The Future Of Nvidia
Question: One year from now, do you continue to see Nvidia active in designing chipsets, or will the company focus on its core business (discrete graphics solutions)?
- Currently, Nvidia can only provide entry-level AMD chipsets, and they have always faced a product shortage. Ultimately, we believe Nvidia's motherboard chipset product will become an added service item for most vendors--i.e. 3D applications.
- Nvidia does not get as much profit from UMA solution as discrete VGA.
- We really don't know…
- It seems obvious Nvidia will not be active in the MCP business. But I supposed they will not and cannot count on discrete graphics alone, maybe they will drive toward applications relating to 3D solutions.
The current situation makes everyone a bit unsure about Nvidia’s future. While Nvidia is nowhere near out of the fight, the “loss” of its chipset business gives the impression that revenue options outside of the graphics world are shrinking. The path Nvidia is on (at least on the desktop), seems to be limited to discrete graphics. This is reflected in what we are hearing from our sources in the motherboard business. Nvidia is keeping tight-lipped, since even its traditional motherboard partners are seemingly in the dark. The comment that best sums this up comes from one Nvidia technology partner: “I supposed they will not and cannot count on discrete graphics alone.”
About half feel that Nvidia is going to have no choice but to refocus on its graphics business. There are some out there that feel Nvidia may win its lawsuit and get the all-clear to develop chipsets for Intel's Core ix-series CPUs, but a third of our participants think there is a going to be a different end game. Oddly enough, someone even brought up the idea of a merger. Another cited Nvidia’s focus on 3D entertainment, which our readers feel is more of a gimmick due to the price tag.
The situation with Nvidia and Core ix-based chipsets is basically written in stone until the 2009 chipset lawsuit gets a judgment later this year. For the moment, Nvidia's chipset business is forcibly idle, and we've seen no discussion of them in roadmaps that we've seen. To that end, though, we're unsure if an Nvidia chipset for Intel CPUs makes sense anyway. At one time, superior memory controller performance and a relatively badass audio subsystem were real reasons to consider nForce as an alternative. But as integration pushes more functionality into the CPU itself, any third-party chipset vendor's chances to differentiate diminish substantially.
Rewind the clock back a few years, the main reason Nvidia was even able to acquire a chipset license was due to AMD’s CrossFire threat. It doesn’t seem to be in Intel’s interest to shorten its reach now that it has its own graphics "solution" and Nvidia’s CUDA may marginalize the performance delivered by a CPU. Now that we all know SLI is simply a licensing matter not dependent on specific hardware, Intel's board partners are able to cover CrossFire and SLI in very enthusiast-friendly X58- and P55-based platforms.
Nvidia, meanwhile, proclaims it has moved to focus on to its Tegra processors, which is by no short measure a bluff. Nvidia’s CEO recently reiterated this focus, as the company sees ARM as a huge growth opportunity. If you look at the financial statements, R&D has been given a big budget increase, despite a drop in the company’s year-to-year sales. We have mixed feelings here if only because the ARM market, though loaded with potential, is dominated by Qualcomm and Texas Instruments. Nvidia’s Android-based tablet demos generated a lot of buzz, but it’s still not clear a product in that vein can seriously compete with Apple’s iPad.
Recent FTC settlement only add more drama to the situation. The settlement effectively solidifies the PCI Express standard, as Intel now must provide bus support for another six years. However, this is as much a protection for AMD’s discrete graphic business as it is to Nvidia’s. The settlement in no way impacts the current lawsuit with Intel. Recently, the company issued the statement regarding the FTC settlement: “Nvidia supports the FTC's action to address Intel's continuing global anticompetitive conduct. Any steps that lead a more competitive environment for our industry are good for the consumer. We look forward to Intel's actions being examined further by the Delaware courts later this year, when our lawsuit against the company is heard.” Obviously, Nvidia wants to keep the chipset business if it can.
In Q2, Nvidia issued a warning estimate that lowered its earnings 16%. This came as a surprise to many, if only because Intel and AMD both issued strong earnings. This is just another indicator of how dependent Nvidia has become on the sales of its high-end cards. As discretionary spending decreased, AMD reaped the benefits of its timely Radeon HD 5000-series cards. The fact that Nvidia is only now releasing its DX11 Fermi-based cards for the mainstream and low-end market spaces means it has some catching up to do.