The graphics processor market contained about 40 players in 1999, but by 2000 it had consolidated to 10 or 15, and eventually it settled to four or five companies, including Intel. Many of these companies had few customers and were suffering from financial losses even before Intel got into graphics, but the company's entry accelerated the process.
Intel's entry didn't exactly constitute a juggernaut. It first made standalone graphics chips, and it stopped selling those about a year after their debut, because of slow sales and tepid reviews.
The company, however, kept producing its chipsets with integrated graphics. Although integrated chipsets couldn't provide the same level of performance as standalone chips, consumers and PC makers flocked to them. Soon, Intel became the largest producer of graphics chips in the world.
In the first quarter of 2004, Intel garnered 33 percent of the graphics market, while Nvidia captured 27 percent and ATI had 24 percent, according to Jon Peddie Research. Intel grew its market share while Nvidia and ATI lost some.
Overall, chipsets with built-in graphics have never climbed higher than about 55 percent of the graphics market, so far. But over time, as integrated graphics gain performance, some predict that chipsets will generally gain a larger portion of the graphics market by nibbling away at the market for low-price or even midrange graphics boards.
"There's always going to be a niche section of the market where there's still going to be demand for very high-end discrete solutions," said Richard Brown, director of marketing for chipset maker VIA Technologies, an Intel competitor. But "Intel will put the squeeze on midrange and the low end. That segment of the market will continue to be gobbled up by integrated chipsets."
Companies such as ATI won't cede PCs without a fight. ATI will attempt to counter Intel by introducing a new line of chipsets for desktops and notebooks this fall that offer better built-in graphics than Intel's 915G, said Reuven Soraya, director of marketing for ATI's Integrated Business Unit.
"I don't want to minimise it, but Intel's option to bundle a CPU (computer processing unit) with a chipset has been there for a long time," Soraya said. "We compete by having higher performance at a good price point -- basically a better value."
