Nvidia Eyes the Android Gaming Market with its Shield Tablet

After much speculation Nvidia (NASDAQ:NVDA) launched its new mobile gaming device (Shield Tablet) along with a wireless controller on July 22. Starting at $299, the Shield tablet is an 8 inch, full HD display, Android tablet running on Nvidia’s Tegra 32-bit K1 processor, which boasts having 192 cores. Moreover, a follow-on 64-bit ARM-based  processor is in development and code-named “Denver”. Designed especially for video games, the tablet is the first to offer gamers the ability to stream games from a PC desktop or notebook, from anywhere in the home using NVIDIA GameStream technology as well as third-party services like Twitch. Nvidia console model transforms the device into a full living-room gaming and entertainment experience. The Shield wireless controller, which is available separately for $59, allows one to play games without touching the tablet and can connect up to four controllers to a single Shield tablet.

Nvidia launched Shield (re-branded as Shield Portable), its maiden attempt as a gaming hardware provider, in July 2013. The Shield handheld device was built around the Tegra 4 processor. Though, Nvidia announced last year that Shield is gaining traction in the market, it has not provided any significant update on the same in the last few quarters.  By extending the Shield family with the addition of the Shield tablet and wireless controller, the company has underlined its focus on tapping growth in the Android gaming market.

The gaming hardware  market was worth $23.6 billion in 2012 and the global gaming market is estimated to cross $30 billion by 2015. ^[1] Nvidia aims to focus on developing the Android gaming market. Android is the world’s largest operating system platform, and the company believes that over time it will also be one of the world’s largest gaming platforms. Nvidia intends to leverage the capability and expertise it has developed in the PC industry in the last 15 to 20 years for the Android gaming market.

Gaming is one of the key growth drivers for Nvidia’s Tegra business, in addition to the mobile and automotive markets. The company derives over 10% of its valuation from the Tegra division, as per our estimate. We believe that Tegra processors revenue will cross $1 billion over our review period. (Read: Mobile Device, Automotive & Gaming Are Key Growth Drivers For Nvidia’s Tegra Processors)

Our price estimate of $18.43 for Nvidia is almost in line with the current price estimate.

See our complete analysis for Nvidia

1. PC Gaming Hardware Market to Hit $23.6 Billion in 2012, Jon Peddie Research, May 3, 2012 [↩]