Advanced Micro Devices (NASDAQ:AMD) revealed the first graphics card based on its Polaris architecture, the RX 480, at Computex earlier this month. The RX 480 is a $199 card aimed at the mainstream portion of the market, selling for a bit more than half the price of NVIDIA's (NASDAQ: NVDA) cheapest Pascal graphics card, the GTX 1070. AMD's strategy is to win share, sacrificing the high-end of the market for the time being.
While the RX 480 has a firm launch date, June 29, and a firm price, AMD has been less forthcoming with the rest of the lineup. At the Electronic Entertainment Expo (E3), AMD teased the RX 470 and RX 460, two lower-end cards set to be released at some point this summer. This brings the Polaris lineup to three cards -- all, presumably, priced below $200.
Going after mainstream gamers
The RX 480 is being positioned as an affordable way to power virtual-reality headsets like the Oculus Rift. According to AMD, only 16% of PC gamers are currently buying GPUs capable of VR. The minimum requirement for the Rift is a GTX 970 from NVIDIA, or an R9 290 from AMD, both of which launched at well over $300. The RX 480 brings down the price quite a bit.
AMD has revealed very little about the RX 470 and RX 460. The company states that the RX 470 is aimed at "delivering refined, power-efficient HD gaming," while the RX 460 is "a cool and efficient solution for the ultimate e-sports gaming experience." Neither will be powerful enough for VR, but PC gaming at 1080p will be less expensive compared to last generation.
If I had to guess, I'd say that the RX 470 will launch for around $150, and the RX 460 for around $100. Those prices would be similar to the launch prices of the last-gen R7 370 and R7 360, but both cards should be substantially more powerful than their predecessors.
NVIDIA's strategy with Pascal follows the typical pattern of launching high-end cards first. NVIDIA announced the GTX 1070 and GTX 1080 last month, priced at $379 and $599, respectively, and a lower-end card from the company is likely still months away. AMD desperately needs to regain market share after losing so much over the past couple of years, and a head start in the mainstream portion of the market may be just what the doctor ordered.
What to expect
NVIDIA will almost certainly launch lower-end graphics cards to compete with AMD in the coming months. If last generation was any indication, a GTX 1060 and GTX 1050 are likely in the works.
AMD will also likely launch a higher-end card, possibly the RX 490, at some point this summer. The company described its strategy with the RX series as "delivering enthusiast class performance and features for gamers at mainstream price points from $100-$300." With the RX 480 priced at $199, there's plenty of room for a higher-end model.
Will AMD's aggressive push into the mainstream-graphics market lead to market-share gains? Probably. The enthusiast portion of the market is small in terms of units, and most of the volume happens at the price points AMD is going after. The company will have a head start, leaving NVIDIA to play catch-up when it finally launches lower-end cards.
I see no reason to believe that NVIDIA's eventual mainstream cards won't be competitive. The company has a major R&D advantage, surpassing AMD in terms of spending despite being focused solely on graphics, and both Polaris and Pascal bring similar improvements in terms of efficiency. NVIDIA's unit market share, which currently sits at around 80%, has gotten high enough that it will be difficult for the company to defend. But that doesn't mean that it will be easy for AMD to get back to where it was a few years ago.
One downside to AMD's mainstream strategy is that a solid $100-$200 graphics card doesn't get the kind of headlines a record-breaking $600 card tends to get. AMD will need to get people excited about the RX series, at least enough to make the plunge before NVIDIA launches competing products. Needless to say, it's going to be an interesting year in the graphics-card industry.
Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.