Nvidia Opens Its IP Licensing: Will There Be Any Takers?
On Tuesday, June 18, the company whose brand may be the last remaining vestige of the era of the power-at-any-price PC, announced it will be offering licenses for its intellectual property to a broader market. Nvidia stated it plans to offer its graphics processor designs, as well as other components of its patent portfolio, for licensed use by other device manufacturers.
This is not Nvidia’s first time at bat in the IP licensing arena. The company is now enjoying the third year in a six-year cross-licensing agreement with Intel -- an agreement which put to rest a long-standing patent spat. And Sony’s PlayStation 3 utilizes a GPU core and the PhysX simulated physics engine licensed to Sony by Nvidia. But the relationship between those two companies soured four years ago after problems with Sony’s Vaio PCs were traced to defects in their Nvidia GPUs -- defects whose remediation ended up costing Nvidia nearly a half-billion dollars. In March, Sony revealed its PlayStation 4 would be using rival AMD’s Jaguar APU instead of anything from Nvidia.
Financially, Nvidia has been just hanging on. Its quarterly revenue is perking back up after a nasty downturn. Last February, at the end of its fiscal fourth-quarter 2013, it reported growing its market share in GPUs to an impressive 66%... without hiding the fact that unit sales for that market are declining along with the PC market as a whole. Last month, the company announced a more entry-level graphics card based on its latest Kepler generation GPU chipset -- at $249, already well below the $300 price point that used to be the floor for GPU families still in the first stage of marketing.
Nvidia had been betting on a miracle, quite literally: the introduction of an Android-based portable gaming platform called Shield, essentially a full-size controller with a built-in high-res display and Nvidia graphics. But before the product was even introduced, it suffered two missteps: a price reduction on June 20 coupled with a veiled public apology ("We’ve heard from thousands of gamers that if the price was $299, we’d have a home run”); and on June 26, a one-month shipping delay blamed on “a third-party mechanical component.”
Right now, the best that Nvidia has going for it is a handful of settlement partners. What it could use is a friend.
With no one else making, or wanting to make, discrete PC GPUs in this declining market, Nvidia’s best opportunity for a new graphics technology licensee would be a mobile platform and/or device manufacturer. In 2012, Qualcomm took the lion’s share of that market with a 42% market share. Apple, Samsung, MediaTek, and Broadcom round out the top five, in that order. Nvidia’s attempt at cracking this market is its quad-core Tegra 4 and Tegra 4i platforms, which were billed last January at CES 2013 as “the world’s fastest mobile processors.”
Qualcomm’s response to the Tegra threat so far has been to characterize it as no threat at all. In 2009, Qualcomm paid $65 million to AMD to acquire its Mobile Radeon GPU assets. Now that technology, redubbed Adreno, is baked into Qualcomm’s Snapdragon mobile platform. So there’s no reason for Nvidia to reach a pact with Qualcomm.
Scott M. Fulton, III has chronicled the history of computing as it happened, from the unveiling of the Apple III to the undoing of MS-DOS to the rise of the cloud. Scott was one of the original online managers of the Delphi network (you remember modems, don’t you?), part of the original editorial team of Computer Shopper (you remember paper, don’t you?), the Senior News Editor at Tom’s Hardware and the original TG Daily (you remember... never mind), and for four years served as managing editor of Betanews. He’s the author of 17 books and over 5,000 articles printed worldwide in multiple languages. Scott also appears as contributing technology analyst on NTN24’s Ciencia, Salud y Tecnología. So basically, he has at least one finger in just about every medium, in hopes that maybe one of them will take root and bear fruit. You never know, something could happen. His fingers are crossed. (Which could explain the typing problems.) While he’s waiting, Scott and his wife Jennifer, herself a best-selling author (where do you think he gets it?), run Ingenus, LLC, an editorial services provider for technology and higher education publishers. Right now, their daughter is probably on Tumblr telling her friends how Dad keeps finding something new to go wrong with his VCR. You can follow Scott on Twitter at @SMFulton3.