Nvidia, ATI rev graphics engines

As expected, ATI will announce Thursday a series of new chips, including a high-end graphics processor that beats the current speed champ, ATI's Radeon 9700.

Nvidia, meanwhile, is expected to announce mainstream and budget versions of its oft-delayed GeForce FX chip, which was heralded last year but has yet to arrive in stores.

The upshot is that ATI will have skipped a full generation ahead of Nvidia, said analyst Jon Peddie of Jon Peddie Research, an awkward but hardly crippling situation for Nvidia, given the company's sizable market share lead.

"Basically, Nvidia missed a product cycle," Peddie said. "It's embarrassing and it's certainly frustrating for Nvidia, but its not going to break them. In terms of the real world, they'll lose a few sales. But Nvidia is very sound and strong and will just try to make it up in the next round."

Peter Glaskowsky, editor in chief of industry newsletter Microprocessor Report, agreed. "The long-term impact on (Nvidia) is pretty small," he said. "It usually takes screwing up two to three generations in a row for somebody's business to really deteriorate. Nvidia had a lot of problems with this generation, but I don't see the situation going beyond that."

ATI on Thursday will announce three new graphics chips that will extend the performance lead the company established with the Radeon 9700. The Radeon 9800, set to go on sale later this month in graphics cards priced around $400, will operate at speeds of 380MHz and 340MHz, compared with 325MHz and 310MHz for the 9700, said David Rolston, vice president of engineering for ATI. The chips will also have dramatically enhanced support for shader instructions, pixel-by-pixel graphics programming that can dramatically increase the realism of animated images.

"What we're doing is topping ourselves by coming out with a product that's significantly faster than the 9700," Rolston said. "Our commitment as a company is to keep building our performance lead."

ATI will also announce two lower-speed chips aimed at more mainstream users. The Radeon 9600 will appear early next month in cards priced around $200, and the Radeon 9200 will appear around the same time in cards priced between $100 and $150.

The 9600 and 9200 will mark ATI's entry to the 0.13-micron chipmaking process, which refers to the smallest features printed on the chip. Smaller features mean more circuits can be crammed onto a piece of silicon, reducing manufacturing costs. Nvidia's shift to the 0.13-micron process has been blamed for many of the delays surrounding the GeForce FX.

Nvidia, meanwhile, will announce mainstream and budget chips based on the GeForce MX design at a press event Thursday morning in conjunction with the Game Developers Conference in San Jose, Calif.

The new chips, the GeForce FX 5600 and 5200, are basically scaled-down versions of the GeForce FX 5800, the high-end graphics chip Nvidia announced last November. FX 5800 cards, set to arrive in stores within the next few weeks, will court PC hot-rodders willing to fork out $400 for a graphics card.

The 5600, priced at $200, and the $100 5200 model will court more of a mainstream audience, allowing them to take advantage of sophisticated effects in upcoming computer games, said Bill Rehbock, director of developer relations. "People with only $99 to spend on a graphics card will have full access to all the features in...games like 'Doom III,' " Rehbock said.

Rehbock said more than 2 million 5600 and 5200 cards are currently in production by Nvidia manufacturing partners to arrive in stores next month. "The ramp-up is going to be very quick," he said.

The near-simultaneous release of chips for different segments of the market is unusual in the graphics industry. Chipmakers typically try to squeeze out six months between the release of a high-end chip and lower-powered siblings.

Getting the 5600 and 5200 out on time will mean Nvidia is pretty much back on schedule, Glaskowsky said. It will also mean Nvidia won't be able to charge a premium to PC performance buffs itching to get their hands on GeForce FX technology.

"Basically, this is a schedule compression," Glaskowsky said. "There should have been more time for (the GeForce FX) to sell on its own. What it means is that Nvidia gave up the ability to attract some of this early-adopter business at higher prices."

ATI Marketing Director Paul Ayscough said that now that ATI has established a reputation with the performance end of the PC market, the company is focusing on making sales gains with PC makers and mass-market consumers.

"What people associate with the ATI name has really changed," he said. "What we want to do now is leverage all the work we've done at the high end and really drive sales in other segments of the market."

Peddie agreed that the past year's successes have helped strengthen ATI's reputation, which should translate to modest sales gains. But the real winners, he said, are PC owners, who now have real competition pushing innovation in the graphics industry.

"ATI will gain a little bit of market share in the short term--whether they can keep it is anybody's guess," he said. "But with ATI's renewed strength and ability to really put out a good product, the real wins are for the consumer. It's raising the bar for everyone."