People Buying Tablets Instead of Cheap PCs, Says Nvidia

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By Kevin Parrish
published

Tablets are eating cheap PCs alive.

Thursday during a conference call, Nvidia Chief Executive Jen-Hsun Huang said that consumers are turning to tablets instead of purchasing cheap PCs, even more so now that Microsoft's own Surface tablet and Windows RT are now available on the market. He indicated that consumers are beginning to realize that a top-notch tablet with solid features is better than a cheap PC with sub-par components.

"These days, tablets are so versatile, transformable," Huang said. "Now with Microsoft Surface and Windows RT, the distinction between a tablet and a cheap notebook has all but disappeared.... The future of cheap PCs is tablets."

He went on to note that Nvidia's own tablet business has doubled from the previous year, and its overall SoC business grew 50-percent in the same timeframe. The company is now expecting to ship some 30 million Tegra chips in 2012 alone. Even more, mobile chips like Nvidia's Tegra will likely take overall computing share from the low-end PC market.

"Windows RT is a monumental event for the PC industry," he told CNET in an interview. "This is really about making the PC modern, because now it's transformable into a tablet as well as being a full PC. And it's incredibly mobile. The battery life is fantastic. Industrial design is fantastic. Windows RT is really about creating the modern PC. Once you touch it, feel it, enjoy it, you realize in just a few clicks that this is going to be the way PCs get built."

Thanks to Windows RT, Nvidia is entering the Windows desktop arena not with the launch of a new GPU (which typically isn't offered in low-end PCs due to their cost), but as an ARM-based chip supplier with processor and GPU cores crammed in a single, centralized solution. The company is now on the same playing field as Intel and AMD who also offer low-power solutions for mobile computing.

"Our view of the PC [total addressable market] is it's being eaten by tablets," Huang said.

On Thursday Nvidia reported record revenue of $1.20 billion for the third quarter of fiscal 2013 which ended October 28. Revenues were up 15.3-percent from the previous quarter, and up 12.9-percent from a year earlier. This may be partly due to an increased number of Tegra chips being used in the second half of 2012 thanks to Google's Nexus 7 and other Tegra 3-based tablets and mobile devices.

Nvidia said that revenue is expected to be between $1.025 billion and $1.175 billion in the fourth quarter of fiscal 2013. GAAP and non-GAAP gross margins are expected to be flat relative to the prior quarter, 52.9 percent and 53.1 percent, respectively. GAAP operating expenses are expected to be approximately $400 million; non-GAAP operating expenses are expected to be approximately $359 million.

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Kevin Parrish
43 Comments Comment from the forums
  • DjEaZy
    ... not in developing countries... with a cheep pc you can be more productive...
    Reply
  • bystander
    Clearly Nvidia is excited about Windows RT allowing them to join the PC CPU market (if you want to call Win RT tablets/convertibles PC's).
    Reply
  • MaXimus421
    Good, maybe PC hardware will get cheaper...
    Reply
  • bigshootr8
    The primarily reason they are selling well is because for most things you can get away with just using a tablet put microsoft office on a tablet and add the ability to use a keyboard and boom cheaper then a laptop and does the same sorts of things.

    For games, editing, rendering, photo work, business's you will still need a desktop of some kind but yea I don't think this surprises me in the least. If anything I wonder why Apple hasn't hit the 200 dollar mark the ipad mini isn't a whole lot closer to that client who wants a cheap tablet like the kindle, nook, and nexus.
    Reply
  • basketcase87
    DjEaZy... not in developing countries... with a cheep pc you can be more productive...You can easily be just as productive on tablets that are designed to provide that kind of functionality (i.e. Surface, ASUS Transformer tablets).
    Reply
  • Meh I rather game on my desktop at 2560 x 1600 all ultra settings, mouse and keyboard any day over a tablet. Everything else I do on my "phablet phone" the Galaxy Note and soon the Note 2.
    Reply
  • From a company that is not building Cheap PCs of any Kind, but is in tablets, sure they are going to downplay the cheep PC, even if you can get a cheep PC for arount $300-$350 that does more than a tablet that costs 500 or more! Most of the people buying tablets already own a pc, I own 3 laptops! I will not pay any more than $200 for a tablet! Anyone that expects to do anything on a Windows RT tablet, can expect to pay for any software on this closed ecosystem, but with the cheep laptops in the $300 to $350 range users can install all the open source software for free, such as Libra or Open office, gimp, and Blender! As for my laptops, none of them cost more than $550, and the latest one I own came with a Sandy bidge Core i7, and I still get more than 6 hours of battery life on it! People rarely need more than 6 hours of battery life on their devices, as Airports, airplanes, and trains all have power outlets! Most people in the coffee houses that are on Tablets, have the tablets plugged in, so power is not the issue It once was! I will be running windows 7 on my laptops, and I have no need to upgrade to Windows 8! Until tablets have the ability to run a full version of a desktop operating system, expect Android based Tablets to be the best deal for under $200.
    Reply
  • drwho1
    "He indicated that consumers are beginning to realize that a top-notch tablet with solid features is better than a cheap PC with sub-par components."

    ... my best guess is that most readers here don't buy cheap PC's either.... most of us simply build our own systems so that we can choose exactly which components do we want on our PC's.

    .. just a thought...
    Reply
  • Solandri
    bigshootr8The primarily reason they are selling well is because for most things you can get away with just using a tablet put microsoft office on a tablet and add the ability to use a keyboard and boom cheaper then a laptop and does the same sorts of things.Just the cost of a "cheap" mobile Intel CPU ($200), and Windows ($80) and Office ($100) are enough to make the laptop more expensive than most tablets. The Microsoft and Intel taxes are a millstone around the low-end laptop industry.

    That's why tablets have overrun the low-end laptop market IMHO. Dollar for dollar you can get better hardware (certainly a better screen) with the tablet. The ARM CPUs may not perform as well as an i3, but in most cases they're "fast enough." It's the same problem Microsoft and Intel faced with netbooks (which ran Linux on non-Intel CPUs before Microsoft made Windows Starter and Intel made the Atom processor). But I don't think they're going to be able to convert tablets into x86 devices running Windows this time around. The iOS and Android software markets have reached critical mass.
    Reply
  • Wolygon
    Now with Microsoft Surface and Windows RT, the distinction between a tablet and a cheap notebook has all but disappeared.... The future of cheap PCs is tablets.
    I think he may be confused with Surface Pro, in which case he doesn't make the chips.
    Reply