I personally think that it has been coming....basically it is an extension of the KAI platform concept that NVIDIA used so successfully (selling it to Google/ASUS to morph into the highly successful Nexus 7 etc).
Except that, now, with Icera modems coming into readiness, NVIDA could take the business model one step further - by selling basic, reference tablets and smartphones to OEMs and regional carriers after some tweaking. Smart way to do vertical integration.
With all the exciting new initiatives recently disclosed (officially and unofficially) to grow the company, now we know why NVIDIA has been prudent in managing its cash position.
I, for one, am extremely satisfied with what NV is currently paying out to shareholders while keeping the company on a growth path. I do not wish NVIDIA to compromise growth with more cash hand-outs....let's face it, we don't want to kill the golden goose by demanding an unrealistically big golden egg.
Nvidia management clearly had a choice:
Start paying a big dividend, funded by milking the GPU cash cow for the next five years, and then wind things up by selling the carcass to the glue factory.
Put most of the cash and expected cash flow into growing market share. Crushing ATI could be done, but doing so would mostly benefit Intel (which is already well along crushing AMD's processor business, hindered only by ATI's contribution to AMD's revenue).
Pay a nominal dividend while moving into new markets, ideally newly created or expanding markets (e.g. automotive and mobile). Paying a dividend should have opened up access to capital, but that part of the plan doesn't seem to be working.
My My a blogger from Russia has got you all excited about Nvidia. I for one expect management to have bought back shares and yes hand out some of it's ridiculous amount excess cash back to the shareholders incrementally of course.
I suspect WS analysts will rip them a new A... if they don't.
Need some real Tegra 4 design wins....that is what WS wants and so do I.
Now with that said here is a good name for the Nvidia Russia/China phone
Red Army Phone in Russia and The Chairman Mao Phone in China...LOL
Fudzilla adds a few more cents - all excellent points!
"The reference design approach could allow Nvidia to gain a lot more Tegra design wins and secure its presence in retail. It sounds like a very interesting idea to get more Tegra devices to consumers by cutting out the middle-man. Bear in mind that Nvidia has plenty of experience with reference designs, as it has been selling graphics cards through numerous AIBs for years.
Since Nvidia would design and manufacture the reference tablets and smartphones itself, it should be in a good position to ensure quality and completely control the features. It is also interesting from the software side of things, as Nvidia could practically roll out updates for all the reference products at once, regardless of branding. This wouldn’t be the first time Nvidia tried to push a reference tablet platform, but its Kai platform, launched last year, wasn’t embraced by many vendors. However, this time around though, Nvidia would not just offer an open reference hardware platform, but a complete design.
Mobile Review claims we should see the first 7-inch and 10-inch devices in May or June, just in time for Computex. It is a very interesting development and we will do our best to learn a bit more about Nvidia’s plans."
SOURCE: Fudzilla today
I first talked about the Kai concept in an early post. I think Fudzilla stole ideas from me and this board - no worse than some of the SA authors did. however. :)
I also wish to point out that Kai platform has been successful; ie. Nexu 7 and the low end Acer tablets etc, just to name a few. Often times, when the OEMs release Kai based products, they tended to avoid the mention of Kai - no big deal since NV would rake in the $$ regardless what the manufacturers do.
"I think Fudzilla stole ideas from me on this board", purports ibexx, ridiculously.
"This wouldn’t be the first time Nvidia tried to push a reference tablet platform,
but its Kai platform launched last year, wasn’t embraced by many vendors",
writes Fudzilla, clearly stealing Nothing from ibexx.
And since Jen's Tegra/KAI reference scheme failed -- and Failed Badly --
what makes you think Jen's newest scheme, "involves building its own
smartphone and tablet hardware designs and offering them white label
to OEMs in Russia and China, aiming at the bottom end of the market",
will do any better?
Answer : It won't.
It's just the newest wild-eyed scheme for Jen to be carnival barking.
This naïve little punk gamer Jen thinks he's gonna go putin
his cheap cellphones and tablets in MY Russian backyard?
HA HA HA HA HA HA!
And you thought Apple went thermonuclear!
We'll have new stringent "testing" and import duties in place.
Welcome to Russia. Chump.
"NVIDIA is hoping to win back mobile processor marketshare with
a scheme that involves building its own smartphone and tablet hardware
designs and offering them white label to OEMs in Russia and China,
aiming at the bottom end of the market."
My my my.
How the once mighty have fallen.
No more of talk about "global leader in this and that."
Oh no no no.
Sales are Ugly, and Jen is getting Desperate.
So nvidia has become a Carp.
TechCrunch has a bit more insight into this subject:
NVIDIA is hoping to win back mobile processor marketshare with a plan that involves building its own smartphone and tablet hardware designs and offering them white label to OEMs in Russia and China, according to a new report from Unwired View. The idea is that by doing that, NVIDIA gets complete control over hardware performance, while also undercutting the competition on price and hopefully flooding the market with devices based on its platform.
That’s not a new strategy for NVIDIA, which has done essentially the same thing in the graphics card market, Unwired View points out. NVIDIA has some traction in smartphone and tablet processors with its existing Tegra 3 platform, and it announced the Tegra 4 was just announced at CES, with some predicting that it will be a big winner in the mobile market. But Qualcomm is the definite elephant in the room, and its new Snapdragon processors unveiled at CES look to push the envelope and help it maintain its lead among OEM adoption.
Building their own white label designs with producers aiming at the bottom end of the market has a couple of advantages for NVIDIA. First, it gives them an opportunity to control the entire soup-to-nuts product design, meaning they can build hardware that will maximize the performance of the Tegra processor. Second, they can start building their own components at a much higher scale, as their low-cost partners ship more and more cheap, but fairly high-quality units in developing markets. That will help with economies of scale, making it easier to produce chips cheaply and in large batches for other hardware producers.
Devices resulting from this plan will begin to come to market in the May to June timeframe, if the report’s source is correct. Some of these will carry the NVIDIA branding, Unwired View says, and some will not, but all should be relatively high-quality devices at the price points offered. This is still a rumor at this stage, but an intriguing one that if true, could help NVIDIA gain even more ground as a mobile processing powerhouse on the international stage.
If I guess it right, Mr. Market likes this tumor too - that is why NVDA has registered a significant gain (2%) today. It also occurs to me that Mr. Market kinda likes the new NV style: no talk, just walk.
Go Jen Hsun, Go NVIDIA!
This is not a new strategy with NVIDA
Exactly what I said in my prior post. NV has done it with graphic cards and with the KAI platform for mobile devices. It is worth noting that, in some cases, NV would just sell (or license) the reference designs to OEMs, thus the capital outlays would be lower than what might speculated.
I wouldn't count on it. It's one thing to sell 3D glasses or a gaming device to enthusiasts to open new markets and revenue streams. It's another to sell generic devices to the broad masses.
The article points out that NVDA is providing reference design kits to white box guys. This model is exactly the same as what they've been doing with many products, from motherboards (when they were in the chipset business) to GPUs reference designs. They also sell multi-chip modules to the automotive and pachinko industries, and certain fully assembled high end graphics cards to partners to resell untouched. It's about controlling quality and the user experience.
There is also a giant philosophical debate that gets raised about competing with your customers. IMO this strategy is undertaken when there is no other traction. Tegra isn't there yet, I wouldn't read any more into the article.
nvda's cash just got discounted to nothing... single digit coming right up.
if you google mlnx on seekingalpha, you would read about some analyst discounting mlnx's cash hoard to only 25% of face value because mlxn has no history of paying dividends nor buying back stock. nvda, in the same boat, with stated intention to get into high inventory value prepositions, the cash is worth absolutely nothing in the stock price.
single digit coming right up.
It is, IMO, a good idea. They have what seems like a great design, but some of the biggest opportunities are already closed to them and no one should doubt that QCOM will be pushing hard to keep them out of the remaining markets. So, they create their own opportunity. Bold, but there may not be any other choice.
Analysts will freakout about the inventory build if Nvidia is going to sell under their own name. If they are selling a reference design with volume pricing contracts on components to White Label partners then there will be no inventory build.
One good thing. It can put some of that hugely dangerous amount of cash Nvidia has to work which will discourage any M/A activity.
Either way Jensen wins. Remains to be seen whether stockholders will. But it's within the realm of possibility.