High Performance Thrust is Super
This new emphasis potentially helps the company in a couple of ways. First, it is generating more than $100 million annually in revenue from high performance computing sales, and that number has been growing. Also eventually, some of the advances made with those systems will trickle down into their desktop and laptop chipsets.
In addition to supercomputers, the vendor is trying to climb on the wave to smaller, more powerful devices. The emergence of smartphones and tablets was one reason why PC sales dropped by about 5% in the first quarter of 2011. In comparison, mobile devices, especially tablets, are experiencing robust growth. “Cell phones represent a substantial opportunity: vendors sold more than 350 million phones last year,” noted The Linley Group’s Krewell.
NVIDIA has targeted that space with its Tegra line, which is based on ARM Holdings’s chipset. The ARM solution has been quite popular in the mobile space and is found inside many cell phones, including Apple’s iPhone as well as handsets from HTC Corp. and Samsung Electronics Co.
ARM, A Mobile Juggernaut
In effect what Intel has been to desktop CPUs, ARM has become for mobile devices. But in other ways, a different paradigm is unfolding with mobile chipsets. On the PC front, the Microsoft Windows Intel alliance made it difficult for alternative chip suppliers to emerge. Intel leveraged its position to become a $45 billion company, more than ten times more than NVIDIA’s $3.5 billion annual revenue.
But in the mobile market, there is more of a level playing field. In fact, Microsoft is playing the role of Switzerland rather than Intel ally. The software vendor developed a full featured version of Windows for ARM. One ripple effect is that Windows applications will run on a range of mobile devices, many of which will not necessarily use Intel processors.
As a result, Intel does not have a domineering presence in this sector — at least for the moment. Its Atom chipset has been used in many netbooks but has had little impact on smartphones and tablets. The vendor has been trying to enhance its position via acquisitions: paying $1.4 billion for Infineon Technologies AG’s Wireless Solutions Business and Texas Instruments Inc.’s cable modem line. To date, the moves have had little impact.
Walking in the Open Door
Since the mobile field is wide open, NVIDIA decided to move in and has experienced some success. The Microsoft Zune HD is one example of the smaller, non-PC devices that are becoming quite popular. That media player runs a version of Windows CE on top of an NVIDIA ARM processor. In addition, Sony’s opted for NVIDIA silicon for its Android tablet. “NVIDIA was one of the first vendors to deliver a dual core mobile CPU, and that helped the company secure some key wins,” noted The Linley Group’s Krewell.
However, the mobile market’s flexibility has produced a bevy of competitors. NVIDIA’s Tegra is vying with chipsets from industry Behemoths like Qualcomm, Texas Instruments, and Samsung Electronics.
“Qualcomm’s has been the star in the mobile space,” stated Gartner’s Mushell. Its silicon supports many phones running Microsoft’s Windows 7 operating system. The silicon supplier claims that its chip is used in more than 100 mobile devices from companies, like HTC, Research In Motion, and Samsung — and another 200 (including 30 tablets) are in development.
A Strategic Acquisition
To gain an edge, Nvidia paid $367 million for baseband chip maker Icera in May. The Icera DXP is smaller than those offered by Qualcomm – as well as other suppliers. Icera relied on programmable firmware to replace separate modem blocks that other chipsets require for wireless protocol, such as EDGE, Wideband CDMA, HSPA, and LTE. Moving forward, Nvidia would like to leverage such capabilities for additional acceptance in the mobile space. Time will tell how well this initiative will fare.
So at the moment, Nvidia appears to be at an important crossroad. With its traditional bailiwick weakening, the company has moved in new directions. With its thrust into the supercomputing space, the vendor seems driven to continue delivering high-end graphic features to customers. However, chances are that the bulk of its future followers will be using its mobile silicon rather than its traditional desktop solutions.
Paul Korzeniowski is a freelance writer who is based in Sudbury, MA. He has been covering technology for more than a decade and can be reached at firstname.lastname@example.org
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