Feds tracking AMD/ATI, Nvidia in antitrust probe
by Zack Stern 
{ Dec 2nd 2006 at 3:30PM }
The Merc reports about a federal antitrust probe -- the best kind of probe -- into the graphics-card industry. Nvidia and ATI -- through recent buyer AMD -- have been served with subpoenas asking for company documents that go back to the late '90s. The Justice Department wants records about "customers, product lines, competition, pricing of products, prices of competitors' products, market studies, and product volumes," according to Nvidia mouthpiece Michael Hara, as quoted in the article.The feds haven't described the exact nature of the investigation and haven't made any allegations, saying only that it relates to "anti-competitive practices." But the probe is most likely about collusion and price-fixing between graphics card companies. Basically, competing companies agree to set similar price points, keeping them artificially high, while limiting the affect of market forces to lower prices.
Could this mean the beginning of the end of $600 -- or more -- enthusiast graphics cards? Have console prices been (slightly) higher because of artificial GPU costs? As consumers, we can only hope, but it'll take many months before we learn if the companies broke any laws.
Reader Comments (Page 1 of 1)
tracked @ Dec 2nd 2006 4:25PM
I serisouly hope that they price of graphic cards slumps down. I hate not being able to afford good cards.
first post
Joonas @ Dec 2nd 2006 5:01PM
Can't say it would be much of a stretch, really. With just two major companies manufacturing such high-priced commodities, the temptation must be there to keep it that way.
Mephistopheles @ Dec 2nd 2006 5:03PM
It would be nice if the price dropped. It sucks how some cards have been on the market for a while yet still cost about the same despite being superseded.
ChrisL @ Dec 2nd 2006 5:26PM
Back in the 3dfx vs. Nvidia fanboy wars Nvidia actually was paying off 3dfx's head of PR, Brian Burke. The story came out the day 3dfx canned him, but by then it was too late. Burke is now head of PR for Nvidia . . .
bohany @ Dec 2nd 2006 5:55PM
If the suspicion turns out to be true, then W3 5H4ll ReJ0yc3!!!!
Why: First, and most obviously, is the drop in price of Video cards and the subsequent competitive pricing. Second, since ATI and NVidia GPUs are used in all three consoles, this means SOONER PRICE DROPS ON CONSOLES!!!!!!!!!!!!!!!!!!!!!!!!!!
Justice FTW/
Balla360 @ Dec 2nd 2006 6:41PM
While I have no doubt that price-fixing is possible, let's not get ahead of ourselves. Modern graphics cards represent huge investments in R&D and are very complex pieces of computing hardware. Very simply, a large amount of the prices they command can be explained by technology involved. Even more, the market seems to be supporting the high prices; top-of-the-line graphics cards are hardly a necessity, yet people continue to pay top dollar for them. "Anti-competitive" practices are abominable, but I think the government is overstepping its bounds in this case.
New 360 owner. @ Dec 2nd 2006 8:23PM
They keep too many products on the market. As soon as X800 started to become cheaper to produce ATI should have dropped the 9x00 line and dropped X800 into that slot. Then they came out with X850, but prices still remained high. The X1k and X800 and X850 based cards were still expensive. And then there were all the variants of each one. Was there really a need for 6 different variants of X800 and 6 more of X850 and keeping 9x00 on the market for so long?? Why is Nvidia still selling FX5x00?? Why so many variants of 6x00 and 7x00?? Something is going on there that we are not seeing.
Dave @ Dec 2nd 2006 8:16PM
If there were price fixing we wouldn't consistantly see ATI Shader 2 cards with the same performance as nVidia Shader 3 cards, costing 20% more.
A 20% premium to get the same performance, but a lower shader version, lack of FP texture filtering, lack of automatic shadow map PCF filter, and slightly better Aniso and AA.
No, I don't see price fixing between companies. They each set their own very high prices.
Are you kidding me? @ Dec 2nd 2006 9:32PM
They want to investigate the grapics companies for price fixing?!? And Intel get's to continue chargins $1200+ for it's CPUs? Without memory (graphics cards have at least 256 megs these days) and with out any PCB (graphics cards have an entire system - memory, power and heat control, drivers, etc) and no one is looking into that? Something is REALLY wrong here...
Burnt Meatloaf @ Dec 3rd 2006 12:08AM
Things cost what people will pay. So long as there are plenty of cards on the market in an affordable price range, there's no problem.
I got a PCI-E graphics card for $150 and it blows away the 9800Pro AGP I used to have. A $100 card would have had more than half the performance of the $150 card. I want a quiet PC, too, without an external power connector, and there's enough variety in the marketplace for me to get the card that fits my requirements. What's the problem?
Maybe, just maybe, developers are to blame for requiring people to get $600 video cards to play games. A good 3D engine should be flexible enough to adapt to any hardware. Like, duh.
If anything, people should go after laptop manufactureres that use Intel graphics. You can't even run 4-year-old games on those damn things!
null0byte @ Dec 3rd 2006 6:52AM
The prices don't go down exceedingly quickly because the cards are still competitive in their range when the next generation is released, though you will have somewhat of a price drop for a previous generation card.
There's actually a very easy way to explain the numerous versions of a card in existence. Basically, in the most simplistic sense, the variability of the chip manufacturing process is to blame. It's how Intel, AMD, etc. have different processor speeds.
All the processors in each card family come from the same wafer of silicon (for example, the X8xx series). Onced the manufacturing process is complete, the chips are tested to find out each one's respective tolerances.
Some chips test out with all the pipeline quads (the pipelines are grouped in 4's) funstional and a high tolerance for fast clock speeds. These are the ones which go into the high-end cards. They also happen to be the ones they recieve the fewest of (hence "supply problems" that commonly happen when the top-end card first is released). As the manufacturing process improves, these chips become more numerous. Because these chips are so great, make these the high end and give them a designation to match, like XT, XTX or GTX, and turn on every bell and whistle available.
Other chips test out with all the pipeline quads working but a lower clock speed tolerance. What to do with these? they aren't up to the par of the other chips with higher tolerances but they are still nevertheless fully functional. Simple, create a new model card and assign these chips to it, one slightly lower than the cards above with a slightly lower price point. These chips become your above-average cards and may or may not have a moniker such as Pro, GT or GS. These cards too, because there is nothing fundamentally wrong with them, also turn on every bell and whistle.
Now there are some chips that are tested which unfortunately have one or more pipelines with some issues. What to do with these? Simple, disable the pipeline quad containing the errant pipeline (ever wonder why cards have pipelines in multiples of 4?), give it a more conservative clock speed and sell it at a more budget price. If they don't fit in this family, just make a new family....call it say...X700 or 7600 or 9500, and start the process all over again. Also, since these chips aren't as great as the chips above, go ahead and create a further seperation between them by disabling or crippling a couple things.
So now not only do you have 2 model lines, but within those lines you can have 2 or more variations. Dishonest? nope. Confusing? hell yeah.
I will agree though that there is a big temptation for price fixing or some sort of collusion between the two companies, whether it actually happens or not. The reason you aren't seeing Intel included in this investigation (yet?) is because they are pretty much in the low end and so far have only done (optional)embedded solutions in the motherboards. As for why such old cards are still being sold, it's likely that it could just be old stock they are trying to sell through. Just because a new generation is released doesn't mean the companies have to drop everything and eat the current stock of cards. No one is forcing you to buy it.
And no, new video games aren't forcing you to buy the latest and greatest cards either. 2 year old cards (and even some 3-4 year old cards) work perfectly well on the newest games, just turn some settings and resolution down. If you are expecting to play everything at the highest quality and resolution on cards not built to handle it, you're misleading yourself and setting yourself up for dissapointment.
Boing @ Dec 3rd 2006 11:55AM
Wake me up when the justice dept investigates the videogame industry who prevents retailers from selling new game releases any cheaper than the industry wants them to be sold at. Retailers sell all kinds of electronics at discount prices (and sometimes even take losses) just to get people in their doors. Yet you never see a new release any lower than the standard industry set $39.99, $49.99 or $59.99. Christ, we retailers didn't even offer discounts on new games or consoles on Black Friday so you know something's up