This is a textbook situation that would be perfect for a competitor to come in and undercut. However not only is that not happening, nobody is even trying.
Making the “theory” pretty worthless if it’s not even applicable in cases that would naturally produce this market entrant.
The reality is that private equity does not actually want to compete with large global brands.
Is it? A competitor can enter the market and undercut by producing a cheaper and otherwise undifferentiated commodity-type product. Nvidia's focus is adding moats that prevent competing on pure specs such as CUDA, design, and so on.
Irrespectively though I don't see how a competitor can replicate the context and tacit knowledge associated building something like CUDA for close to 20 years without putting in a similar amount of time.
Nvidia also made sure that CUDA runs on gaming GPUs and supports Windows. This is why its tools are so good. You don't need to buy a datacenter GPU, no need to mess with Linux. Just buy any gaming GPU, install CUDA SDK and you're good to go.
AMD wasn't like that. Their alternative - ROCM didn't even work on gaming GPUs. Their datacenter GPUs didn't even support Windows. Basically the opposite approach of NVIDIA. Now AMD is rushing to add Windows and consumer GPU support to ROCM, but it's a bit too little too late.
Do you have any idea how much R&D it takes to make a GPU, let alone something that could possibly compete with NVIDIA?
This is not something a dozen people in a large garage are going to do.
> However not only is that not happening, nobody is even trying.
AMD has been trying to compete for years. If you're a gamer that doesn't care about getting the top performance and just wants to optimize price/performance, their offerings aren't bad.
> The reality is that private equity does not actually want to compete with large global brands.
Because the barrier of entry into the GPU market is probably at least a couple billion dollars.
There are $BN Private Equity deals done everyday, there's plenty of money to fund a competitor.
No, I think people are just scared and don't care about the existence of monopolies.
They already are undercutting.
Some business that are really into hyper-scaling are already pouring man-hours into making those "undercut" alternative products work. Specifically because sometimes you can't affort Nvidia at that scale. Or they have a large enough scale that they can make it work with suboptimal tech.
It's just that for most business the man-hours required to make "undercut" products work still aren't cheap enough to win in cost-benefit.
A lot of companies are trying. It's just that nvidia is really good and significantly ahead.