Something that Wall Street just doesn't understand is how ravenous PC gamers are for the latest and greatest graphics technology. Until games can be rendered in quality indistinguishable from reality, at 120 frames per second in an integrated graphics product, there will continue to be a very real need for bigger, badder, and more powerful discrete graphics cards. Enter NVIDIA's (NVDA -1.51%) latest GeForce GTX Titan Black Edition, a $1,000 beauty that will sell like hotcakes.
GTX Titan Black is actually a steal
When the original Titan from NVIDIA hit the market, it was extremely tough to buy one. That's partly due to it being a 7.1 billion-transistor beauty that was very expensive to build -- there are very few, if any, chips with that many transistors out there today, and NVIDIA built a monster with GK110. So, the quantities were limited. But a bigger part is that this represented an extreme value for non-gamers in search of a lot of computing power, in addition to the deep-pocketed gamers.
Just how is a $1,000 graphics card considered a value? Much of NVIDIA's gross-margin dollars in GPUs don't come from GeForce -- they come from its professional workstation cards known as Quadro. These typically share the same hardware as their GeForce counterparts, but they usually come with enhanced firmware and driver stacks that make the solutions more suitable for workstation/computing workloads. They're also usually significantly more expensive.
Illustrating the point
The GTX Titan Black is a fully featured GK110 die with all of its cores enabled and sells for $1,000. How much would one have to pay for a comparable Tesla card? The nearest comparable card is the NVIDIA Tesla K20X, which retails for north of $3,200, and actually comes clocked lower. Professionals in need of the best aren't going to cheap out and buy gamer GPUs. They'll pony up for the Quadro or Tesla, depending on their workload. However, for anybody in need of high-performance computing on the cheap, these cards are an absolute steal relative to their Quadro/Tesla siblings.
The AMD "shortage" also creates opportunity
Thanks to their talent as crypto-currency mining devices, AMD's (AMD -1.65%) latest $550 R290X gaming cards are in short supply in North America, as crypto-currency miners gobble them up. This has driven up the prices of AMD's R290X considerably in North America. For gamers who aren't interested in crypto-currency mining, NVIDIA's highest-end cards are actually a pretty sweet deal. A GTX Titan Black for $1,000 offers more gaming performance than a $900 (post-shortage) R290X, as does a 780 Ti.. So, gamers looking for the "best" will either go with a 780 Ti for around $700 or a Titan Black for $1,000.
Foolish bottom line
As a "cheap Tesla," the GTX Titan Black is a great deal. Gamers who are looking for the absolute best will likely buy a GTX Titan Black for $1,000 or a GTX 780 Ti for $700. Both offer higher gaming performance than the R290X. As a final point to ponder, take a look at the availability of the GTX Titan Black on Newegg.com, the world's leading computer hardware site:
NVIDIA will sell every one of these that it can make.