Nvidia's Tegra Business Begins to Take Off

From X-bit Labs: Although Nvidia Corp. unveiled its Tegra system-on-chip product for handheld devices years ago, the company still does not sell a lot such SoCs these days. But according to the company's chief executive officer the situation is changing and in the coming quarters sales of Tegra products will increase their share in the company's revenue.

In the third quarter of its fiscal year 2011 Nvidia earned $51.9 million on Tegra sales as well as from royalties for its RSX graphics processor inside Sony PlayStation 3 game console, which is 13.6% higher compared to Q2 FY2011. Given the fact that the company has been selling its SoC since early 2009, a little bit above $50 million in quarterly sales is not lot. Nonetheless, the chief executive of Nvidia claims that design cycle of Tegra-based products is long and the firm will realize higher revenues from Tegra in future.

"The Tegra business has a much longer design win cycle and the amount of contribution of software to the Tegra business is just incredible. You are building an entire computer on a chip, and if the computers are as sophisticated as what it is going to take to compete against an iPad or an iPhone, the amount of software that you put into your product lines is going to have to increase dramatically," said Jen-Hsun Huang, chief executive officer of Nvidia, during the most recent conference call with financial analysts.

Nvidia expects a number of tablets aimed at consumers and based on Tegra SoCs to emerge in the foreseeable future.

"We know at this point that the projects that we are working on, particularly in the tablets, has taken longer than we expected and it has taken longer than we expected by a few months, but the important thing is that you can’t just build a tablet, you cannot just put an operating system on a tablet and hope that on a piece of glass and hope that you can compete against the iPad," said Mr. Huang.

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