AMD & ATI: The Acquisition from all Points of View
by Anand Lal Shimpi on August 1, 2006 10:26 PM EST- Posted in
- CPUs
Our Thoughts: The GPU Side
The AMD/ATI acquisition doesn’t make a whole lot of sense on the discrete graphics side if you view the evolution of PC graphics as something that will continue to keep the CPU and the GPU separate. If you look at things from another angle, one that isn’t too far fetched we might add, the acquisition is extremely important.
Some game developers have been predicting for quite some time that CPUs and GPUs were on this crash course and would eventually be merged into a single device. The idea is that GPUs strive, with each generation, to become more general purpose and more programmable; in essence, with each GPU generation ATI and NVIDIA take one more step to being CPU manufacturers. Obviously the GPU is still geared towards running 3D games rather than Microsoft Word, but the idea is that at some point, the GPU will become general purpose enough that it may start encroaching into the territory of the CPU makers or better yet, it may become general purpose enough that AMD and Intel want to make their own.
It’s tough to say if and when this convergence between the CPU and GPU would happen, but if it did and you were in ATI’s position, you’d probably want to be allied with a CPU maker in order to have some hope of staying alive. The 3D revolution killed off basically all giants in the graphics industry and spawned new ones, two of which we’re talking about today. What ATI is hoping to gain from this acquisition is protection from being killed off if the CPU and GPU do go through a merger of sorts.
The NVIDIA GeForce 256 was NVIDIA's first "GPU", offloading T&L from the CPU. Who knows what the term GPU will mean in 5 years, will it be a fully contained within today's CPUs?
ATI and NVIDIA both seem to believe that within the next 2 - 3 years, Intel will release its own GPU and in a greater sense than their current mediocre integrated graphics. Since Intel technically has the largest share of the graphics market thanks to their integrated graphics, it wouldn’t be too difficult for them to take a large chunk of the rest of the market -- assuming Intel can produce a good GPU. Furthermore, if GPUs do become general purpose enough that Intel will actually be able to leverage much of its expertise in designing general purpose processors, then the possibility of Intel producing a good GPU isn’t too far fetched.
If you talk to Intel, it's business as usual. GPU design isn’t really a top priority and on the surface everything appears to be the same. However, a lot can happen in two years -- two years ago NetBurst was still the design of the future from Intel. Only time will tell if the doomsday scenario that the GPU makers are talking about will come true.
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HopJokey - Wednesday, August 2, 2006 - link
I beg to differ. It gets old after a while:(
Regs - Tuesday, August 1, 2006 - link
The distant future looks good. Though we yet to see any more green slides about new core technologies from AMD. It almost seems AMD will be making baby-steps for the next 5 or so years to try to compete with the performance Intel is now currently offering.For stock holders - lets just hope AMD can pull something off to gain revenue from other markets with the help of Dell and ATi. Their growing capital and recent acquisition need some definite profits to pay it off.
AnandThenMan - Tuesday, August 1, 2006 - link
I think it's fair to say the article has a very strong pro Intel and NVIDIA slant. For starters, it needs to be pointed out that ATI is actually the #2 graphic maker, not NVIDIA. Saying that NVIDIA is #1 in the desktop space is only part of the market, so why state it that way? Trying to make NVIDIA look good of course...And this:
This statement is just dumb. Unless the planet is destroyed by an asteroid, the deal is pretty much done. It is HIGHLY unlikely that the deal will not happen.
defter - Wednesday, August 2, 2006 - link
The desktop market is very important market since most of the profits are made in the high-end desktop market.For example ATI has much bigger overall marketshare than NVidia (27.6% vs 20.3%) and has lot of presense in other markets (consumer electronics, handhelds). Still, NVidia has bigger revenue, meaning that ASP of NVidia chips is much higher.
If you look at profits, the difference is even bigger, during the last quarter, NVidia made three times as much profit as ATI. Thus high-end desktop market is definitely very important.
Here are some GPU market share numbers for Q2:
http://www.xbitlabs.com/news/video/display/2006073...">http://www.xbitlabs.com/news/video/display/2006073...
PrinceGaz - Wednesday, August 2, 2006 - link
Most of the profits are not made in the high-end desktop market, in fact the very high end probably struggles just to break even due to the relatively tiny number of units shipped compared to development costs. Most of the money in discrete graphics is actually made in the low-end discrete graphics segment, cards like the 7300 and the X1300.
defter - Wednesday, August 2, 2006 - link
This is like saying: "most of the revenue is made on $100 CPUs instead of FX/Opteron parts..."The revenue can be higher on the low end of the market. But GPUs like 7300/X1300 are selling at $20 or less, profit margins for those can't very high. High-end chips like 7900/X1900 are selling for about $100 and the margins are much higher. (Compare the die size between 7900 and 7300, the difference isn't THAT big).
JarredWalton - Wednesday, August 2, 2006 - link
Hey, I'm a skeptic and you can blame me for the comment. Still, until the deal is well and truly done we have a proposed merger. Government interference, cold feet, whatever other setback you want... these things can and do happen. Do I think the deal *won't* happen? Nope - no more than I think the deal *will* happen. If you had asked me three months ago when I first heard the rumors, I think I would have been about 90% sure it wouldn't happen, so obviously I'm less skeptical now than before.As for NVIDIA and Intel slant, the NVIDIA perspective is their view. That doesn't mean it's correct, any more than the ATI, AMD, or Intel perspectives. However, ATI is #2 for the same reason Intel is #1: integrated graphics, specifically on laptops, and again we're talking about the underpowered, mediocre kind that will choke on Vista's Glass GUI. Wipe out all of the low-end GPUs, and NVIDIA has a clear lead in the market. Not in performance, necessarily, but in mindset and brand recognition? Definitely. We are an enthusiast website, and so we're looking at the stuff that moves the market forward, not just what suffices to run office apps.
AnandThenMan - Wednesday, August 2, 2006 - link
Being #1 in one market is not good enough anymore. NVIDIA NEEDS to be in the integrated graphics sector, the ultra thin mobile sector, the console market, the HD devices market etc. etc. This is where ATI is much more diverse than NVIDIA.
The article is about the implications of AMD/ATI and how it affects Intel, NVIDIA, and the whole industry. I understand what you are saying about the discreet enthusiest market, and naturally this is the most interesting and desirable segment we all like to talk about. But the merger is about much more than that. IMO, NVIDIA has to re-invent itself to be capable of taking on AMD/ATI. NVIDIA has come out and bragged about how they are not the "last man standing" but this is marketing spin at best. NVIDIA is on the record years ago as saying they want to "be where ever there is a pixel" but honestly, AMD/ATI is far better positioned to deliver this than NVIDIA IMO.
defter - Wednesday, August 2, 2006 - link
Care to elaborate? NVidia is doing fine financially, why it NEEDS to be strongly present on those sectors?
NVidia has been in the console market since 2001.
Calin - Wednesday, August 2, 2006 - link
NVidia IS in the integrated graphics sector - if you are referring to the "enthusiast" integrated graphic sector