San Jose, Calif. -- Nvidia Corp. pushed the boundaries of PC graphics at both ends of the spectrum last week by launching a novel processor architecture and buying PortalPlayer for $357 million. The moves show that innovation lives, even as the core business for desktop graphics processors rapidly matures.
At the high end, Nvidia's GeForce 8800 represents the first in a new class of graphics processors to use a unified architecture that aims to bust through old bottlenecks in traditional graphics realism. The chip will also open the door to a style of thread processing for a range of data-intensive technical applications traditionally served by DSPs, FPGAs and vector processors.
At the low end, the acquisition of PortalPlayer Inc. is part of Nvidia's effort to build a business that serves the booming mobile world of cell phones and MP3 players. The billion-unit volumes of this consumer business in- creasingly demand good graphics for games and video.
Both opportunities look sweet for a company that is effectively the last of the major independent designers of PC graphics, a sector that is shifting toward more-integrated chips.
A whopping 76 percent of notebook PCs now use graphics integrated into core-logic chips, a figure expected to go as high as 85 percent in the next few years. Desktops have plateaued at about 63 percent using integrated graphics over the last two years. Still, increasingly, sales of PC clients are shifting from desktops to notebooks, said Dean McCarron, principal of market watcher Mercury Research (Cave Creek, Ariz.).
Adding to the pressure, Advanced Micro Devices Inc. has said it will roll out a line of CPUs with integrated graphics cores, starting in 2008, as part of its merger with Nvidia archrival ATI Technologies.
"There has been a slow erosion in the standalone market" since integrated chips first hit in 1998, said McCarron. Nevertheless, "pretty much as long as people care about computer graphics there will be a market for standalone chips," he added.
Indeed, referring to the primary role of graphics in the next generation of Windows, David Kirk, Nvidia's chief scientist, said that"with Vista, standalone graphics could become the fastest-growing part of the market." He likened merging CPU and graphics cores for high-end products to "taking two sports cars and two Hummers and putting them in your Prius--and at the low end, people will still want more performance, not less."
Whatever the challenges, Nvidia (Santa Clara, Calif.) is firing on all cylinders with both standalone and integrated parts. In its last quarter, Nvidia led the market in overall graphics shipments. "They displaced Intel, something they haven't done for a while," said McCarron.
Also in the last quarter, Nvidia saw two years of investments in mobile chips pay off when it pulled neck-and-neck with ATI in the rival's strong area of notebook graphics chips. "We have a genuine horse race in mobile graphics now," McCarron said.