Jon Peddie Research reports that 50% of the computers in use today

Vista's compositor in Aero Glass would choke on most of the computers in use today—a potential boon for suppliers of add-in boards

Robert Dow

TIBURON, CA—February 9, 2006—Jon Peddie Research
(JPR), the leading research and consulting firm for graphics and multimedia,
has just completed its add-in board (AIB) report for Q4’05 and the
year 2005. The report which measures the GPU and Add-in Board chain
also tracks the installed base of PCs and the type of graphics that
ship with them..

In 2005, 63% of the 203 million computers shipped (desktop, notebook,
and servers) were equipped with last generation integrated graphics
controllers, just the opposite ratio from 2003; the turning point
came in Q3’04 when integrated graphics hit parity with discrete graphics
chips (GPUs.)

JPR estimates there are close to a billion PCs in use today most
of which are equipped with antiquated integrated graphics.

Over 600 million PCs shipped in the last 3 years, and are still
in service. These are the ones that are most logical to upgrade with
the new Vista operating system.

However, because of the low graphics performance of integrated graphics
chips found in most of the PCs, they would not be able to take advantage
of the richness and benefits of Vista’s new Aero Glass GUI and the
graphics-based operating system would be unusable on most of them.

The simple solution of course is to add a modern graphics board,
and Dr. Jon Peddie, president of Jon Peddie Research, speculates that
the add-in board suppliers are counting on that and predicts we will
see big promotional campaigns to educate the users of this low cost
solution for tapping into the power of Vista.

JPR found that there was $2.7 billion worth of add-in boards (AIBs)
sold in just Q4 of 2005, and almost $10 billion for the entire year.
Vista could, if the consumers get the message, raise that market value
significantly in 2007 when it ships in full volume.

But, cautions Peddie, “Not all AIBs are created equal, and there
have been a lot of low power units shipped as well.”

The breakdown for Q4 is shown in the following chart.

Figure 1. Sales and units sold
of Add-in boards in Q4 2005.

As the chart shows, the bulk of the market is in the performance sector,
and this, says Peddie, is logical. “Consumers who spend from $175 to
$450 for an add-in graphics board do so because they expect and demand
a lot of performance from it.”

This is also the sweet spot of the market for both the GPU suppliers
and the AIB builders, as well as many PC suppliers—”performance
AIBs is where the margins are, and most excitement,” adds Peddie.

And, according to JPR’s analysis, it will take a performance level
AIB to pull out the richness built into Vista. “When user sees a system
running Vista on a PC with integrated graphics, and then sees Vista
on a PC with a powerful graphics AIB in it, there will be no discussion,
they will go for the better looking system if they can possibly afford

JPR thinks the bubble of AIB sales due to Vista will last through
most if not all of 2007, and by 2008 integrated graphics will begin
to catch up in performance.

JPR will be available for press and analysts interviews about the
report and the product.