According to graphics chip-maker
, the market for games sold on
popular Android platform will be worth $12 billion by the end of
2016. Although NVIDIA doesn't sell games directly to end users,
it does hope to capitalize on this booming industry through the
sale of performance-oriented mobile processors as well as other
A two-pronged approach
NVIDIA has a long history as a graphics chip designer. It, along
with longtime rival
Advanced Micro Devices
, designs powerful graphics processors that go into consumer PCs,
professional workstations, and even supercomputers.
However, in order to capitalize on the smartphone and tablet
opportunities from a chip perspective, NVIDIA can't
sell stand-alone graphics processors -- it needs to provide
highly integrated processors (known as "systems-on-chip") in
order to be successful in the ultra-mobile device market.
Such chips integrate a host of sub-components, which include
central processing units, graphics processors, dedicated video
and image processors, and, in some cases, even cellular modems.
NVIDIA's line of such products is sold under the "Tegra"
In addition to offering mobile processors to third-party
device vendors, the company has also been designing and selling
its own gaming-oriented mobile computing devices (powered by its
Tegra processors). To date, the company has released a handheld
gaming device known as Shield Portable and a gaming-oriented
tablet known as the Shield Tablet.
There's some interesting stuff going on here, so let's take a
A focus on performance with Tegra
NVIDIA's strategy with Tegra has evolved over time. Initially,
the company appeared very interested in going after a large part
of the mobile market, gunning for premium devices (tablets and
higher-end phones) with one line of processors and for more
mainstream smartphones with another.
However, according to Jen-Hsun Huang in an interview with
, NVIDIA's experience with its mainstream-focused Tegra 4i
platform taught the company a valuable lesson.
"I think that for mainstream phones, there's one strategy that
really works right now, which is price. That's not our
differentiator," Huang said.
So, what exactly
"[O]ur phone and device strategy is to focus on
performance-oriented devices -- devices where performance and
differentiation matter" said Nick Stam, senior director of
technical marketing for NVIDIA in an email exchange. "[W]e
partner with people that are looking for that performance
differentiation and coolness factor."
Does Tegra K1 measure up?
NVIDIA's latest mobile processor is known as the Tegra K1, and it
has shown up in a couple of performance-focused devices so far:
the Xiaomi MiPad and NVIDIA's own Shield Tablet. Does it live up
to the company's claims?
, "the Tegra K1 is easily the fastest in all of [its] GPU
In a follow up piece,
noted that the Tegra K1 "delivers immense amounts of performance
when necessary, but manages to sustain low temperatures and long
battery life when it isn't."
Additionally, in my exchange with Stam, I raised the question
of whether the Tegra K1 -- which has yet to show up in a
commercially available smartphone -- could potentially power
"Tegra K1 can deliver the best performance in a superphone
power budget," Stam replied, presumably referring to
larger-screen devices like the Xiaomi Mi3 (which comes with a
5-inch 1920-by-1080 display).
The second part of the equation: Shield
While NVIDIA still supplies Tegra processors to third-party
device vendors, it has also begun to design and sell its own
Tegra-powered devices under the "Shield" branding.
Last year, the company released a product known as the Shield
Portable -- a handheld, Android-based gaming device. This year,
NVIDIA followed that up with an 8-inch tablet known as the Shield
Tablet. According to Stam, these Shield-branded products are
intended to "leverage Android and build a gaming platform out of
While the company doesn't explicitly break out Shield revenue,
the original Shield portable didn't do much to stop the 48%
year-over-year decline in NVIDIA's Tegra revenue in fiscal 2014.
However, the Shield tablet may fare better as it is, in the words
, "a solid, worthwhile 8-inch Android tablet in its own right,
and it happens to have a host of novel features, to boot."
Though the company's Tegra business doing much better this
year (up 35% and 200% year-over-year during the first two
quarters of fiscal 2015), it's not yet clear how much of the
company's Tegra revenue will come from device sales against more
traditional chip sales. Nevertheless, if the Shield products turn
out to generate material revenue, the company could choose to
break out those sales numbers later on.
Foolish bottom line
Though NVIDIA's strategy to address the mobile gaming market has
evolved markedly over time, it's clear that the goal is to try to
compete in markets where its experience in developing
gaming-oriented products will be valuable.
If there really is a market for, as Stam puts it, for "gamers
that also want a tablet," NVIDIA seems well-positioned to
capitalize on that demand with Tegra and Shield. Investors will
likely get a much better picture of what this opportunity could
ultimately amount to as the next 12-18 months play out.
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How NVIDIA Corporation Plans to Grab a Piece of
This $12 Billion Market
originally appeared on Fool.com.
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