NVIDIA's Road Ahead: Ion, Tegra and The Future of The Company

NVIDIA's ION platform will help siphon Atom-driven revenue into the company's coffers, but it leaves the GPU manufacturer entirely dependent on Intel's release calendar, pricing, and product delivery. ION is important, as it provides NVIDIA with an ultra-low-power platform that's x86-compatible, but good feelings between the two Santa Clara-based companies are most likely at or near a historic low.

Tegra's design combines a proven, well-documented, low-power CPU architecture (ARM11 MPCore) with NVIDIA's own graphics technology. At present, Tegra is being floated as a solution for GPS units, automotive computing, smartbooks, and MIDs—and it'll power the upcoming Zune HD—but we can expect Team Green to continue to evolve Tegra's capabilities the same way Intel is evolving Atom's.

If NVIDIA can persuade more OEMs to design Tegra-based products and successfully overcome the device's inability to run x86 code, the long-term profit potential could be enormous. According to Intel's financial reports, Atom was responsible for $581 million in company revenue in the first two quarters of 2009. Even if we assume Atom merely repeated that performance in the second half of the year (i.e., no seasonal uptick), Intel's Atom-derived revenue for all of 2009 would be nearly $1.2 billion. That's small potatoes compared to Intel's net revenue of $37.6 billion in 2008, but it would be great performance for a product family that won't be even two years old by then. Keep in mind, actual Atom revenue for all of 2009 should be significantly higher.
 

Microsoft's Zune HD
 

Even a small slice of Atom's current revenue would make a meaningful difference on NVIDIA's balance sheet, and Intel doesn't exactly plan to limit the small processor's growth potential. Intel's oft-repeated goal is to push Atom from netbooks to MIDs to smartphones, pausing along the way to launch devices at every commercially viable size and speed. If NVIDIA can tap that growth with a mixture of x86 platforms (ION) and its own solutions (Tegra), the company could establish itself as a major player in a variety of new markets.

CUDA (Compute Unified Device Architecture) doesn't appear to be supported on the first-generation of Tegra devices, but it's hard to imagine NVIDIA not including it (possibly in a limited way) on subsequent iterations of the platform if the first proves successful. NVIDIA has made a great deal of noise about CUDA as the future of GPU software development, and the ability to offload programs to the graphics processor could give NVIDIA its own secret sauce when competing against future iterations of Atom.

A quick word on CUDA. While it's often discussed as if it was a programming language, this is incorrect; NVIDIA defines the term as "a revolutionary parallel computing architecture that delivers the performance of NVIDIA's...graphics processor technology to general purpose GPU Computing." CUDA is best understood as a platform capable of running C code (with optional CUDA extensions), OpenCL, and Microsoft's DirectCompute. NVIDIA recently

released a DirectCompute-compatible driver in anticipation of Windows 7's launch date, while Apple's upcoming Snow Leopard will use OpenCL to pass code to the GPU for execution.

There's no inherent reason why all three standards can't coexist the same way various CPU programming languages have shared space for decades. CUDA may be at a disadvantage, insomuch as it's currently limited to NVIDIA video cards, but that fact does not, in and of itself, doom CUDA. If NVIDIA can demonstrate benefits to using CUDA as opposed to DirectCompute or OpenCL, especially in the HPC market, it will remain a viable option. Even if CUDA is deprecated in the long run, deploying its own standard gave NVIDIA and its developer partners a significant headstart in developing programs that effectively utilize the GPU.

The last twenty-five years are littered with examples of companies who claimed Intel (and, by extension, the x86 architecture) couldn't possibly challenge the performance or scalability of their various processors or products. Faced with a future where integrated CPU / GPU hybrids chip away at its budget products and Larrabee challenges the midrange (at least), NVIDIA is pursuing the barely tapped market for smartbooks, UMPCs, MIDs, and next-generation smart phones. The company's lack of an x86 license could prove to be a disadvantage, but the market space Tegra is targeting is the only one where a non-x86 architecture actually has a chance of succeeding.

Wars aren't won by sitting at home and waiting for the enemy to come to you, especially when your foe has ten times your revenue and far-reaching connections. Graphics and GPU design will remain a critical part of the company's future—you don't pump two years into creating the concept of "visual computing" only to quit—but NVIDIA's decision to capitalize on the on the same market opportunities Intel is working to create in Atom's target market is, at the very least, strategically sound.