Santa Clara (CA) - The PC will remain the core business for Nvidia, but the company is looking to other market segments, chief executive Jen-Hsun Huang told shareholders today. The company hopes that applications such as Google Earth will fuel demand for 3D graphics chips in electronics devices far beyond the PC.
Today's graphics chip market is pretty much set with similar roles for the world's largest chip suppliers in every quarter. Intel basically owns the integrated chipset market and, according to market research firm Jon Peddie Research, currently accounts for 43.1 percent of all graphic chip shipments. ATI (26.1 percent) and Nvidia (17.9 percent) battle out primarily the performance market with standalone performance chips for desktop and notebook computers.
With growth in the PC market slowing down and ATI still dominating the notebook segment, Nvidia has to look for future markets that offer opportunities for substantial growth and are large enough to please investors. Today, CEO Jen-Hsun Huang presented shareholders his idea where Nvidia needs to go to be able to sell lots more of its chips.
According to Huang, the desktop segment will remain the main focus with more than 145 million PCs sold every year. High-end graphics card currently are by far the most profitable business and brought $2.1 billion in revenues for Nvidia in the past fiscal year. The company has begun to increase its development and marketing efforts in the notebook market which is growing much faster than the desktop market and currently is estimated to reach about 58 million units this year. Beyond those traditional 3D graphics markets, Huang sees quickly evolving opportunities in the segments of media center PCs, workstations, servers and especially handhelds and consumer electronics.
"There will be 1 billion cellphone sold in 2009. 145 million people will download 2.3 billion games. It's clear that every cellphone company wants 3D graphics in their devices," Huang said. He told shareholders that he believes that 3D graphics chips will "as pervasive as processors and memory" in next generation electronics and will be required for new consumer and industrial applications. While workstations will need more graphics capability for medical imaging or 3D CAD to allow collaboration around the world, he said, consumer devices such as cellphones or embedded automotive devices could soon take advantage of software such as Google Earth: "Imagine the potential using 3D graphics for search. You could fly to the next Starbucks on your navigation screen," Huang said.
Dual-graphics chip solutions are another key element in Nvidia's strategy to increase growth. "If someone has to graphics processors in his computer, it makes me very happy," Huang said. So it is no surprise that Nvidia plans to extend SLI in much more markets than just gaming. "The first generation of SLI was about driving a new level of performance," he told shareholders. In the future, the company plans to build on its initial success with SLI and highlight more benefits in other markets. For example, Huang envisions "graphics supercomputers" for the workstation segment: "This market already generates more than $400 million for us per year and has huge growth potential, especially when we see designers collaborating around the world."
Huang also gave shareholders a few financial details on Nvidia's participation in Sony's next-generation game console, PS3. For the first time in its history, the company acts as a pure IP supplier -it licenses technology and lets someone else build the hardware. According to Huang, Nvidia will collect royalties from Sony for every Playstation sold. This also includes PS3 derivates, such as future Playstation Portables based on the PS3 graphics architecture.