The futile quest for market dominance

It's baffling to consider how third-party board vendors stay in business whilst producing virtually homogenous products. Whether it's graphics cards or motherboards, the quest for market dominance has become a donkey race whereby vendors attempt to differentiate their products from the competition through intangible, colourless means concocted by their marketing departments.

Take graphics cards for example. Gigabyte, ASUS, MSI, ABIT and so forth base their products around a reference board, but add little value to the final product. We can think of four main areas of differentiation:

- Aesthetics

- Software bundle

- Support / Warranty

- Price

But is this enough to secure consumer brand loyalty or any tangible market share growth in the future? Aesthetics and software bundle are both moot points. Most users that have moved to the stage of upgrading individual components inside their machines are likely to already be avid purchasers of games and other applications, and don't derive much benefit from a software bundle that includes titles that were all the rage around three years ago. Sure, there are some exceptions to the rule, such as the bundling of Half-Life 2 with ATI-based cards. However, since this promotion was included with nearly every ATI-based card, this doesn't increase the competition between third-party vendors themselves.

The same goes for aesthetics. While a creative packaging design or 'gorgeous' heatsink / fan unit looks desirable on the company's website or on store shelves, in reality few people take notice of this once the card has been slotted into their machine, and even fewer keep the original packaging longer than the time it takes to bring the card home from the retailer.

Admittedly, support and warranty are extremely important and are significant drivers of purchasing decisions, but vendors are always quick to note the revolutionary nature of their flashy new heatsink / fan design before trumpeting their 24 hour phone support and lifetime warranties.

So that leaves us with price. With little reason to choose one card over another as far as feature-set and performance are concerned, price is the only area of tangible competition. Yet with most vendors paying similar prices for their chipsets from the manufacturer (e.g. ATI or nVidia), the only way to decrease price is by lowering profit margins. Suffice to say, this isn't a popular choice and thus, it's rare to see more than a $US50 difference between various third-party cards based on the same chipsets.

The same issue exists in the motherboard market, as well as any other market that involves third-party vendors repackaging identical chipsets into various products. However, the lack of potential to differentiate isn't necessarily the fault of the vendors themselves. Rather, it's inherent in the market due to each product being based around the same reference board.