Jon Peddie Research has issued its most recent graphics market share report - and while the figures for the industry as a whole are looking healthy, Nvidia appears to be suffering from its competitors' ability to combine CPU and GPU technologies.
While Nvidia offers ARM-based system-on-chip creations for the mobile market, and is currently developing an add-in product that will bring its Tegra platform to PCs, it is the only one of the Big Three graphics chip manufacturers not to offer an x86 CPU.
In the past, this hasn't been too much of a problem for the company - but with rivals Intel and AMD pushing their combined CPU and GPU creations in the form of Intel's Embedded Processor Graphics and AMD's Fusion-branded Accelerated Processing Units, this lack is starting to hit the company hard.
According to Peddie's figures, Nvidia's market share shrank 1.7 per cent in Q1, continuing a downward spiral which has seen its slice of the graphics business drop 28.4 per cent year on year to its current level of 20 per cent. While some loss could be attributed to a general slowdown in the market which started in Q3 2008, the figures suggest otherwise - with both AMD and Intel growing 15.4 per cent and 9.7 per cent year on year, to 24.8 per cent and 54.4 per cent respectively.
"Year to year this quarter," the report points out, "AMD had tremendous market share growth, Intel had above average growth, and Nvidia slipped significantly." The question: what is the green camp doing wrong?
Possibly the biggest loss for Nvidia is in the lower end of the market. With Intel entering its fifth quarter of EPG shipments, increasing numbers of OEMs are opting to use the embedded graphics found in certain Intel processors - saving themselves the cost of a discrete graphics processor and the complexity of yet another component.
The company has also lost market share to long-time rival AMD and, with AMD's Fusion product line only just out of the gate, it's hard to blame it on a lack of integrated offering. Now that Nvidia's early Fermi missteps are out of the way, the playing field between the red and blue camps should be relatively even - but the report's figures suggest otherwise.
While the Fusion APU line isn't likely to have had a major impact at present, AMD's x86 CPU line-up still gives the company a major advantage over Nvidia: OEMs can source motherboard chipsets, CPUs, and GPUs from a single manufacturer - something that isn't possible if Nvidia is chosen as the graphics vendor.
With Nvidia working on producing an ARM-based CPU for desktop, laptop, and server use - codenamed 'Project Denver' - and Microsoft confirming that Windows 8 will be available in an ARM-compatible flavour, it's something that could change - but, for now, the company is likely to struggle to compete with its two main rivals.
The report also warns of oversupply risks from all manufacturers, with shipments growing over 10 per cent in the first quarter of the year, raising the spectre of possible inventory build-up that could severely impact shipments in Q2 as the channel struggles to keep up.
The figures are sad reading for those outside the graphics triopoly, too: multi-display specialist Matrox has seen its market share drop to just 0.05 per cent as AMD's Eyefinity technology eats away at its customer base, while low-power specialist VIA has seen a 1.2 per cent growth that still keeps it at a minuscule 0.8 per cent market share.
With the market seemingly recovering from its 2008-era doldrums, Intel and AMD are sitting pretty - and Nvidia looks like it will have to step up its game to remain competitive, especially when AMD starts to beef up its APU offerings.