I smell a conspiracy…

by Calvin on February 24, 2001

Introduction

Maybe, if you’ve been paying attention at all over the last 12 months or so, you’ve noticed some momentous occurrences in the computing entertainment industry. First off, It became apparent that Microsoft was indeed serious about entering (and trying to dominate) the lucrative console market. Secondly, it was announced that nVidia was Microsoft’s choice for the design of their X-Box graphics chip. Thirdly, 3DFX was sued and outsold into submission, and sold off most of their intellectual property to nVidia.

Now, lets lay out some logic first:

  • The GeForce 3 is going to cost $600 at first release. Granted, a lot of the cost will be RAM, but don’t kid yourself, this chip ain’t cheap.
  • The X-Box’s price point at release is in the sub-$500 range. I doubt that the X-Box uses the same fancy RAM as the GF3, but if you add in the cost of the P3 and the other parts, Microsoft is clearly selling them at a loss.
  • The GF3 and the X-Box Graphics chip are VERY similar, if not identical, in power. It would be safe to assume that the production costs are indeed similar.
  • Microsoft has been promising the ludicrous: that the X-Box graphical power will be untouchable by PC’s. Maybe at first, but PC’s have always caught up in a year or two.
  • Currently, ATi be damned, nVidia owns the gaming video card business. They have a solid low, mid, and high-end line up, but not as many features as ATi.
  • Despite their dominance on the PC, that market is small potatoes compared to the console market, where even the failing Dreamcast sold 3 million + units.
  • The Mac market is struggling to recreate itself as a viable gaming platform. Also, the Mac market, due to decreased competition and an emphasis on user-friendliness and support, tends to be more expensive as compared to an equally performing PC machine.

So what do we have? Well, Microsoft wants to assure that their X-Box remains more powerful than anything but an obscenely priced PC. Why even bother? Because they’ll be running a lot of the same titles. If a title comes out for both platforms, and looks noticeably better on a PC, then the X-Box is S.O.L. But, if MS can restrict the number of GeForce 3’s that enter the market, it can keep the price of the card well above the price of the X-Box as a whole.

Is Apple an Active Partner?

Hard to tell. There is no concrete proof that they are involved, but Jobs is really the type of person that would love this. He has tried to portray Mac as a cutting edge technological platform (which it is, in many ways), and this sort of announcement gives both him and Mac the limelight he loves so much.

So how did the deal work? Again, no real evidence, but I suspect that Microsoft offered nVidia some sort of monetary/X-Box profit bundle for them to keep their card out of the PC arena, and that nVidia then approached Apple offering to make the GF3 a Mac-first release, for just a small fee. Apple, of course accepts, and hypes the GeForce 3, to the delight of both nVidia and Microsoft.

So, Who Wins?

Well, obviously, nVidia wins big. They get free publicity (actually better than free, if they get some sort of fee), and they get fees from both sides. Since Apple is hyping the GeForce so much, they will probably sell well, despite their $600 price tag. If they sell well, nVidia can say that supplies are too low to release the card to PC. If sales are poor, nVidia can say that demand is too low to release the card on the PC, and that they have to stop production until the price comes down (read: sometime well after the X-Box release).

Microsoft is happy because they think they’re in control, and they probably do increase the attractiveness of their X-Box. Apple likes it because it’s a lot of publicity, and something they can claim they have over the PC industry.

So, really, everyone wins.

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