Published in Graphics

Nvidia will be fine

by on03 July 2008


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Market watchers get clueless


The market
is happy, Nvidia finally made a mistake. This proves that Nvidia CPU Jen hsun Huang is not a robot and, as a human, he tends to make a mistake. Nvidia's slip makes Intel, AMD, ATI and many other chip companies feel much better about themselves.

I have been following Nvidia from its NV5, Rage 128 chip and the only time I’ve seen Nvidia really go down was in 2003 when it failed to impress the world with Geforce FX, aka NV30. This happened when Nvidia got uber-arrogant and history repeats itself.

Nvidia is one of the most arrogant companies and it is extremely hard to work with most of their departments, but at the same time, Nvidia has state-of-the-art engineers and an incredibly good marketing machine. This combination usually works quite well and they proved it with their dominance in high-end and mainstream for years. You might not love them, but they still make state-of-the-art products.

Nvidia messed up big time in the notebook business and this slip, along with problems faced in the chipset business, will cost Nvidia $150 to $200 million. At the same time, notebook discrete graphics are a cycle problem. We remember ATI had more than 70 percent of this market and within a year, it lost more than half of it to Nvidia. This business changes hands in cyclic periods.

We wrote about the slip here and today at press time Nvidia stock had dropped $5.50 to current $12.53, which is massive 30.5 percent loss, or roughly Nvidia went down from $25 to $12.53 in a month's time. At the same time Intel and ATI are doing great, but AMD is down to $5.36 or 1.47 percent today and Intel is down 1.39 percent and this descent has been going on for days. Intel has never been better and AMD is supposed to be fine, at least with its GPU side.

The second problem that people believe about Nvidia is that Nvidia has a weak GPU roadmap, but we totally disagree. Nvidia's soon-to-come Geforce 9800 GTX+ is nothing special, but with the right price it can really hurt Radeon 4850 sales. It is the same old G92 chip shrunk down to 55nm, but it should be just enough to challenge 4850.

Geforce GTX 260 will also sell quite well when it gets to the same price of Radeon 4870 cards and Geforce GTX 280 is overpriced and has to drop severely to make some good sales. Our sources have reported that despite its incredibly high price Geforce GTX 280 is selling quite well. People simply put their trust in Nvidia in the high-end market.

ATI's dual-chip R700 will launch in August and at this point it doesn’t exist, and as far as we know Nvidia has its 55nm GT200 chip in the pipeline.

GT200 is definitely not the smartest chip we’ve seen, but it’s not bad, either; but knowing Nvidia, they will come back with some better marchitecture.

This is Nvidia’s slip, but it’s not even close to being as problematic as Wall Street wants you to think. The overall market situation will force Nvidia to drop its prices and they will lose some of their juicy profit cake. This leads to lower average selling prices, but it should still be enough to make them some profit. 

Nvidia has a few chances and one important one against ATI is PhysX. If Nvidia makes PhysX sexier and faster on Geforce hardware, they will make a huge distance between themselves and ATI, and this is Nvidia’s best bet.

Let’s just remind you on the other semiconductor mistakes. Intel slipped with Prescott and most of its Pentium 4 marchitecture, AMD is still trying to recover from the Barcelona 65nm quad-core adventure and ATI was late with 65nm transitions, and it was number two for years now.

So no, we don’t think this is the end of Nvidia, and we think that the market really exaggerates. Yes, we do believe that this is a minor bump in the road and that Nvidia will be fine.

 

Last modified on 04 July 2008
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