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Smart phone / Cell phone / Portable Media Devices

This has the potential to be one of the next “big markets.” If I asked you which products ran a GoForce GPU, you’d probably find yourself at a loss for words. The problem with this handheld GPU market isn’t that NVIDIA is lacking the resources to succeed here. Their acquisition of Media Q in 2003 and the existing NVIDIA resources are more than enough to cover this market. NVIDIA doesn’t need extra help here – the reason that GoForce isn’t that popular is that there just aren’t many cell phones engineered with high-performance video and graphics (yet). It doesn’t matter than the Motorola RAZR V3x and Sony Ericsson W900i both feature NVIDIA GoForce chips – the content isn’t there yet. As more content arrives in 2006, more GoForce design wins will be announced.

Professional Video and Broadcast

The professional video and broadcast market is a high-margin growth opportunity. NVIDIA knows this and the success of the Quadro FX SDI boards have set the pace. NVIDIA’s SDI solutions power NASCAR Racef/x technology, the “1st & Ten” virtual first down line in NFL games, and the K-Zone virtual strike zone in MLB games. They’ve already got a lot of success in this market. However, in the conference call, Jen-Hsun mentioned that key growth of 2006 would occur in the professional markets of “HD content creation, HD video editing, and Broadcast.”

At the moment, NVIDIA does not have any products in the area of HD content creation or video editing; Quadro FX SDI is an output-only solution. In order to truly capture the market, NVIDIA needs a product with full HD/SD SDI input/output. Additionally, most boards rely on PCI-X. Perhaps NVIDIA's expertise with PCI-Express can play a role here. What gets more interesting is that a lot of “real-time HD editing” and transition effects can be improved with the use of the GPU shader pipelines. NVIDIA clearly has strengths to bring to this market, but they also have areas where they can gain valuable expertise through a company acquisition.

So which companies are at the forefront of HD/SD SDI capture? The list is long: Avid, Digital Voodoo/Bluefish444, Matrox, Canopus, Blackmagic design, etc. It could be any of these companies.

But what would Jen-Hsun do? He’d look to buy a company with expertise in HD/SD SDI video production. Unfortunately, there are so many to choose from. Let’s see what other markets are available to NVIDIA and if there’s a more efficient way.

Medical Imaging

The other area of high-margin growth opportunity is the medical imaging market. As more and more hospitals and clinics are moving to digital imaging, there is clearly room for growth in this market. Moreover, this becomes a self-sustaining market with regular upgrades because most of the systems are leased rather than purchased.

The technical challenges involved for developing medical imaging graphics aren’t difficult. Although a handful of devices are built around old SGI Irix designs, most of today’s medical imaging technology is based on a Windows operating system (which is surprisingly stable when you don’t have any of the normal stuff that gets installed). Likewise, the GPU itself only needs to drive a 5 megapixel display at 10-bit grayscale and provide a custom LUT that can auto-calibrate to a DICOM-standard gamma curve. Today’s Quadro’s can easily handle the rigors needed for medical imaging solutions.

While ATI has a presence in medical imaging market through a deal with Barco, NVIDIA has a fairly small market share in this arena. This is because most hospitals and clinics don’t buy their Medical PACS workstations on their own. They don’t go to Dell or BOXX to buy their workstations. Instead, the PCs come as a big bundle with the actual CT scanner or the entire PACS system (the storage server, network server, etc). So when a hospital decides to buy an AGFA, GE Centricity, KODAK, Siemens, Philips, or Sectra PACS system, they get whatever video card that those companies happen to bundle.

The Quadro would be perfect for these markets, but it’s really tough to break into the market. The medical imaging industry tends to be fairly cautious and prefers not to switch manufacturers for no reason.

What would Jen-Hsun do? If he wanted to break into the medical imaging market, he’d buy a company that has an established relationship with the PACS manufacturers.

So which company supplies most of the GPUs in the medical imaging market? It’s not ATI. It’s not NVIDIA. It’s Matrox.

What would Jen-Hsun do? He’d try to acquire Matrox.