Nvidia Reduces Its Dependence On PCs With Its Own Gaming Device

May 22nd, 2013 by Trefis Team
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In an effort to reduce its exposure to declining PC sales, Nvidia (NASDAQ:NVDA) is focusing on expanding its footprint in alternate growth markets. The company has been continuously investing to make a mark in the mobile computing domain and went a step ahead earlier this year by announcing its own handheld gaming device – Project Shield.

Launched at the 2013 Consumer Electronics Show, Project Shield is an Android-based portable gaming console that also offers PC game streaming features. What differentiates Shield from other devices is that it is the only device to play Android games with an integrated gamepad. Powered by the Tegra 4 processor, Shield is Nvidia’s maiden attempt as a gaming hardware provider, pitching it against console makers like Sony and Microsoft.

The device offers games spanning Nvidia’s TegraZone, Google Play, and Steam. The company expects Project Shield to attract great games to Tegra Zone, a free application available in the Android market, which can then be played on any Tegra powered device. Tegra Zone has already been downloaded 6 million times until now.

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Earlier this week, Nvidia announced that the portable device will start shipping in July this year and has started taking pre-orders. Priced at $349, Shield will cost $100 more than the PS Vita and $180 more than the Nintendo 3DS. [1] Despite its proposed benefits, the steep price of Nvidia’s gaming device might be a roadblock in its widespread acceptance among gaming enthusiasts.

Nvidia’s GeForce is the gamers choice of GPU by a margin of almost 2:1, but we are yet to see if the gaming device will be able to reach a similar level of popularity. [2]

Jon Peddie Reasearch valued the PC gaming hardware market at $23.6 billion in 2012, and forecasts the global gaming market to cross $30 billion by 2015. [3] Gaining a strong foothold in the market will further reduce Nvidia’s exposure to the persistent weakness in the PC market.

Our price estimate of $16.63 for Nvidia is a premium of over 10% to the current market price.

See our complete analysis for Nvidia’s stock

Notes:
  1. nVidia Shield is most expensive portable gaming gadget on market, Fox News, May 14, 2013 [↩]
  2. Nvidia Corporation’s CEO Discusses F4Q13 Results – Earnings Call Transcript, Seeking Alpha, February 13, 2013 [↩]
  3. PC Gaming Hardware Market to Hit $23.6 Billion in 2012, Jon Peddie Research, May 3, 2012 [↩]