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Intel is preparing to annihilate NVIDIA: the war is on

by Tarinder Sandhu on 11 April 2008, 15:05

Tags: NVIDIA (NASDAQ:NVDA)

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The root of NVIDIA's machinations

The last few months have seen NVIDIA adopting an increasingly aggressive posture against none other than Intel - the world's leading semiconductor company.

Surely, casual observers may argue, NVIDIA's main competitor is AMD, for it too produces chipsets and a top-to-bottom range of discrete GPUs, which constitute the bulk of NVIDIA's estimated $4bn revenue in 2007.

So why, when picking a fight, does NVIDIA seemingly choose to rattle the cage of a company whose revenue is almost 10x greater and one that makes money, and lots of it, practically every quarter?

The reason lies with self-preservation, we reckon, as Intel has publicly indicated, firmly, that it is set to massively encroach upon NVIDIA's discrete graphics' domain with its upcoming Larrabee architecture.

Would you be upset if your previously amenable neighbour made nefarious machinations on the very thing that provides the majority of food on your table? Of course you would. Jen-Hsun Huang appears to be upset, really upset, and he's doing what co-founders and CEOs do best - aim acerbic fulminations against a company whom he probably cannot win against.

The lessons that AMD learned

So Jen-Hsun seems to be annoyed that Intel is making a concerted move into a space that has reaped exceptional financial rewards for NVIDIA, through hardware excellence coupled with a marketing team that's dogged, determined, and, like the co-founder, willing to do whatever it takes.

Recent history tells us that AMD learned a rather harsh lesson in what an upset and irate Intel is capable of, though. AMD rode high with the introduction of its K8-based Athlon series of CPUs, so much so that it eroded Intel's x86 market share in both the desktop and enterprise arenas.

Athlon and the subsequent Athlon 64 microarchitectures were good, real good, and caught the NetBurst-infested Pentiums with their silicon pants down, big style. AMD hammered home the advantage with a slew of well-timed releases that ensured Intel wouldn't gain the performance lead any time soon. Indeed, our review of the AMD Athlon 64 FX-57 concluded that: "Technology marches on and AMD stomp with the biggest CPU-shaped boots." It was good to be an AMD employee between 1999-2006.

AMD's PR wasted no opportunity in rubbing Intel's nose in it on every occasion, pointing to its rosy roadmap, to the extent that the company fell foul of that most underappreciated of ailments: hubris.

Time moved on and Intel hit back, oh so hard, with the release of its Conroe-based Core 2 Duo microarchitecture in mid-2006, spanking the AMD upstart back into shape.

AMD's still feeling the effects of that chastisement, clearly, with its CPUs now competing solely on a price, not ultimate performance, perspective. Dwindling revenue and job cuts - including the departure of key brass - are the physical manifestation of not being able to keep on the same technology curve as Intel, and the hurt is going to continue well into 2008, we predict.