Nvidia is a global force of nature in the world of technology, producing a number of leading electronic components for a host of different platforms. From graphics processor units (GPUs) to system-on-chip (SOC) units, fitted into mobile devices. Nvidia is one of the reigning giants in these key industry areas. However, amidst recent woes with its proprietary Tegra chips, is this Goliath about to come toppling down, during the pinnacle of the battle of the tablets.
Tegra is a mobile processing chip, originally designed for smartphones and portable tablet devices. In actual fact, the component could really be defined as an electronic board, housing an ARM central processing unit (CPU) and GPU, along with a number of other complex features that are found in most desktop computers. The primary advantage of the Tegra architecture, however, lies in the component’s small size, and solid performance to power consumption ratio.
Unfortunately, Nvidia were very much late to the party, and the Tegra chip was one of the company’s first genuine shots at chip manufacturing for portable devices.
According to recent reports, Nvidia has been hit pretty hard through its collaboration with Microsoft, who had released its new Windows RT operating system (OS) on a variety of portable devices, including tablet devices. Inside of these Windows RT-based devices, however, lies Nvidia’s Tegra 3 chipset. Nvidia seems to be placing the blame of its crisis solely on the poor reception of Microsoft Windows RT, which has generated mixed reactions from the consumer. For Nvidia, this complicates the battle of the tablets.
According to ZDNet, the remarkably outspoken CEO of Nvidia, a Mr. Jen-Hsun Huang, inferred Microsoft’s involvement in his companies tanking revenues, during a conference call this Thursday:
“… so coming into the year we had pretty high expectations on one particular platform and there’s no sense mainly, but it’s a very important platform that also derived from it a lot of design wins.”
To be clear, Huang is referring to Microsoft’s “platform”, Windows RT, which he then goes on to tie in with his own company’s financial misfortunes.
Resultantly, Nvidia has been forced to re-evaluate its forecast revenue for the Tegra line of chipsets, who have suggested it may drop by up to 40%. As is clearly evident, Nvidia lost a jaw-dropping amount of revenue from its Tegra line, in Q2, raking in a paltry $52.6 million (a 49% drop), and a 70.7% year-over-year (Y/Y) nose-dive. Let me re-emphasize that last point, compared to the previous year, Nvidia faces a 70.7% revenue drop on their Tegra chipsets.
Despite these astonishing performance failings, Nvidia’s high end GPU line-up saved the day. Their GPU division saw an overall increase of over 9%, since the previous quarter, which constituted a 7.5% year-over-year increase. Overall, therefore, the company was able to report a respectable total revenue of $977.2 million for Q2 of the coming 2014 fiscal year.
Furthermore, Nvidia have recently launched the portable gaming device, Shield, which houses the new Tegra 4 chips. The company hopes that this device will significantly improve revenue in the third quarter.
Nvidia primarily focuses upon its GPU hardware range, which yields most of its annual revenue. However, one must question, if Nvidia then encounters troubles with its GPU division, in what direction can the company then turn? The Nvidia crisis, battered by these latest Tegra woes, may then escalate even further under these circumstances, particularly when taking into consideration the presence of Intel and Qualcomm, who are Nvidia’s powerful competitors.
The battle of the tablets is only hurting Nvidia, who desperately needs to pull the rabbit out of the hat. Let’s hope the new Tegra 5 chipsets, which are due for arrival some time in 2014, can inspire the change Nvidia, so-desperately, needs.
By: James Fenner