Nvidia managed to achieve a profitable third quarter this year and we believe the company can thank many OEM partner deals for that. But issues such as the lack of Fermi, the limited allocation of GT200-based chips and the scarcity of Geforce GTX 260 stock for the holiday season are the biggest critical factors throwing most of Nvidia partners on their knees.

The green giant's partners suffered most over a lack of GTX 260, GTX 275 and partially GTX 295 shipments which effectively crushed their margins. As a result, most of them faced significant revenue losses over the past few months.

The situation might be relieved once Fermi makes its official debut, but it looks like most volume Nvidia chips will be distributed to OEMs as these manufacturers order huge amounts of chips for a steady supply of customers. In perspective, Nvidia typically allocates most of its volume shipments for OEMs, not leaving enough for its add-in-board partners to survive. At this point, it is the Nvidia-only AIB partners who are particularly suffering, yet there is still a large chance that they will be distributed a significant portion of the first batch of Fermi chips. At the very least, this is what we would do to help these guys raise profits and to honor their unwavering brand loyalty.

At this time, Nvidia-only partners do not have many products to make money on, and innovation will be difficult at this point as the generation of GT200 and GT200b come to an end. At the same time, the Geforce GT 240 (9600GT replacement) that is supposed to launch in two weeks won't make the situation any dramatically different.