Nvidia: Not Enough Money in a PS4 GPU for us to bother

[96Firebird]

Without knowing how much it costs to produce the chip we don't know what margins $60 is.

We can use history and say they are slim margins.

We all like to reference history, right?!

 

[VulgarDisplay]

We can use history and say they are slim margins.

We all like to reference history, right?!

Historically the companies had to spend a ton of money developing the CPU/GPU in the console. Amd already had the work done.

I expect their upcoming PC apu's to be quite similar to what's in the ps4.

 

[ICDP]

Consoles are razor thin margins. But some people just seem to refuse that statement and think its a golden cow for AMD.

They want, or closer to the fact, need to have the hope that this is true. Let them. Doesn't hurt anyone. Makes them happy. No harm no foul.

Typical moving of the goalposts. You are tring to win argument by pretending the argument is about something it isn't. Everyone agrees that the profit margins in consoles are minimal, that has never been the crux of the debate. The argument was never about AMD making a massive killing, or milking the console cash cow. The argument is, and has been since the 1st post, that Nvidia claiming they didn't want it because the margins are slim is BS.

It's easier to win an argument when you twist it to suit your agenda isn't it.

 

[BallaTheFeared]

It's easy to say Nvidia is full of BS, and then never back it up as well it seems.

Nvidia is a well managed company, I'll believe what forum CEO's say when they can actually prove PS4 would have been a good investment for them.

 

[ICDP]

It's easy to say Nvidia is full of BS, and then never back it up as well it seems.

Nvidia is a well managed company, I'll believe what forum CEO's say when they can actually prove PS4 would have been a good investment for them.

Where has the argument that Nvidia is full of BS in this case not been backed up? They have been proven to go for low margin contract wins in the past (Original Xbox, PS3) and are still doing it with Tegra.

 

[sontin]

They did it because their investment was low (PS3) or they got something for it (Chipset from the xbox).

And how many times must i repeat that they have 50% gross margins with their Tegra products...

 

[ShintaiDK]

Tegra is a high margin chip.

 

[ICDP]

My bad on Tegra.

 

[blackened23]

They did it because their investment was low (PS3) or they got something for it (Chipset from the xbox).

And how many times must i repeat that they have 50% gross margins with their Tegra products...

Is it? How do you figure? If it were truly high margin it would not have created losses for nvidia some 3 years in a row. Maybe that will change this year with Tegra 4. But nvidia has not made a net profit as of yet with any tegra product. In fact, total losses from the Tegra division from 2010 to 2012 has totalled more than 250 million. Nvidia has not yet recouped those costs.

Now I understand returning to the green for these things takes time - mobile is a growing market, PCs are not. I get that. Nvidia is depending on reception to the tegra 4 to be great to turn things around, but already google has switched to Qualcomm for the nexus 7/10. Now for obvious reasons, you can see why a high margin product still not turning a profit seems strange.

 

[thilanliyan]

Is it? How do you figure? If it were truly high margin it would not have created losses for nvidia some 3 years in a row.

Could be due to R&D expenses?

 

[NTMBK]

Tegra is a high margin chip.

They shoved Tegra 3 into the Nexus 7, and that device was dirt cheap. NVidia can't have been getting good margins on that, and that made up a huge bulk of Tegra 3 sales.

 

[Imouto]

Maybe that will change this year with Tegra 4.

Tegra 4 will power only the Project Shield, they lost every single contract out there. Charlie had his fun explaining it at SA.

 

[VulgarDisplay]

Tegra 4 will power only the Project Shield, they lost every single contract out there. Charlie had his fun explaining it at SA.

Is anyone going to buy a project shield? It looks like a flop to me. I have a smart phone, so I do not need a portable gaming device no matter how good it is.

If someone really needs a controller for their portable gaming you can buy one for 30 bucks that your phone mounts to. Project Shield will flop.

 

[The Alias]

Is anyone going to buy a project shield? It looks like a flop to me. I have a smart phone, so I do not need a portable gaming device no matter how good it is.

If someone really needs a controller for their portable gaming you can buy one for 30 bucks that your phone mounts to. Project Shield will flop.

Ikr i'd pick up a moga way before a project shield tbh

 

[Arachnotronic]

Is it? How do you figure? If it were truly high margin it would not have created losses for nvidia some 3 years in a row. Maybe that will change this year with Tegra 4. But nvidia has not made a net profit as of yet with any tegra product. In fact, total losses from the Tegra division from 2010 to 2012 has totalled more than 250 million. Nvidia has not yet recouped those costs.

Now I understand returning to the green for these things takes time - mobile is a growing market, PCs are not. I get that. Nvidia is depending on reception to the tegra 4 to be great to turn things around, but already google has switched to Qualcomm for the nexus 7/10. Now for obvious reasons, you can see why a high margin product still not turning a profit seems strange.

Easy. If it costs $600M in R&D and sales expense, and you sell $750M worth of chips @ 50% gross margins, you still lose money.

Tegra has high gross margins, but they don't sell enough of them to cover costs...yet.

 

[SirPauly]

Nintendo lost money last year, $460 million.

And that's the key to me -- console revenue seems to be cannibalized by mobile, which is a key growth sector.

 

[blackened23]

Easy. If it costs $600M in R&D and sales expense, and you sell $750M worth of chips @ 50% gross margins, you still lose money.

Tegra has high gross margins, but they don't sell enough of them to cover costs...yet.

I don't buy it. Tegra 3 was in some of the cheapest junk android tablets last year which were ridiculously low in cost, I just can't see Tegra 3 being a high margin product unless you can provide reputable links to prove it. High margin products don't find their way into cheap junk.

So in other words, nvidia is going all in with tegra 4 and better hope that they get some actual design wins? Otherwise another year of big losses? The only high profile thing i've heard is that google dropped nvidia - because the upcoming qualcomm chip is better with integrated LTE? That's what rumors indicate. Microsoft as well dropped it for the RT successor. But I don't really count that because Windows RT is a failure, nobody will buy it anyway.

 

[Arkadrel]

Qualcomm = Intel of the mobil chip world.

They have huge R&D budgets and put out chips
that better whatever nvidia is comeing out with.

So its kinda a uphill battle.

 

[SirPauly]

I don't buy it. Tegra 3 was in some of the cheapest junk android tablets last year which were ridiculously low in cost, I just can't see Tegra 3 being a high margin product unless you can provide reputable links to prove it. High margin products don't find their way into cheap junk.

So in other words, nvidia is going all in with tegra 4 and better hope that they get some actual design wins? Otherwise another year of big losses? The only high profile thing i've heard is that google dropped nvidia - because the upcoming qualcomm chip is better with integrated LTE? That's what rumors indicate. Microsoft as well dropped it for the RT successor. But I don't really count that because Windows RT is a failure, nobody will buy it anyway.

Considering 30 percent of their revenue is derived from non PC -- Tegra -- would say that their margins are high based on the company enjoyed around 53 percent margins as whole.

According to nVidia, they have more Tegra 4 design wins now than they did with total Tegra 3.

 

[ams23]

Tegra 3 was in some of the cheapes junk android tablets last year which were ridiculously low in cost

Tablets such as Nexus 7 are certainly not "cheapest junk android tablets". Tegra 3 tablets were in the $200-$500 range (with the Nexus 7 being sold barely above cost), while the cheapest Android tablets were far worse and sold for less than $100. For most of 2012, Tegra 3 was the only quad CPU core mobile SoC, and for most of 2012 the Tegra 3 GPU was among the fastest Android mobile GPU's too. So let's not get carried away here.

 

[Arachnotronic]

I don't buy it. Tegra 3 was in some of the cheapest junk android tablets last year which were ridiculously low in cost, I just can't see Tegra 3 being a high margin product unless you can provide reputable links to prove it. High margin products don't find their way into cheap junk.

So in other words, nvidia is going all in with tegra 4 and better hope that they get some actual design wins? Otherwise another year of big losses? The only high profile thing i've heard is that google dropped nvidia - because the upcoming qualcomm chip is better with integrated LTE? That's what rumors indicate. Microsoft as well dropped it for the RT successor. But I don't really count that because Windows RT is a failure, nobody will buy it anyway.

You conflate low cost with low margin.

If it costs me $5 to make a Tegra and I sell it for $10, my gross margin is 50%.

 

[ams23]

Qualcomm = Intel of the mobil chip world.

They have huge R&D budgets and put out chips
that better whatever nvidia is comeing out with.

So its kinda a uphill battle.

NVIDIA's R&D budget for Tegra is over $1.3 billion for 2012-2013, not counting the $2+ billion R&D budget for GPU's during this same time period. So I don't think R&D is an issue. In fact, Tegra 4 appears to have a more powerful CPU and GPU than S800. Tegra 5 details will be available by end of this year (with production early next year), and that appears to be another huge leap forward.

 

[PingviN]

In fact, Tegra 4 appears to have a more powerful CPU and GPU than S800

And you base this on what, exactly?

Tegra 5 details will be available by end of this year (with production early next year), and that appears to be another huge leap forward.

Source?

 

[ams23]

And you base this on what, exactly?



Source?

Source for the first is The Linley Group and NVIDIA documents. Source for the second is GTC 2013.

 

[blackened23]

Source for the first is The Linley Group and NVIDIA documents. Source for the second is GTC 2013.

This is utterly ridiculous and you know it. Even nvidia themselves state (and I quote) "Tegra 4 compare favorably against Qualcomm’s current offerings, but it also appears to have an edge over Qualcomm’s pending Snapdragon 800." Nvidia hype machine anyone? There is no source that can quantify this, period. If you're taking nvidia's PR spin at their word, I don't know what to say....neither chip is released yet. Give me a break.

However, there are some sources we can quantify. Microsoft and google. We know what google's opinion was. They went with Qualcomm for their Nexus refreshes.