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Fans of high-end PC graphics could soon gain new options: Creative Technology has announced it will buy graphics vendor 3Dlabs and re-enter the desktop graphics market.

Creative--known for its desktop PC audio products--exited the once-crowded graphics market several years ago. Since then, two companies have come to dominate the fast-paced industry: NVidia and ATI.

While Creative faces a tough battle, its presence in the market could lead to better desktop graphics for users, says Peter N. Glaskowsky, senior analyst for 3D graphics and multimedia at MicroDesign Resources.

Focus on Precision

Today, 3Dlabs is the top maker of graphics cards for graphics professionals, Glaskowsky says. Its cards are used in systems by all the major vendors. Graphics professionals use the cards for precision work, such as high-end content creation and CAD drawings. "They [3Dlabs] are the NVidia of professional graphics," he says.

The key to 3Dlabs' success is its technology's ability to precisely render pixels on the screen, Glaskowsky says. When you're using a PC to design something intricate--like a jet engine--every part must appear exactly as it is. "3Dlabs doesn't make anything casually correct; its customers only want absolutely correct," he says.

The company could bring that level of precision to desktop graphics, which neither ATI nor NVidia can yet claim, he says. "Their sub-pixel accuracy is not at the same level as the professional cards," he says. In fact, Creative could easily market future cards by claiming pro-level graphics at a mainstream price, Glaskowsky adds.

In fact, sources inside Creative say the company could release a mainstream graphics card by the end of the year, if the merger goes through. Glaskowsky says early next year is probably a more realistic estimate.

Of course, 3Dlabs' chips involve a trade-off. "NVidia and ATI chips are not as expensive to build--and they use their transistors to do other things," Glaskowsky notes. For example, 3Dlabs' current technologies don't offer programmable pixel shading, as mainstream graphics chips do.

Uphill Battle

Adding another player to the desktop graphics market might be a boon for consumers--especially gamers--but Glaskowsky cautions that Creative and 3Dlabs face a challenge building a successful business.

"Wedging yourself in there as a third option will be difficult without some sort of proprietary edge," he says. "Unfortunately, you can't have unique hardware or software and sell to the mainstream PC market."

Why try? Because Creative is already selling its audio products to so many PC vendors, it sees the opportunity to sell a few graphics cards as a win-win situation, he says. Also, at 3Dlabs' estimated $170 million price tag, Creative isn't taking a huge risk, he says.

Both firms cite the opportunity to move 3Dlabs' high-end products into the high-volume PC market. Statements from Sim Wong Hoo, chair of Creative, and Osman Kent, chair of 3Dlabs, focus on the new market for their merged technology.

Dangerous Waters

Still, the faster pace of consumer graphics could be a stumbling block for the merged firms. 3Dlabs' development resources serve it well in the professional market but are somewhat meager compared with NVidia's and ATI's, Glaskowsky says. 3Dlabs currently upgrades its professional products about once yearly; both ATI and NVidia launch a new graphics chip or a major upgrade about every six months. ATI's last major launch was in January; NVidia's latest release was in February.

"Even together they'd still have to staff up," Glaskowsky says.

Also, 3Dlabs risks spreading its limited resources too thin, which could hurt its successful professional graphics business. NVidia is already targeting that market with new products. "However, I've been assured they won't drop the ball on that," Glaskowsky adds.

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