Santa Clara (CA) - The dual-graphics solution SLI is becoming a visible growth factor for Nvidia: With almost one million units shipped, nForce SLI is aimed at every performance PC, the company said during its Q1 conference call. Nvidia also delivered a solid financial result, increasing its earnings by more than 200 percent.
There was a time when market experts were uncertain, if many users would be willing to sink more than $500 into a new graphics card. Then came SLI that pushed the envelope even further by requiring an investment of at least $500 for a dual-card graphics system and as much as $2000 for a high-end system.
Nvidia's financial result for the first quarter of this year (fiscal 2006) indicates that Nvidia's aggressive strategy and bet on SLI was on target. Admitted, one million SLI units in half a year is not much if total PC sales of more than 100 million in the same time frame are considered. But about one percent of the total market is much more than many analysts had expected and Nvidia believes it can grow this figure. "SLI is a result of focusing our development for the past three years," said Jen-Hsun Huang, president and CEO of Nvidia. "It will be a must-have feature for every PC enthusiast."
Huang credited SLI and nForce as the biggest growth drivers for a solid quarter performance that was considered by analysts as sign that Nvidia has turned the corner after two years of stagnation. Net profit climbed by 202 percent from $21.3 million to $64.4 million year-over-year. Revenues grew from $471.9 million to $583.8 million in the same time frame. nForce and Quadro brought record revenues. nForce also reached a 55 percent market share in shipments of the AMD64 platform, according to Nvidia. Being about a year into its life cycle, the GeForce 6 family now also accounts for a majority of desktop graphics processor shipments. Huang said that the series now brings in more than two thirds of the GPU revenue.
With the current Xbox nearing its retirement, Nvidia said it has stopped producing graphics chips for the console and it expects to ship the last chip during the second quarter of this year. While ATI will produce the graphics chip for the Xbox 360, Nvidia has picked up the graphics chip business for the Playstation 3.
Not as much attention is paid to the integrated graphics (IGP) market, where Intel is gaining significant market share every quarter. Huang said that Nvidia will "target the most profit-rich segments" first before looking to IGPs. Although Intel's dominance in IGPs recently resulted in more than 40 percent share for the company in the overall graphics market, analysts are not too concerned. "There will be always demand for more and more performance," said Kathleen Mahr, an analyst with Jon Peddie Research. "The mid-range and performance segment hangs on." However, she also said that IGPs will continue to gain ground to "a certain point" as the speed offered by integrated graphics was enough for many users.