Nvidia is Doomed!

Piyush is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The death of the PC is here! Except for gamers, most users these days prefer buying laptops and ultra-books. Thanks to Intel’s (NASDAQ: INTC) Ivybridge, users no longer require dedicated graphic cards to perform basic graphic intensive tasks and even gaming on “HD ready” displays. Ivybridge processors (HD 4000) deliver up to 50% faster graphics compared to its predecessor, Sandybridge (HD 3000). This has butchered the sub-$100 dedicated GPU market, and Nvidia (NASDAQ: NVDA) appears to be the casualty of that war.

The War of Integrated Graphics

Though AMD (NYSE: AMD) also manufacturers and markets dedicated GPUs, it didn’t suffer much from the higher graphical performance of HD 4000. The company launched its range of Trinity APUs, which are stacked up against Intel’s Ivybridge processors. Even though Intel processors are far superior to Trinity APUs in terms of pure processing power, AMD APUs offer up to 2x faster graphical performance compared to its counterpart. Due to this solid gfx performance, many PC manufacturers have started rolling out more products equipped with AMD APUs.

Intel’s Haswell could Butcher AMD?

But that’s not the end of it!  The Haswell processors from Intel are due to be released in mid-2013. According to several announcements, demos, and leaks, we can expect Haswell processors to deliver graphics performance at par with AMD APU’s while being 10%-15% faster than Ivybridge in pure processing capabilities. As of now, AMD doesn’t seem to have any products lined up to take on Intel’s Haswell, and its “Vishera” socket processors due for release are already being greeted with pessimism. Intel definitely seems to be ahead of AMD.

Is That A Shooting Star?

Also, it should be noted that Haswell’s 2x faster graphics would butcher the sub-$100 dedicated GPU market, and we can expect Nvidia’s GPU revenues to significantly shrink in 2013. But Nvidia hasn’t been sitting idle. At CES 2013 NVidia launched its quad core Tegra 4 mobile processors, clocked at 1.9 GHz, which are capable of 4k content rendering.

No, It’s A Crashing Plane

But there’s a problem! Qualcomm (NASDAQ: QCOM), which is Nvidia’s direct competitor in the mobile processor sector, also launched its Snapdragon 800 processors, which can render and capture 4k content. Moreover, both the processors are built on the Cortex A-15 architecture, and Snapdragon clocked 21% higher than Tegra 4 processors. Additionally, Qualcomm would be launching its Snapdragon S4 Prime processors this year, which would be clocked at a gigantic 2.5 GHz. This gives Qualcomm a significant competitive advantage.

But Nvidia still appears to be focussed on premium gaming. Its Tegra 4 processors have 72 GPU cores, which are believed to be better than Snapdragon’s Adreno 330, developed by AMD. Gauging by its expected expensive price tag, I believe it would attract gamers with deep pockets. In my opinion, NVidia is limiting its market share. A faster Snapdragon 800 may perform the task of a mobile desktop, but a Tegra 4 device would perform the job of a handheld gaming device. Doesn’t make much sense to me!

The Random Walk?

Moreover, Nvidia also unveiled its handheld gaming consoles at the CES 2013. Going by the fact that a sub $400 smartphone (HTC Desire X to be specific) can handle almost any game in the market, NVidia will have to target high end consumers who are willing to pay over $600 for a mobile gaming device that can’t make calls. I think this is absolutely ridiculous, as people want everything crammed into one device. It makes absolutely no sense to carry a smartphone and a gaming device separately. I believe that people will choose to compromise a little on the graphics quality than handle another fragile and expensive mobile device.

The Foolish Conclusion

In my opinion, Nvidia is headed in the wrong direction. Rather than making premium devices that interests gamers, the company should try to target the “performance/dollar” metric. I think that Qualcomm is ahead in the competition, and will likely remain ahead if Nvidia continues to gamble with its future. Qualcomm gets a Foolish Buy Rating, but Nvidia does not!


PiyushArora has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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