Another one bites the dust!

[HAL9000]

Recently announced, graphics card maker Elsa has filed for bankruptcy.

[pam123]

I can't be the only one who's been hearing that "gamers drive the PC market". So why are the makers of graphics cards dropping like flies? It's not happening to other component makers so what's their problem?

[KuhnDog]

One word. Familiarity!

Buyers are subconsiously driven to the companys which are taked more about.

[DrZaius]

I remember reading a while back that they were going to stop making gaming cards and focus on just workstation graphics. Ah well, as long as ATI is around I'm good.

[morriswindgate]

I think the big problem is like that that happened to Trident and now Nvidia is following in the steps. In other words, sell your graphics chips to anyone including unknowns trying to make a buck, then they build cheapie cards using the same chips and sell these at a price the quality manufactures cannot make a profit at. I mean just look at all of the differant brands of GFORCE cards out there. At least whn I get an ATI from ATI I know who made it and the quality.

[KuhnDog]

True, but some companys have good reputations for making geforce 3. I only have heard good reviews from PNY. Thats where I got mine.

::KuhnDog

[morriswindgate]

But you know the manufactures and their reputations, the average AOL user (who is still wondering where all the Bedsheets and towels that UPS delivered came from) just runs out and buys the cheapest card they can find because the box says GForce on it.

[HAL9000]

Originally posted by morriswindgate I think the big problem is like that that happened to Trident and now Nvidia is following in the steps. In other words, sell your graphics chips to anyone including unknowns trying to make a buck, then they build cheapie cards using the same chips and sell these at a price the quality manufactures cannot make a profit at. I mean just look at all of the differant brands of GFORCE cards out there. At least whn I get an ATI from ATI I know who made it and the quality.

Unfortunately, ATI has followed this same route now. You can get Radeon based cards from Powercolor and Giga-byte. My price list from my supplier even includes a "Generic" section listing Radeon based cards.

Quickest way to spot a non-ATI card, usually only a one year warranty. ATI cards carry 3-5 year.

[Xayd]

The pricing is simply too high.

Who pays 300-400 dollars for a new vid card every six months?

I only buy a new vid card every couple years, and I *am* a stereotypical 'hardcore' gamer. I simply refuse to shell out 600-1000 bucks a year just to play games. Prices are too high, especially on the nVidia side.

[Computer Hobbyist]

The question is why are video card manufacturers in such financial trouble. Part of the answer has already been suggested--familiarity (or lack of it). ATI and NVidea are simply draining the life out of their competition. Another (and I think more important) reason is that high end video cards are really luxuries most folks can do without. When times are bad luxuries are the first places most people look to make up the short fall. This can be really tough on a small manufacturer. If ATI weren't so big or NVidea hadn't just signed a major contract, one or both of them might be in big trouble too.

CH

[Loafsta]

Hey CH, What competition? Nvidia and ATI run the home GPU market -- and Nvidia is trying to break into the low end professional market as well.

If Elsa died, its not ATI's or Nvidia's fault. Both of those chipset developers are coming out with new products at a tremendous rate. For licensees like Elsa, that's a dream. Imagine if we were all still running the Geforce 256. . . prices would be rock bottom and licensees building boards would have virtually no space for markups or profits. By putting out new cards every 6-10 months, Nvidia drives its own profits but it also drives licensees' sales. I don't know the details, but I can surmise that Elsa died for two reasons, 1) the sluggish economy is making people less likely to upgrade across the board and 2) other licensees like PNY, Gainward, hell, even hercules and visiontek, have better marketing strategies and are selling either better or more attractive products (by attractive I mean packaged more attractively or put on an oddly colored board with a big fan to get the less knowledgeable consumer excited, etc.). Finally, if board-makers are dying out, thats not necessarily bad for us. Most of those producers were selling to the low end anyway -- less competition for ****ty products won't effect prices for quality boards -- and as many on this board have already noted, as long as new products keep coming out, there will always be high prices at the high end. Plus, if we concentrate competition at the high end, that might bring prices down in the long-run.

As for those who complain about the constant stream of new products, imagine how much you'd be whining if new card chipsets came out as often (read: rarely) as new CPUs? I'd rather developers keep driving the market forward than for us consumers to have to push developers forward.

That's my two cents. Sorry about the diatribe.

[Sauron]

I also perfer quality over quanity...so what if they dominate the market? Microsoft dominated the market also...I am sure most folks would be glad if they were destroyed...but, these small companies expect to make it big with inferior products and it doesn't work that way. The ppl that are talked big about are the guys who have the better stuff. No one else. In order to succeed in this world. You have to give something, that no one else has. ATI and nVidia have done that. So has Microsoft, AT&T, Dell, and a lot of others. If you don't have what it takes. Get the hell out!

[Loafsta]

FYI -- from ELSA's 3Q 2001 financial report. Looks like this should give everyone some idea of why cardmakers are in trouble.

"In the third quarter of 2001, the business of ELSA AG has been strongly impacted by extraordinary internal and external influences. Despite the good position in a meanwhile strongly consolidated market environment, and the acceptance of our technologically leading products as well as the strong brand, ELSA could not escape the general trends of a declining PC market. Against the background of difficult market environment and the previously reported limitation to fund further growth, sales of 208 million EUR represent a development better than the overall market, however still showing a 12% decline compared to revenues of the first nine months of the previous year.

The consequences of the terrorist attacks on the USA in the traditionally best-selling month of the quarter, September, have massively burdened the business towards the end of the quarter. Particularly the company's U.S. subsidiary experienced a corresponding decline in sales. Nearly a week of disrupted air traffic resulted in further production delays, affecting sales as key components especially from the US were not available. The resulting slump in sales shortly before the end of the quarter could not be compensated adequately.

The typhoon related flood catastrophe in Taiwan, by the end of September, resulted in further supply bottlenecks. This affected mainly computer graphics products that were, and remain, in strong demand."

If you look at more recent financial reports, it looks like ELSA had overextended their debt during an attempted restructuring and scared investors demanded payment, forcing the company into bankruptcy -- the same reason Enron ultimately collapsed, although I doubt ELSA was remotely as deeply -- or illegally -- in debt. The fact is that in a weak economy, when companies show signs of cracking the investors make a run on the bank -- tyring to pull out their money while there's some left. Any company with revenues down 12% from the previous year would have trouble paying up, especially one involved in an industry that borrowed overzealously across the board and was ultimately hit extremely hard by faltering investor confidence.

Anyway, ELSA isn't out of business, its just in the German equivalent of Chapter 11 restructuring. Its currently looking for investors to cover its debts and will probably pull out of this just fine -- although it'll probaly pare down its product line. Hell, I don't expect K-Mart to go out of business any time soon. . . and its bankrupt too.