TIBURON, Calif—March 23, 2007—Who would have guessed the professional graphics
market would be the growth story it is today? Jon Peddie Research (JPR) has
completed market analyses of both the workstation and professional graphics
markets for the fourth quarter and full year ’06 and finds that the
professional graphics hardware market remains surprisingly strong.
JPR reports that Q4’06 saw approximately 802,000
graphics hardware units sold, with add-in boards accounting for nearly $285 million
in revenue (street value). For the year, units were up 18.3% to 3.3 million and
revenue up 17.9% to just over $1 billion. The burgeoning mobile workstation market
is responsible for driving a good chunk of units, but add-in-board sales remain
robust as well. And most notably, it’s the pricey upper end of the market that’s
bringing in more and more of the dollars.
No ASP appears too high … Nvidia mining the upper
end of the market with great success
Long gone are the heady days of SGI, Sun, DECo and IBM
workstation graphics, expensive add-in boards with custom silicon that made
ordinary consumer graphics look like child’s play. Today, it’s PC gaming—not
workstation computing—that drives most graphics hardware innovation. But that
hasn’t stopped vendors Nvidia and AMD (via its ATI acquisition) from harnessing
all that innovation and redirecting it to a professional market still hungry
for as much 3D horsepower as it can find.
Akin to hard-core gamers who must have the latest and
greatest 3D cards with little regard for price, professional users have an
insatiable appetite for every incremental bit of performance they can find, and
they’re willing to pay dearly to get it. So much so, it seems suppliers have
yet to set a price too high for the market to bear. Witness the $2,999 price
tag of Nvidia’s recently announced Quadro FX 5600, already picked up by OEMs
like HP.
Just two short years ago, JPR’s High (>$950) and Ultra-High
(>$1500) market segments commanded about one quarter of all dollars spent on
professional graphics hardware. By Q4’06, that share had grown to half. More
buyers are forking out more dollars to get the latest from both of the big
vendors, but Nvidia in particular.
Nvidia not only profits most from the surge in sales of
higher price cards, but with its aggressive strategy of pushing more upscale
product, it’s been largely responsible for creating that surge. Ironically,
3Dlabs left the same market in early ’06 citing poor business conditions, but
all that meant was more business for Nvidia to take. Impressively, JPR finds
that just one of Nvidia’s high-end Quadro FX add-in board models took in about
$93 million (street value) in Q4’06, about one third of the entire professional
graphics add-in-card market, and roughly four times the total revenue for #2
AMD’s entire professional business.
Workstations post strong gains as well
The workstation market continues to deliver surprisingly
strong results to the market’s big players. Overall, the workstation market
showed continued strength in Q4’06, with vendors shipping roughly 706,000
workstations, accounting for almost $1.8 billion in revenue. For the year,
units were up 22% to 2.5 million and revenue up 17.3% to $6.2 billion.
Dell still outships #2 workstation supplier HP, but the
gap has narrowed. At 40% Dell’s share appears to be stabilizing, but HP is steadily
gaining ground, now up to 30%. What was nearly 20 points of market lead over HP
two years back is now down to just 10.