Nvidia to more aggressively go after small biz market

Santa Clara (CA) - Nvidia will put more focus on the small business, government and educational market with its "Business Platform" certification. The program is aligned with AMD and will gain visibility next week with first "certified" systems hitting the market. The strategy may allow Nvidia and AMD to take another shot at Intel's dominance in the business chipset and processor market.

PC systems aiming for small companies, government and educational institutions is a lucrative business opportunity for system and component builders. It's especially the higher unit-count sold per customer and the resulting opportunity to improve margins that makes this target group very attractive for the IT industry. But it's not an easy market to crack, if you aren't an established supplier in this field as businesses are typically asking for very specific requirements in PCs they are purchasing.

And for the most part, performance is not what these customers are asking for; it's the total cost of ownership (TCO) they are interested in. With most cost being created after a purchase of the actual PC - for example through technical support - IT managers typically standardize their PC base as much as possible with the same PC models and components, which promise a high level reliability and a reduction of support cost as a result. Compared to the consumer market, a business PC has a closely defined life cycle: A system considered by business customers needs to be available in one and the same configuration for at least 12 months and support needs to be available for at least another 24 months thereafter.

Today, this market is dominated by Intel with the firm's "professional business platform" and the "fundamental business platform." Both platforms outline certain processors and chipsets that can be used by system vendors to build PCs that bring a baseline of performance, stability manageability and security to the customer. However, more and more businesses have started to show interest in such platforms, generally referred to as "stable images," not only from Intel but from AMD as well.

Over the next few months we will be seeing AMD and Nvidia to push stronger into this segment. Nvidia has created a "Business Platform" certification a few months ago, but has been developing the program largely under the radar of media and other industry observers. Catering to small business, government and educational customers, Nvidia's stable image version covers its chipsets and integrated graphics as well as discrete graphics processors (GeForce 6200) and security features such as a firewall and a trusted platform module (TPM) that are built onto a certified motherboards. Additionally, the platform includes Nvidia's driver software, a system builder certification and remote system management features provided by Altiris and Microsoft.

For now, Nvidia's program is only available with AMD processors (Athlon 64 and Athlon 64 X2). Company officials also told TG Daily, that the certification is a channel program that won't be available to Tier 1 system builders such as Dell, but rather target Tier 2+ manufacturers. Among the firms participating in the certification are names such as Amax, Acmar, Bass, Compusys, Maxdata, Premio, and Tarox. According to Nvidia, the strategy is to enable smaller vendors to compete with leading system suppliers that have more resources to create, build and support stable platforms individually.

Despite its recent success and continued traction in this market segment, AMD is without doubt the underdog in this game. It may be surprising that Nvidia chose to play with AMD and not with the company that would enable the firm access to the majority of the market - which is estimated at around 20 million PCs per year for North America and Europe. Nvidia officials explained that AMD was a natural fit, as there is currently no Intel version of the firms integrated graphics chipset (IGC) versions. Also, we were told, Nvidia's core logic and graphics products are very complementary to AMD's stable image strategy. Together, the two firms may be able to provide a more convincing stable platform than they could on their own.

However, the simple lack of an Intel-enabled IGC as well as AMD's recent progress in the business market may not have been the only reasons for Nvidia to bundle up with AMD - in the end we are talking about revenues and profits here. If there's a chance for Nvidia to do the same with Intel, we have no doubt that this will happen. A look into Intel's product roadmap and history brings more clarity to this scenario: Intel never has marketed a third-party product as part of its stable image program and opted to provide the components - processor, chipset and graphics - through its own products instead. At least for now, it simply makes more sense for Nvidia to run its program with AMD and combine the marketing potential of the two firms - rather then investing in a program that may never receive substantial support from Intel.

The Business Platform strategy clearly won't take over the market overnight. It may take several years until the program logo will be widely established and its meaning recognized. But a combination of AMD's increasing traction in the business segment with Nvidia's 70% share in the business workstation market may help to create a stronger product that is able to challenge Intel in this market segment.