Nvidia and Integrated Chipsets

News.com’s story gives a good insight into what Nvidia is doing. Its a company to track as it takes on Intel in the chips business. Writes News.com:

Integrated chipsets that combine chipset and no-nonsense graphics processor functions appeared on the PC market about five years ago and have quickly become the preferred option for PC makers to handle both jobs in low-end PCs. About half of all PCs now ship with integrated chipsets, with the rest using traditional standalone graphics cards.

Integrated chipsets are tricky financial propositions for graphics chip makers. Profit margins are wafer-thin compared with those associated with the market for flashier standalone graphics processors, where a small but significant audience of gamers and other enthusiasts is willing to pay stiff premiums for the latest technology. Development costs involved in mastering chipset design are also high for anyone entering the business.

The advantage of having both chipset and standalone graphics products is that the chipsets allow a graphics chipmaker to squeeze more life out of investments in graphics technology, McCarron said. Nowadays, flashier, standalone graphics chips become obsolete quickly. But the integrated products tend to have legs.

An earlier News.com article (Nov 1, 2001) provides additional context:

The graphics business has changed drastically in the past couple of years, with low-end PCs integrating graphics directly into the chipset to save costs, abandoning the need for separate graphics chips or boards.

“The market has really moved toward integrated” graphics, said Mike Feibus, principal at Mercury Research. “Everyday users don’t need a high-end graphics card.”

nForce takes risks in that it aims to create a market niche where none existed before, a middle-of-the-road between high-end chipsets with no graphics and low-price chipsets with integrated graphics.

What I find interesting is Nvidia’s strategies as it takes on an entrenched market leader. We will need to do the same soon in software.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.