet the demanding requirements of VR headsets like Facebook Inc’s (FB) Oculus Rift. After all, it’s a lot cheaper to replace the graphics card than it is to buy a new “VR-Ready” computer.
AMD’s Latest Offering
AMD’s version is the Radeon RX 480 and it’s priced at $199, a low price that AMD hoped would help it to gain ground on NVDA, which is currently estimated to power nearly three quarters of gaming PCs.
However, AMD has stumbled with the Radeon RX 480 launch. The card was hard to find because demand outstripped AMD’s capacity to deliver, and then reports surfaced that it’s drawing more power than advertised.
Using more power than expected may sound like a minor issue –that means it will cost slightly more in electricity to a run a PC using a Radeon RX 480. But the bigger issue is the potential for that high power draw to actually damage the motherboard of a lower-spec computer — the kind of PCs that need this video card upgrade to make the leap to VR capability.
AMD has announced it is releasing a new software driver that addresses the power issue, but there are concerns that any fix will require throttling performance. That’s exactly what you don’t want when you buy a new graphics card.
Opportunity for Nvidia?
With AMD struggling and PC owners looking for an affordable upgrade, NVDA suddenly has a big window of opportunity. The timing couldn’t be more perfect to release a competing graphics card. That makes the GeForce GTX 1060 an even bigger deal for Nvidia than it already was.
The price is $50 higher than AMD’s card, but the Nvidia GeForce GTX 1060 is billed as being roughly 15% more powerful than the Radeon RX 480 — in fact Nvidia says it’s faster than last year’s GeForce GTX 980, which cost twice as much.
The new NVDA card also uses significantly less power than AMD’s.
This is a very important year for the makers of graphics cards. Virtual reality is finally making the leap from cool demo technology to mainstream, with consumer headsets now for sale and game developers releasing a slew of VR titles.
4K gaming is also taking off. Graphics cards — dominated by offerings from NVDA and AMD — are the primary determining factor for whether a PC is capable of virtual reality and supporting 4K video game titles, so that means the potential for a big upgrade cycle.
Both NVDA and AMD are also releasing their first generation of cards employing all-new architecture since 2012, and that alone is enough to prompt a wave of upgrades.
Bottom Line
Both companies sell much more powerful graphic cards, but the Radeon RX 480 and NVDA GeForce GTX 1060 are the versions aimed at mass adoption.
The big question around Nvidia seems to be whether it will be able to keep up with the expected demand for the GeForce GTX 1060. It goes on sale on July 19, and if the company can churn the cards out fast enough to satisfy demand and take advantage of AMD’s stumble, this could be a major win for NVDA.
Since the GeForce GTX 1060 announcement, NVDA has been up over 4%, reflecting anticipation that the new graphics card is going to be a hit.
The real test of whether Nvidia can take full advantage of the situation won’t be on the launch date — which is expected to see a sell-out — but in the following weeks. That’s when we find out if the company can keep up with demand to open up an even larger lead on AMD.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
