Tuesday, August 26, 2008

Nvidia paints the town green

The fountains flowed a toxic green that puts all those terrible green beer St. Patrick’s hangovers in perspective. You were never that sick. But the point was made. San Jose, at least for these three days in August belongs to Nvidia.

What we find interesting is what Nvidia has chosen to concentrate on. There has been plenty of candy for the game boys, but the emphasis is on business, high end computing, entertainment and the future.
One thing is for sure, stereographics is here to stay—at least for a couple of years. Jen Hsung Huang showcased 3D video in his keynote and showed how much more fun games might be if you had a 3D view. Now, you might well say, we’ve had the opportunity for years and so far, gamers have played with 3D for a bit and their glasses wind up in the toy box with the steering wheels, old joy sticks, pedals, and t-shirts. But this time it’s differerent or at least that’s what the hardware vendors (of graphics boards, glasses, computers, glasses and displays) want us to believe. At Nvision the high quality screen and fast stereoscopic performance was pretty convincing. The next day’s keynote highlighted 3D and stereoscopic views for space exploration as if to say, again, it’s not just fun and games.
And that, really, seems to be what Nvidia is setting out to do with Nvision—bring more people into the family to share the vision of 3D and great graphics. It’s not just fun and games, it’s graphics.

Thursday, August 07, 2008

Larry’s Bee - Part Two

Last week I posed a postulate that Intel could justify the investment in Larrabee (Larry’s Bee) on the basis of obtaining some level of parity with the incumbents, mainly ATI and Nvidia. And in my rush to post and then catch an airplane, I included the total discrete graphics semiconductor market, not just the desktop discrete market – sigh. OK, I’ll eat a little humble pie, give you the right numbers but more importantly suggest something bigger.

First the numbers

I mistakenly used the total GPU (desktop and notebook) in my calculation of Intel’s TAM – although the charts revealed the real numbers.

In any case the desktop potential in 2010 is 100 million units. I’m not including notebooks because I don’t think Intel will have a Bee mobile version by 2010.

So, same speculation, they hit parity by end of 2010, gives them a TAM of $3.3 billion, a little less than the $4.6 Billion I mistakenly quoted.  But read on….

Larry’s bee maybe more

Some of you have seen my forecasts on the expansion of the discrete GPU market due to expanded use of Crossfire and SLI down to the mainstream level, the deployment of hybrid architectures (with integrated and discrete GPUs), and GPU-compute.

Now I want to suggest that Larry’s Bee will have a synergistic impact, and not be just a spoiler for ATI, Nvidia, and others.

Not just a spoiler

Intel has been steadily leaking information about Larry’s Bee for almost two years. Some might call that salting the mine. Others suggest it is a deflection and FUD program designed to defer purchases of current parts and make the consumer wait for the Bee. Not that many, if any, would put such tactics beyond Intel, but I think there’s more going on than even Intel may realize. Intel will by the very nature of its marketing muscle and brand strength attract new attention to the 3D world and gaming in particular.

Regardless of the quality or performance of the Bee, Intel’s brand will raise the awareness of PC gaming, and give the industry increased credibility as a viable entertainment vehicle, and as a safe bet for a consumer’s purchase. No doubt my friends at ATI and Nvidia are not going to be happy with this legitimization of the Bee as I’m suggesting it will happen, but they should.

Why?

Because as the incumbents they (ATI and Nvidia) have made the industry what it is today. Others like 3Dfx, Matrox, and S3 also contributed in the past, but it was ATI and Nvidia who kept at it, had the passion, and made the investments. Their work has brought new gamers to the fold, and that has paid off handsomely for them. In fact, the numbers show why Intel, the only company with the resources needed to enter the market wants a piece of the action.

Intel also wants a piece of the action because as the graphics vendors expand their influence on users and increase the ability of accelerate functions beyond gaming, Intel is in danger of seeing the CPU over shadowed by the GPU.

At Jon Peddie Research we think there are still more people who are curious about PC gaming and would like to try to it, but just a little timid. They’ve tried the free stuff from the web and what comes bundled with a new PC and while entertaining for a while it usually doesn’t hold their interest. However, FPSs, racing, RPGs, and RTSs games would. The action, the cinematic quality of the images and in some cases the stories are attractive. Something is needed to push them over the edge. Something to get them to invest the extra $100 to $300 to get a good enough graphics board to handle the richness of today’s games. Intel will be spending a lot of money to convince them that they want to invest in a good, gaming capable machine.

and the Nintendo

And least we forget, look at how the Wii resonated with people who never thought they’d be interested games.

The vixen Vista

We think Vista is a model for such consumers. Why Vista? Because Vista introduced the notion that to use it you had to have good graphics. Rather than being a turn off and scaring people away, it was a catalyst to new PC sales and to a certain extent aftermarket sales of graphics AIBs.

If a boring, do nothing entertaining operating system can have that kind of effect, which was largely due to Microsoft’s marketing effect combined with some of their OEMs, imagine what the impact of an Intel could be on PC gaming.

So we did

We put our heads together, looked at all our models, especially the ones in our new Gaming PC Market reports we’re introducing soon, and decided that Intel’s entrance, combined with the support of the game publishers and developers (who will lavish praise and testimonials on the Bee and Intel), plus Microsoft’s and the OEMs (Dell, HP, etc) support will make the market jump a full five percentage points, or something north of 1.5 million new users growing to 10 million in three to five yerars

Newbees not loyal

I don’t think once these new PC gamers take the plunge they will remain loyal to Intel, or anyone else. The Bee is going to have to earn and keep the loyalty of these newly hatched gamers. As they get involved with PC gaming and learn more about the ins and outs, they will change allegiances annually at the least. Some new gamers in fact will enjoy tuning their machines joining communities, debating the merits of various hardware rigs and they’ll be the first to jump.

And yeah, Intel is going to steal some market share from the incumbents, that always happens and sticking your head in the sand, or putting too much effort in discrediting the Bee isn’t going to have much if any effect on the its impact. It’s at best a distraction, and at worse a drain.

Friday, August 01, 2008

Why not Larrabee?

Anyone not stuck in outer space or maximum security knows Intel is going to introduce a new chip code named Larrabee. At Siggraph they are going to reveal, after almost two years of teases and leaks, the architecture of the device.

It is not a GPU as many have mistakenly described it, but it can do most graphics functions, Intel says it can do all, we’ll have to wait for proof. Right now its slide-ware, but development systems are supposed to become available in November.

ATI and Nvidia will be very busy discrediting the device and pointing out its shortcomings. They should, given that Intel has all but ruined their share prices with disparaging comments about GPUs. Perhaps Intel needs to be reminded of some of its past triumphs; the Itanium and XScale come immediately to mind.

Nonetheless the question is, in my mind at least, is there room in the market for a third major player in discrete graphics?

What is Larrabee’s market potential?
If you look at the market development for discrete desktop GPUs over time your answer is probably no. In the late nineties when the market was just cresting 100 million units a year, the number of suppliers swelled to over 70. Today, it is approaching 400 million units a year; but the market has consolidated to four discrete graphics chips suppliers plus two integrated (only) suppliers. And of that population, two suppliers, ATI and Nvidia, own 98% of the discrete GPU business (which was 350 million units in 2007.) And, the trend line indicates a flattening to decline in the business as the red line shows in Figure 1. However, Intel is no light-weight start up, and to enter the market today a company has to have a major infrastructure, deep IP, and marketing prowess – Intel has all that and more. So yes, there is room for a third player if that player is Intel.

Figure 1: Shipments of GPUs to date

Assuming flat growth in discrete graphics chips, if Intel could reach parity with the incumbents that would give them 33% of 20 million units a quarter. Are seven million units a quarter worth the investment? Intel won’t be able to charge any more than ATI or Nvidia.

It’s a bigger market
However, you can’t assume flat growth in discrete GPUs. We recently increased the forecast on desktop discrete GPUs to take into consideration multi-AIBs (i.e., Crossfire and SLI), and two new developments: Hybrid configurations (which have a GPU and an IGP), and GPU compute. Clearly Intel sees an opportunity for Larrabee in GPU compute, and probably in Hybrid.

This revised forecast gives Intel a market potential of 46 million units in 2010, the first full year of shipments of Larrabee. Assume they can sell the chips for $100 that represents a market value of $4.6 billion and more if they build AIBs.

Now there’s a lot of “if” in that, not the least of which is that they can bite into ATI and Nvidia’s market share. But $4.6 billion is an admirable goal and can represent Intel’s TAM.

Intel has told me they intend to push Larrabee into graphics applications first, so the GPU compute portion of the market may not be realized immediately in their TAM calculation. However, they will come out with several versions of Larrabee (various number of cores, just as ATI and Nvidia do) and so the entire discrete spectrum is open to them.

Figure 2: Potential increase in GPU shipments due to new architectures and multi-AIBs

When is a GPU not a GPU?
One final note. GPUs. Larrabee is not a GPU in the sense an ATI, Nvidia, or S3 chip is a GPU. It is gang of X86 cores that can do graphics processing, so it is a GCPU – graphics capable processing unit, as are ATI, Nvidia, and S3’s chips. It’s unlikely the industry is going to take such subtleties into consideration and adopt a new term like GCPU and rather will incorrectly label and refer to Larrabee as a GPU.

Probably Intel will come up with a catchy mnemonic for Larrabee. It would be wise of them to do that to differentiate it and to drive home their point that existing graphics processing architectures “will be a footnote in the history books However, the industry, analysts, reporters, users, and investors have demonstrated too many times that they are lazy and will find it easier to simply call Larrabee a GPU.  A GPU by any other color smellith as sweet….

Then and now
Intel is announcing a 2010 part now. Maybe that will influence some potential buyers to wait, certainly that would Intel’s ambition. However, do you think ATI and Nvidia are just going to sit on their hands till 2010 and wait for Larrabee to show up?

ATI and Nvidia are fleet-footed companies and can turn much faster than Intel. So if they chose to they could have a counter punch to Larrabee by 2010.

And lets not forget that ATI and Nvidia have been building hardware optimizations direct and OpenGL for the last 10 years, designs that are based on the APIs. Larrabee can’t do that and so there will be constraints in Larrabee which Intel is confident it can overcome in software. A lot can happen between now and 2010.