Nvidia Corporation (NASDAQ:NVDA), as expected, has issued an aggressive price-cut campaign for its top of the line graphics accelerator products. This action by the company is clearly aimed at bursting rival AMD's recently launched Radeon 9 series of graphics cards.
Last October 29, Nvidia reduced the retail price of its flagship card GTX 780 from $649 to $499. The Kepler technology- powered GTX 780 was only released last May 2013 and the surprisingly big $150 price slash seeks to undercut the new Radeon 9 series 290x graphics card from Advanced Micro Devices, Inc. (NYSE:AMD).
The new $499 price of the Nvidia GTX 780 is $50 cheaper than AMD's 290x, effectively making the former a better deal even though the 290x actually scored higher benchmark scores. Nvidia is further making its flagship card a more attractive buy by bundling free games with it. AMD must be seething mad already, after Nvidia's price cut, buyers of the GTX 780 gets to own free downloadable copies of Batman: Arkham Origins, Splinter Cell Blacklist, and Assassin's Creed IV.
Ruthless, that's how Nvidia is, because aside from offering three free premium title games with GTX 780, the company is also offering North American customers a $100 discount off Nvidia's SHIELD handheld gaming console for every new buyer of the GTX 780, Titan, and GTX 770.
Price-Cut, Bundled Freebies are Fair & Smart Tactics
Nvidia also slashed the price of its GTX 770 from $499 to $329 as a direct competition for AMD's new mid-range $299 280x graphics card. Although with a higher retail price, the GTX 770 is also eligible for the free games and $100 discount on SHIELD, making it a better value deal than AMD's product.
This aggressive tactic of Nvidia is fair and just shrewd. It directly hurts AMD's sales figures while improving those of Nvidia's. The lower price tags from Nvidia effectively castrate the better benchmark performance of the 290x. Coming just two week's from AMD's launch of its new R9 series, the price reduction by Nvidia already impairs the future sales results of the 280x and the much-praised 290x.
This purposeful price-war assault of Nvidia to render the technical advantage of its rival's products, in my humble opinion, will greatly benefit the company. It will increase the number of unit sales for the company's high-end graphics accelerator cards. The lower price tags also give Nvidia lots of positive PR brownie points. Consumers always appreciate cheaper prices for premium quality products.
Unless AMD reduces the price for its new Radeon 9 series, Nvidia will continue to outsell it in the lucrative high-end graphics market. Nvidia has a stronger financial position; it can afford a nasty price war so I don't see Nvidia backing down. Either way, consumers benefit from any price-slashing competition between these two companies.
SHIELD Sales is Also Going Strong
The $100 discount coupon being given away by Nvidia to buyers of its high-end and mid-range graphics accelerator cards will further improve the already great sales of the SHIELD handheld console. Launched only in July, the $300 SHIELD has received mostly positive reviews and great consumer reception. With the discount bonus, this gadget can be have for only $200.
The mega super powerful 5-core Tegra 4-powered SHIELD not only plays Android games and run Android apps, it also streams full PC games. This live PC game streaming is the device's most compelling feature and it sold briskly because PC games embraced it readily. This feature lets gamers play full-blown games installed on their desktop computers using the SHIELD's screen and controller.
SHIELD let gamers play the latest desktop games like Battlefield 4 while comfortably lying down on their bed. This appealing feature helps Nvidia's reputation for creating cutting-edge technology. The company is so bullish on this handheld device that it is taking a more active role for it.
Due to a complaint by a reviewer that the SHIELD's controller only properly works for about 100 games on the Android Market, Nvidia decided not to wait for game developers to re-code support for SHIELD. The company announced last October 29 that it is doing the re-mapping of more Android games so that they will work with the controllers of SHIELD. The company also revealed a new update that will let SHIELD owners make custom mappings for the controller.
The lower price tags for Nvidia's top graphics accelerator cards and the SHIELD console will definitely increase the total gross revenue of the company. More units will be sold especially now that the holiday season is coming. Parents will be buying gifts for their kids and adult gamers flush with cash from Christmas bonuses and 13th month pay will buy new graphics cards for their gaming rigs. The cheaper Nvidia GTX 780 with free bundled games will most probably be their first choice.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.