The main threat for the market of add-in graphics cards?sales volumes remain chipsets with integrated graphics cores, however, they are also the main reason for relatively high average selling prices of add-in graphics boards, according to Jon Peddie Research market tracker.

Back in the fourth quarter of 2006, about 57.6 million of desktop graphics adapters were shipped with only about 21.1 million being standalone add-in-boards (AIBs) according to Jon Peddie Research's data. As a result, while the personal computer (PC) market can claim increase in sales, shipments of discrete components either stagnates or even tumbles, as integrated chipsets steal sales of entry-level AIBs.

“Integrated graphics is eating the lunch of the lower end cards (especially sub $100 “Value?. It makes sense given how things have evolved: if you’re really interested in performance, you’re not buying a low-end card and if you aren't interested in performance, integrated graphics will suffice. So the low-end board is becoming the ‘odd man out??said Alex Herrera, an analyst for Jon Peddie Research.

However, the markets of performance-mainstream and enthusiast-class solutions also do not seem to be performing really well. Despite of a surge in demand towards workstation graphics accelerators in the fourth quarter as well as the launch of Nvidia GeForce 8800-series graphics products, the enthusiast-class segment has not increased and still commands about 2% unit share and 4% market share.

Nevertheless, as a result of shrinking sales of low-end add-in graphics cards, average sales price of a graphics accelerator increased to $213 in the Q4 2006, which may be positive for developers of graphics processors who pour-in hundreds of millions of dollars into their new graphics processing technologies every year.

With further stagnation of add-in board market and necessity to amplify investments into development of future graphics architectures, the appropriate designers, such as ATI, graphics product group of Advanced Micro Devices, and Nvidia Corp. will need to find additional sources of revenue to keep evolution of consumer-class graphics technologies at the current pace. Moreover, add-in-board makers will also need to reform their businesses and, perhaps, merge with each other to stay competitive.

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