NVIDIA says trying to design a GPU for the console wasn't worth the cost
Advanced Micro Devices, Inc. (AMD) has quietly dominated the market for commodity graphics chips and CPUs for console gaming systems, and the latest generation of consoles look to be no exception. Sony Corp.'s (TYO:6758) PS4, to launch this holiday season, will feature an AMD GPU and CPU. And there's an AMD 550 MHz Radeon "Latte" GPU aboard Nintendo Comp., Ltd.'s (TYO:7974) popular Wii U.
So how does NVIDIA Corp. (NVDA), AMD's chief rival in the PC graphics market feel about AMD's dominance of the increasingly PC-like consoles? Not too bad, apparently.
NVIDIA's Senior Vice President of content and tecnology told Gamespot in a recent interview that his company is essentially letting AMD win. While he's convinced his firm could be AMD if it tried, he says it just isn't worth it, remarking:
I'm sure there was a negotiation that went on and we came to the conclusion that we didn't want to do the business at the price those guys were willing to pay. Having been through the original Xbox and PS3, we understand the economics of the development and the trade-offs.
If we say, did a console, what other piece of our business would we put on hold to chase after that? In the end, you only have so many engineers and so much capability, and if you're going to go off and do chips for Sony or Microsoft, then that's probably a chip that you're not doing for some other portion of your business.
That statement seems a bit odd -- after all, hegemony of consoles could be a ticket for a financially struggling AMD to effectively sell tens, if not hundreds of millions of chips.
But NVIDIA's focus is more directed on the mobile market, where it's looking to leverage pared down versions of its GeForce GPUs beside ARM CPU cores. NVIDIA has its work cut out for it in that market; it largely lost the last round to Qualcomm, Inc. (QCOM) due to its chips being too power-hungry.
NVIDIA is looking to change later this year with the refresh of Tegra 4 that will include an on-die LTE modem. Between Tegra and the development of traditional PC GPUs, NVIDIA sounds content to let AMD freely dominate the console market -- or so it says
'NVIDIA says trying to design a GPU for the console wasn't worth the cost'
More likely they just did not have a 64-bit SoC part ready as Project Denver sounds like it would have been ideal but it is obviously still years away. It's not all bad for Nvidia as all the next generation consoles are basically mid range AMD PCs so will keep the PC gaming ecosystem alive and healthy for future discrete graphics cards.
I thought what Nvidia's head of marketing was either misquoted or incredibly stupid way to put it. But with that said let's go with his thesis. He says Nvidia didn't want the business.AMD has stated on record that the semi-custom chip program of which the consoles are the only known sales so far will generate 20% of their revenue by the end of the year. Assuming $1B in revenue/quarter times 20% gives $200M in revenue per quarter. Even assuming a low margin of say 30% would generate $60M in gross profit. Have no idea what the operating income would be but let's assume 2/3rds of that. That would give $45M in operating income per quarter.
So, the question that Nvidia must answer is what do they have in the pipeline right now that will add at least $45M in profit per quarter. It's a compelling question and one that Nvidia own marketing chief did not answer, but of course it simplyt could be the set-up for Jensen's UNPRECEDENTED GTC convention's financial presentation!
from xbitlabs jan 23, 2013
AMD got $271M in revenue per year for their embedded business...
Includes all console business from all the vendors...
Add to that PS4 is a custom chip...
LOTS of R&D dollars for NOT much gain...
at best, AMD breaks even...
the worst part for AMD is the energy they put into it just to break even...
distracts from other projects...
Its pure folly to make up numbers for AMDs profit on PS4 sales before one PS4 goes on sale.
Nvidia's PS3 deal is nothing like AMD PS4 deal.
AMD has the CPU + GPU and because of the cross license agreement with Intel
AMD can not license the x86 to Sony but must to sell Sony parts.
Nvidia was NEVER going to get that deal with only a GPU to offer.
Tegra 4 need not apply for a 64 bit PS4 job.
So what ever Sony was willing to pay Nvidia for a GPU only is not what they would pay for a CPU+GPU solution.
Nvidia is sounding off like if Sony offered them $5 for a GPU then they must have offered AMD $5, that is NONSENSE.
AMD SOLD Sony more than a GPU so they should get PAID for more than a GPU.
Nvidia is looking at their PS3 deal and bad mouthing the AMD PS4 deal and ignoring the fact that IBM took home the CPU MONEY in that PS3 deal not Nvidia.
Sony could only pay Nvidia peanuts because they had to save the big buck to buy a CPU from an Intel, IBM or AMD.
Do you think IBM took less than Nvidia in the PS3 deal?
AMD got some or all of what would have gone to Nvidia and IBM if Sony stayed with the same suppliers.