When 'good enough' graphics won't do

Underneath a tent erected across the street from the San Jose Convention Center earlier this month, dozens of FLOPS (floating-point operations per second)-hungry gamers bellowed and whistled at the demonstrations of Nvidia's latest graphics hardware, the GeForce 8800. Several had been there all night, competing against fellow gamers in a marathon LAN party, but they showed no signs of fatigue as game developers showed off their latest wares running on the new graphics card.

Beneath the surface, however, market forces are changing Nvidia's competitive position. The company's longtime rival, ATI Technologies, was recently acquired by its longtime partner, chipmaker Advanced Micro Devices. Nvidia and AMD now compete on high-end graphics technology, but also collaborate on chipsets for AMD's processors. At the same time, Nvidia is getting set to release its first chipsets for Intel's processors--meaning it has to maintain a delicate balancing act between the titans of the PC industry.

Huang took time out from hosting model Adrianne Curry and Christopher Knight--the former Peter Brady--at the GeForce 8800 launch event to sit down with CNET News.com. After being whisked from meeting to meeting during the event, he was so pumped to get going he put the first question himself, asking, "What do you think about the show?"

It's a show, all right. It's definitely a little different than your average launch event.
Huang: If you can't do a great show with a GPU (graphics processing unit), than you can't do a great show at all.

The beauty of our technology is it's so experiential, you can almost argue that what Nvidia is, is the experiential processor company. We build processors that make it possible for people to articulate all these wonderful stories and beautiful images, and to deliver these incredible experiences that hopefully came through today.

What are these new products going to allow game designers and graphics professionals to do that they couldn't do before?
Huang: If you take a look at the previous-generation GPUs, we introduced a lot more performance. So geometric fidelity was higher, resolution was higher, and we invented a technology called the "shader" that makes it possible for you to articulate shiny, bumpy, really interesting surfaces.

But in the final analysis, they were all still kind of rigid. This generation, we unified the shader and introduced a concept called "geometry shading." We can create and destroy geometry inside the GPU. That makes it possible to do all the supple things in life, like skin, people talking and animating, grass blowing in the wind. All the particle systems that you saw in the nuclear bomb (during the simulation of an upcoming game), all the smoke, were (made up of) individual pixels, individual particles that were being simulated in physics which in combination looks like an explosion plume, a nuclear plume. These kinds of effects just weren't possible before.

This is an interesting time in this business with AMD and ATI. What does that merger mean for you guys?
Huang: At some level, it doesn't change anything. Our focus has always been focusing on the consumers, focusing on the end users, and making sure we deliver the best possible experience. At that level, it doesn't change a thing.

However, at the industry level, the ecosystem level, what changes is that we are now the sole standalone independent dedicated GPU supplier in the world. It makes it possible for us to passionately support both AMD and Intel microprocessors.

With AMD's stated goal to integrate the CPU (central processing unit) and GPU in a two-year or three-year time frame, how would you guys fit into that landscape, in which GPUs are directly integrated into CPUs?
Huang: Well, we think integration is a terrific thing for certain segments. Integration is a horrible thing for other segments. Take the TV and the VCR: You could argue you that you could integrate a VCR with a TV, a DVD player with a TV, a stereo system with a TV. You could put the stereo systems in the speakers, why not?

But if you're a hi-fi enthusiast, you're not going to want somebody choose for you what CPUs and GPUs to help integrate, you're going to want to choose it yourself. So in those particular systems--where the chassis and platform are still important, and the processor is still important, the GPU is still important, the peripherals are important--you're going to want to pick those. That's the marketplace we believe we support already, so in that sense, nothing has changed.

Who do you see as eventually becoming your competition in this type of market? If AMD and ATI work on some kind of integrated graphics product similar to what Intel's doing, where's the threat to your business coming from over the next couple of years?
Huang: Well, we compete with a lot of different people. You mentioned Intel and AMD, at some level we compete with them. But at most levels, we collaborate with them.

In the final analysis, the thing to realize is that our ultimate competitor is the apathy of consumers. We have to make sure we continue to deliver the type of experiences that keep them coming back to the store and clamoring for more. "Good enough" is our ultimate competitor.

We saw Henri Richard (AMD's chief sales officer) on stage today, which seems to mean your relationship with AMD is healthy. Can you talk about that part of your business?
Huang: Our NForce business is the fastest-growing business in the company. It's growing at 100 percent year over year, and it's going to go well beyond a billion dollars this year.

What is going to change for us is that for the first time, we're going to enter the Intel marketplace with integrated graphics, we're going to bring branded graphics to the Intel (market). We're going to integrate NForce and GeForce--two extremely valuable brands--into one chip.

What's your time frame for that?
Huang: We would like to do it as soon as possible. We haven't really formally announced anything yet, but the industry is expecting us to have something in the early part of the year (2007).