NVidia’s Q3 2014 results (http://phx NULL.corporate-ir NULL.net/External NULL.File?item=UGFyZW50SUQ9MjEwMDA0fENoaWxkSUQ9LTF8VHlwZT0z&t=1) support the notion PC sales are approaching a bottom. NVidia’s GPU (Graphics Processing Unit) business rose slightly (2.1%) from the 2nd Quarter, 2014, but declined by a tame 1.9% year over year. GPU products are sold into PC computers, workstations and laptops.
NVidia’s Tegra product line did not fare so well. Revenues were up 111% from Q2, 2014, but down 54+% from Q3, 2013. I should explain the Tegra product line is NVidia’s System on a Chip (SOC) effort on the ARM Cortex quad processor chip. The firmware features render a flat panel display into a touchscreen tablet, or game console. Acer Corporation appears to be one of NVidia’s largest customers for this product. Acer is an aggressive PC competitor in emerging markets. But the Tegra product is targeted to the high end of the market with a matching price point (approx $500.00 retail for a 27 inch “smart display” featuring the Android Jelly Bean O/S). I should note the feature set for the Tegra products position them squarely against some of Samsung’s offers. I’m not sure whether this positioning works to NVidia’s advantage, or not. It would likely be safer, at this point in the market cycle, to back off of Tegra products, while, perhaps, putting more muscle back into the GPU product line.
The revenue shortfall for the Tegra product line points to relentless competitive pressure, in my opinion, in the high end tablet/gaming console markets. As I’ve written elsewhere in this blog, I’m convinced the high end tablet market is mature, well defined, and characterized by aggressive competitive efforts, by players, to cannibalize customers, where ever possible.
With PC markets approaching a floor and tablet markets in a mature state and clearly defined, companies like NVidia can provide analysts with highly useful indicators of where consumers are headed. I should note NVidia produces some of the better GPU products on the market today. So they certainly qualify as an industry leader.
Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)
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