The AMD Squeeze: Nvidia Intros GeForce 8800 for $300

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Introduction

These binned processors fill three major roles. First, producers take chips and sort them out based on how well they come through the manufacturing process. "Grade A" chips become high-end parts while those that can't sustain the high clock rates get moved to the next product category. When there are defects, chips can be set aside for later use. This can be chips with fewer pipelines, or in the case of the GeForce 8800, they can be GTS models. The second is to create a pricing level that would attract purchases from consumers who would not have looked at new hardware but now find the new technology within their financial constraints ("A" series parts are worth more than "B" rated parts and so on). Intel, for example, is currently using the Pentium D line to force AMD prices down while they keep Conroe parts at a premium. AMD has nothing to combat this as their current product is inferior. The same holds true for Nvidia and AMD/ATI. Nvidia has the upper hand, and with the launch of another part, they keep pressure on AMD/ATI, which is in the follower's position for pricing.

A good example is today's market. AMD/ATI has yet to introduce its D3D10 hardware and Nvidia is soaking in all of the limelight and sales from the enthusiast demographic. Not only does Nvidia capture the hearts and minds of the high end but it is winning share from those who seek subsequently less expensive cards in the next part of the pricing model. There is a trickling down of brand name, and product superiority plays a factor in the graphics marketplace. Consumers currently see Nvidia having the advantage and lean to buy Nvidia-based cards. To make matters tougher for AMD/ATI, Nvidia is launching a less expensive graphics card that still outperforms the best its competition has to offer, the GeForce 8800GTS 320 MB.