"Nvidia's got to face reality: If they want to grow, they have to get into other markets," remarked Jim McGregor, editor of In-Stat's Microprocessor Report. "I doubt ATI is going to get out of offering the high-performance chipsets, so I wouldn't give the market to Nvidia just yet. But whether or not they will actually be able to garner additional revenue from Intel, I wouldn't necessarily give them that [deal] either."
"Probably the knee-jerk reaction is...Nvidia should be rushing into Intel's arms. But I don't think that's quite the case yet."
Jim McGregor, editor, In-Stat Microprocessor Report
The way McGregor sees it, there may be nothing certain that emerges from this deal for Nvidia and Intel. Just because Intel doesn't have a presence in performance graphics today, he said, doesn't mean it won't have one tomorrow, and Nvidia doesn't necessarily have to play a role in that. Intel is as interested in building new platforms as AMD; but with one consumer platform already garnering success - Centrino - Intel has already proven it can meet the demands of its ODM customers without relying on anyone else's intellectual property. In other words, it can take the dance floor on its own and still command the floor.
So Nvidia's next move with regard to Intel could depend on whether ATI appears to cede its share of the high-end market. And if ATI does that, McGregor believes, then it's cutting off its own lifeline. "It's a lot easier to dumb something down than it is to build it up," he told TG Daily. So do I think ATI's going to get out of the high-end graphics market? Absolutely not. If they do, they're worthless to AMD...just because that technology that they continue to develop is critical for them to remain competitive from a graphics standpoint. If they gave up that market, I'd say AMD wasted their money."
If Intel continues to go it alone in the platform department, it might not leave Nvidia in the cold, believes IDC semiconductor analyst Shane Rau. In a sense, he told us, Nvidia already has a platform: SLI. It's a concept that requires two or four (maybe more) Nvidia GeForce GPUs, and an Nvidia nForce chipset.
"What is the fate of Nvidia long-term?" posed Rau, beating us to the punch. "Initially, it doesn't look very good, because they're being cut out. Probably the knee-jerk reaction is, 'Oh, they've gotta find a partner, they've gotta get bought, too!' And Nvidia should be rushing into Intel's arms. But I don't think that's quite the case yet. I think there is an argument that these companies can maintain independence based on their ability to provide some independence and some third-party-based differentiation."
Rau believes that a technology platform need not necessarily be comprised of all one brand of silicon, assembled in one prescribed manner. If done properly, a platform can spell out exactly what areas a company can innovate, and still innovate with the system: case in point, the whole PC expansion bus thing to begin with. "OEMs who make the systems want to be able to differentiate," he told us. "They don't want to have all the same silicon in their system. They want to be able to differentiate on something."
"Alienware, Falcon Northwest...don't want to have the same processor, the same chipset, the same graphics, the same networking components as all the mainstream PC OEMs."
Shane Rau, semiconductor analyst, IDC
This could put Nvidia in a strangely advantageous position. Specifically, with AMD and ATI jointly going after ODM customers, responding to what they say they want - a standardized platform - Nvidia could easily go after the same customers and others, responding to something eise they say they want: choice. And for the high-end, performance, and enthusiasts' market segment, Nvidia could end up being the company that exemplifies choice. In so doing, SLI could very conceivably become the platform...of choice.
"I think differentiation and segmentation kind of go hand in hand," remarked IDC's Rau. "I think segmentation is partially driven by the fact the market gets so big that not everybody can do everything well, so they pick something that they can do well and they do it so well that it becomes a niche, or eventually a segment unto itself." He pointed out specific examples: "Alienware, Falcon Northwest - small, but differentiated PC companies who decided to address high-end PC enthusiasts, and they want to continue to have that differentiation. They therefore don't want to have the same processor, the same chipset, the same graphics, the same networking components as all the mainstream PC OEMs. They want to mix and match; they want to have the best processor they can get - for their purposes, from an Intel or an AMD. Then they've got to find the best chipset they can get, and that may not be from Intel or AMD, it may be from Nvidia. So you can start to see an argument that Nvidia could play both sides of the fence by offering some ability to differentiate, to innovate, within an Intel platform or an AMD platform."
The Nvidia platform today, said Rau, "doesn't have a central processor unit, but it does have GPU technology, of course, and now [Nvidia] has a chipset business. They have the SLI technology, which requires two or more Nvidia GPUs and an Nvidia chipset put together. This is a platform approach, and they've been able to do this successfully; they pressured ATI to come up with a similar solution [Crossfire]. So if you want to have this technology, you couldn't do it with Intel silicon. You couldn't do it with AMD silicon alone. You needed to go to Nvidia for this. So I think that is an example of how Nvidia can survive by innovating and providing differentiation for its OEM customers."