A new report coming out of Taiwan claims that Nvidia’s product policy of selling the Founders Edition cards is going to hurt the profitability of its add-in board partners.
Nvidia saw huge success with its current generation Pascal GPUs which has “prompted the company to actively promote sales of the Founders Edition graphics cards,” according to industry sources via DigiTimes. This could eat into the orders for board partners’ graphics cards, resulting in affecting their sales.
Why is Nvidia selling the Founders Edition cards?
Nvidia introduced Founders Edition models back in May 2016 with the launch of its first Pascal-based graphics cards, the GeForce GTX 1080 and GTX 1070.
The Founders Edition cards are essentially what were known as the company’s reference designs. But, instead of selling them through its AIB partners, Nvidia announced to make these cards available directly from its GeForce.com website for as long as they are relevant in the marketplace.
The Founders Edition cards are produced in limited quantities and the true purpose of selling these cards is to build a “direct relationship” with customers, according to Nvidia.
“There are some people that — some gamers and customers — who would prefer to have a direct relationship with our company,” says CEO Jen-Hsun Huang. “The reason for that is because we have a network of partners who are much, much more able to take the NVIDIA architecture to every corner of the world, literally overnight.”
Nvidia’s FE cards could Affect Sales of AIB Partners
Trying to build a direct relationship with customers is not a bad idea, but it could hurt profitability of board partners in Taiwan and China in 2017 and beyond, claims the new report.
Nvidia supplies GPUs to graphics card makers, including Taiwan-based Asus, Gigabyte, MSI, Palit,Hong Kong-based Zotac and China-based Colorful, but at the same time, it’s also a competitor to these clients thanks to its Founders Editions models.
In 2016, the top-six board partners earned a total profit of around US$159.49M. This has encouraged Nvidia to step into the segment to take a slice of that pie – even though it comes at the expense of affecting sales of graphics card suppliers that are generating profits for the chipmaker itself.
According to the source, Nvidia wants to continue its last year’s strategy and will likely make efforts to push sales of Founders Edition cards in future, which is a big concern for AIB partners.
What’s your take on this? Should Nvidia continue producing Founders Edition cards? Do these cards offer more value than their aftermarket variants? Let us know your thoughts in the comments below.