NVIDIA Is Testing Its Pricing Power With New RTX Graphics Cards

NVIDIA's (NVDA -9.51%) 10 series graphics cards, which began launching more than two years ago, have helped power the company's impressive growth. NVIDIA claimed roughly two-thirds of the market for graphics cards in the first quarter, according to Jon Peddie Research, despite rival Advanced Micro Devices' attempted graphics comeback.

NVIDIA is now looking to pull ahead even further with its RTX 20 series, built on its new Turing graphics architecture. These new GPUs are faster than their predecessors, but the biggest change is the addition of hardware designed to accelerate ray tracing and artificial intelligence calculations. NVIDIA is aiming to revolutionize gaming graphics, in the same way that fully programmable shaders did nearly 20 years ago.

A screenshot from Battlefield V using NVIDIA's ray tracing technology. Image source: NVIDIA.

This new tech won't come cheap, and NVIDIA is taking a bit of a risk with pricing. The company is betting that gamers already willing to shell out hundreds of dollars for the latest technology will be willing to pay even more this time around, especially at the high end. NVIDIA's pricing could leave AMD with an opening when it refreshes its own line of GPUs.

More powerful and more expensive

NVIDIA typically launches high-end products first, and the RTX 20 series is no exception. Here's a rundown of the cards and their pricing:

Data source: NVIDIA.

If that pricing seems higher than normal, that's because it is. The GTX 1080 Ti launched at $699, the GTX 1080 at $599, and the GTX 1070 at $379. NVIDIA is adding between $100 and $300 to each of these new cards.

NVIDIA claims that these new cards deliver a sixfold increase in performance, but that's only true for games that take full advantage of the new specialized cores. In terms of raw single-precision processing power, these cards offer more modest performance gains.

TFLOPs = Trillion floating-point operations per second. Data source: Anandtech.

In all cases, NVIDIA's price increases outpace the increases in raw performance. The actual performance gains in games will likely be larger, due to architectural improvements, faster memory, and other factors. But that sixfold increase touted by NVIDIA refers to ray tracing performance, not what gamers will actually see in games that don't use the new features.

Ray tracing and AI

NVIDIA is betting that the new ray tracing and AI cores will be enough to justify these price increases. Ray tracing is a rendering technique that simulates individual rays of light. The concept has been around for a long time, but it's so computationally intensive that doing it in real time has been out of reach for consumer hardware. Ray tracing involves calculating the intersection of potentially hundreds of millions of light rays with a scene comprised of millions of triangles. The numbers get big fast.

NVIDIA's RT cores accelerate these calculations. The company introduced two new performance measures to give an idea of how fast these cards are at ray tracing calculations. The 2080 Ti can handle 10 billion rays per second and 78 trillion RTX-OPS, a measure of overall ray tracing performance. When NVIDIA is talking about the sixfold performance increase, it's referring to RTX-OPS. Given that the 20 series cards have hardware designed for ray tracing and the 10 series cards don't, a big increase in ray tracing performance isn't surprising.

The Tensor cores are built to accelerate deep neural network processing, which can be used for Deep Learning Super-Sampling, a technique to smooth out edges in images. NVIDIA listed more than a dozen games that will support DLSS, along with more than 10 that will support real-time ray tracing.

A bet on the future

How high can NVIDIA push up its graphics card prices before gamers balk? We'll find out with the RTX 20 series. We won't know how the cards perform in existing games until third-party benchmarks begin appearing closer to launch. But the performance gains when the new RT and Tensor cores aren't being used will be much smaller than the sixfold increase NVIDIA is touting.

AMD is expected to launch a new batch of graphics cards sometime next year. The company's return to the high-end graphics market with Vega last year failed to make much of a dent in NVIDIA's dominance. But with NVIDIA pushing up prices, AMD may have an opening to undercut its rival. If AMD prices its new cards aggressively, it may be able to win over gamers not interested in being ray-tracing early adopters.

NVIDIA certainly put on an impressive show, and ray tracing may very well be the future of gaming graphics. But the company will need gamers to accept the sky-high pricing of these new cards. That's not a given.