Nvidia moves to take on Intel

August 25, 2008: 10:20 PM ET
Inside PCs, components like Nvidia's graphics chips are becoming more important. Photo: HP

For Nvidia, it's showtime.

Intel (INTC) and Microsoft (MSFT) have long been the most influential companies in the PC world, but lately something is shifting: The latest Intel chip or Microsoft operating system is no longer guaranteed to send technology buyers rushing into stores.

Instead in this visual age, glitzy entertainment features are just as likely to excite shoppers as anything else – and that's why the spotlight is on graphics chipmaker Nvidia (NVDA) as it holds its first-ever conference - dubbed NVISION - in Silicon Valley this week. With many of the digital effects industry's A-listers on hand, it's shaping up to be a flashy affair.

Think of the conference as a coming out party of sorts. Over the past several months, co-founder and CEO Jen-Hsun Huang has been making the case that Nvidia deserves a place beside Intel as one of the most influential players in the tech hardware business. While Huang and his company are well known among video game fanatics and creative professionals who rely on his chips to bring 3D landscapes and other visual effects to life, he feels now is the time to make a play for a more mainstream audience.

"A lot of people think that what Nvidia does is make graphics chips for video games," Huang said to a huddle of journalists. "We love doing that, and nothing geeks us up more than to do that – but it really is only the tip of the iceberg."

So the show so far is orchestrated to suggest that Nvidia's technology is at the center of some of the most interesting digital trends. During a rambling two-hour keynote address, Huang demonstrated how Nvidia chips allow Lamborghini to use digital models to solicit pre-orders of a limited-edition car that will sell for 1.5 million euros. He also invited presenters to show how graphics processors enable virtual worlds, TV effects, touch-sensitive interfaces and immersive 3D games.

The atmosphere was markedly more casual (and the crowd more sparse) than at the Intel Developer Forum last week in San Francisco, where the chip giant tried to rally the tech industry behind its vision of how Intel chips will eventually power all sorts of digital devices. As things got going Monday in downtown San Jose, the 7,100 attendees included gamers in rumpled t-shirts mingled with engineers in button-downs. Underscoring the rebellious vibe, the fountain outside the San Jose Convention Center was dyed green, in tribute to Nvidia's signature color.

It's a convenient time for a graphics specialist like Nvidia to assert itself. The latest operating systems from Microsoft and Apple (AAPL) make heavy use of visual effects to make the computing experience more engaging, with icons that jump when clicked, and windows that slide in and out of view. Video recording and playback are gaining prominence as higher-quality webcams arrive, and high-definition videos take hold in Blu-ray drives and on YouTube (GOOG).

All of those tasks go more smoothly on a PC with a decent graphics processor. Mark Randall, chief strategist for Adobe Systems' (ADBE) Dynamic Media group, said that his company's software writers are increasingly trying to tap the power of graphics chips as they develop new tools for video editing and web design.

But Huang has even bigger things in mind than traditional graphics fare. With its new Tegra family of mobile chips, the company is seeking a foothold in the emerging market for pocket computers like the iPhone. On the high end, Huang plans to make supercomputing-style power more affordable to businesses through its Cuda environment, which uses a method called parallel computing to take on big jobs for industries including financial services and oil and gas exploration.

Both of these moves position Nvidia for a showdown with Intel, whose Atom chip for mobile devices and upcoming Larrabee chip for graphics appeal to the same markets. Each company is arguing that its approach will provide the most thrilling features to tomorrow's devices. At stake are billions of dollars in potential profits. "The world is converging, and who has the better mousetrap, Nvidia or Intel?" said David Wu, analyst with Global Crown Capital. "That's what I'm going to NVISION to find out."

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