Behind the scenes at Nvidia
Jen-Hsun Huang, CEO, Nvidia
One out of every three PC's carry Nvidia's GeForce graphics processing unit and its graphics and multimedia processors will power the much-hyped Microsoft Xbox. Most recently, Nvidia announced it will release a graphics card for PCs that will allow consumers to watch and record live TV and play DVDs.
And Huang says this is just the beginning.
Huang, a Stanford-trained engineer, can celebrate the good times now, but he has also seen his fair share of trouble through Nvidia's eight-year history; the company has been on the brink of folding twice. Many credit this CEO's ability to stay focused through adversity--and a good bit of timing--as the key to Nvidia's current success.
The company has recently seen its stock fluctuate with news of the Xbox being delayed in Japan, but it isn't banking on success in the gaming arena. In this economic climate Nvidia has projected growth and prosperity, but conservatively so.
Nvidia has taken away market share from the likes of competitor ATI Technologies, and is now in a careful dance with Intel, which may turn on the heat and compete head to head in the GPU (graphic processing unit) space.
Recently Huang took time to sit down with CNET News.com during a tour of Nvidia's new offices in Santa Clara, Calif., to talk about what it is to remain bold in a drab economic climate and where he sees the company headed.
Q: The economy is in a slump; a lot of companies are predicting warnings, lowering their projected estimates. But you're able to go in the other direction; how's that?
A: Couple of different reasons. Number one, the adoption of 3d gfx processors is really the rage. Almost from about 5 years ago, when we first introduced the first mainstream 3d gfx processor, we've seen our demand increase from nearly one out of every three, one out of every four PCs in the world. So that level of adoption has been very high. The other part of it is the rapid product cycles we're in. 3d gfx is just at its nascent stages and we're at the tip of the iceberg so all of the new products that we're creating that take 3d gfx to the next level are being adopted and consumed by the marketplace very rapidly. And probably the last reason is we're seeing 3d gfx demanded in all kinds of computing platforms...whether it's laptops or desktops or workstations or Macintoshes or game consoles. We're seeing that people understand that 3d gfx experience, the visual experience, really defines the experience of the PC.
It is one of the last differentiating factors when you walk up to a computer store shelf and you see all of these processors. Do you think that message will come across to people as an increasingly important one: Will they associate your name and your brand as something they have to have in a computer?
Certain computer companies say the network is the computer. We'll argue the display is the computer. What you see of your computer is your experience of the computer. And it is true that the GeForce brand is now synonymous with great 3d gfx capability. All of our retail partners, many of our PC OEMs (original equipment manufacturers) would go out of their way to show their end users that the GeForce processor is what they have in their PC, it's a necessary ingredient if you will for terrific 3d gfx. So I think end users really understand the benefits of GeForce. We're also seeing that many of the influencers of computing today are really the teenagers; or the parents are looking to their teenage children to help them understand what's the latest and best technology, and I think we've done a pretty good job helping them understand that GeForce is the best possible brand for them.
You've been a victim of timing a couple of times in your past, with forces beyond your control from memory prices to manufacturers. Do you feel like it's coming back around for you now? Do you feel like this is a convergence of all the possible good luck in the world?
You're one of the few people that remembered that memory pricing and memory technology were big influences in the company's history. We first started out having some challenges with APIs (application programming interfaces). Then we had some challenges with the rendering model. Then we had a major challenge when the company was about to ramp up and the DRAM industry collapsed. The type of memory we were using was precisely the wrong one. Since then, you could say what doesn't kill you makes you stronger. We now understand the importance of the memory dynamics to our business. We leverage it, instead of fight with it; and it is true, when memory pricing now collapses, we benefit from it instead of having it take us down.
Explain that...how do you leverage it, how do you benefit from it?
Well the way to think about it, at its highest level is to realize that memory technology is a very important element of 3d gfx. We need it for frame-buffer resolution. We need it for texture storage and we need the bandwidth for performance. So you can say, visual realism and the experience of 3d gfx is directly coupled to the memory. Now you take a look at our solution, we use a great deal of memory on each one of our products' 64-megabyte frame buffer, which is 4x--the size of the largest PC configuration we bought in a PC when we first started the company is now completely in the frame buffer. So obviously, we're tied to memory pricing as a result of that. If memory pricing is now low, and we use the right type of memories, the overall solution price would be more affordable. So the GeForce 3--which 9 years ago, first of all, the technology would be impossible--the solution cost of a 64-megabyte frame buffer would probably be $5,000, but now because of memory pricing and the affordability of memory, we can have a 64-megabyte frame buffer GeForce 3 at a consumer price just a little north of $299. So that's pretty exciting. We can bring a lot more technology to the marketplace as a result of that.
You've got some serious competition in this space. I mean in the past few years, you and your competition have decided to gobble up the smaller players and the field is really down to 3 or 4 major names. What do you think gives you the competitive advantage right now?
My sense is that the competition in this industry will continue to rise; intellectual property is going to become a very important element of it. The technology will continue to be very, very complex. And we're about to go into areas in 3d gfx that previous-generation companies such as Silicon Graphics have never seen before. We're starting to do the type of things in 3d gfx that you've never seen anywhere before. So as a result, we're going into new ground, we're creating new technology, and the barriers will continue to (widen).
The flip side of that is the market is going to grow as well. All of a sudden we're talking about visual processing, we're talking about technology that will fundamentally transform entertainment. So you'll see our technology in living rooms. You'll see our technology helping people render the human body so that you could do a better job curing somebody with cancer, designing the next-generation cars and planes. You'll see us in display technologies such as car navigation, handhelds, mobile computers. All kinds of computing devices are going to benefit from having a better visual experience. As a result of that, the number of displays has grown exponentially. And so I think the marketplace for visual processors for the type of things we do, what we call GPUs, is going to be quite large. I think those two characteristics of our businesses are going to continue.