Here’s what NVIDIA should do to stay relevant in the mobile market

Here's what NVIDIA should do to stay relevant in the mobile market

A week ago NVIDIA announced Tegra 4 chip, its first Cortex A15-based quad-core processor. And while we dig the new CPU, we do wonder whether that’s enough to stay relevant in today’s mobile chip-making business.

The situation?

Few years ago, we had a relatively simple image – we knew how was making phones and who designed processors. Today, the situation is different with major handset makers like Apple, Samsung and Huawei using their own chips, leaving less business on the table for the likes of Qualcomm, Texas Instruments (TI), MediaTek and NVIDIA. To make things worse, LG may also opt for this solution to cut its production costs. TI on its end may leave the business altogether (or is at least looking to expand to other markets) and it’s pretty much up to NVIDIA and Qualcomm to split what’s left with the latter taking the lion’s share of the market. Other, smaller chip makers are rarely competing in the high-end market which NVIDIA is targeting.

Qualcomm rules the game

Qualcomm is the 800-pound gorilla in the mobile chip making business. NVIDIA managed to blitzkrieg the market with the Tegra 3 chip, which was the industry’s first quad-core processor. Today, however, most modern smartphones rely on Qualcomm-made Snapdragon S4 series SoC (namely Snapdragon S4 Pro).

Tegra 4

The new chip is pretty cool and all, but as I’m writing this not a single handset with Tegra 4 was announced. And while we hope to see first such devices unveiled at Mobile World Congress, we do question NVIDIA’s ability to compete with Qualcomm in the long run. Perhaps they need a partner, perhaps a shift in strategy.

Reference designs…

Speaking of strategy, NVIDIA seems aware of the problem and it’s apparently working on reference designs for smartphones and tablets, as we reported before. The idea, according to unverified information we’ve got, is to make it easier for tier-two OEMs to make Tegra-based products. That sounds promising, but I would go one step further.

Next step – Tegra Zone 2.0

Here’s where I’m reaching to the point of this article. Reference design is cool, but that’s not enough. The way I see it, NVIDIA should adopt the following strategy to stay in the mobile game:

1. Making Tegra Zone a full-fledge app store

NVIDIA should dedicate resources to turn Tegra Zone into a full-fledged app store, all with support for in-app payments and the ability to integrate with carrier billing. They should charge what is now considered a “regular” cut of 30% from developers to pay for the store maintenance.

Inclusion of other content like magazines, e-books and videos would also be beneficial and NVIDIA could (at least initially) work with third-parties like Zinio and Kobo to make it happen — Samsung used to do this before it developed its own services. In other words, Tegra Zone could be much more than an app store – it could be a mobile content store.

If needed, NVIDIA could acquire some of the existing app stores.

2. Re-brandable store

Make the new store, Tegra Zone 2.0, re-brandable (white-label) so that OEMs and carrier partners can offer it to their clients. Plus offer them (OEMs/carriers) a fair cut of the revenues — let’s say 20% of developers’ asking price and in-app purchases.

3. Bundle it with reference design

That’s the best part. Instead of selling “just” reference designs, NVIDIA could also offer re-brandable store to its OEM and carrier clients which get to keep the portion of the revenues. No other chip maker offers anything similar! As a result, OEMs and carriers opting to make Tegra-based devices not only get a chip (and reference design) but also an app store (mobile content store) that will keep making them money long after the sale of a device.

I think this is a winning strategy, what do you say?

  • Ferry

    Hardware maker teaming up with Carriers and surpassing the OS platforms? What would be the benefit for the Hardware OEM’s? Is there existing market demand : No.
    Which Android OEM’s should follow Nvidea in this? You’ve already written off Samsung and LG. Sony wouldn’t as they have their own content and are probably developing their own platform. Motorola will (surprise) stick with Google Play. So your down to Oppo/BBK/Meizu/Lenovo? People buying their phones are downloading the hacked applications and not buying them online….

    • Again – Samsung has its own Samsung Apps store which works all around the world.

      People were downloading music from Napster for free before iTunes came along. If NVIDIA could integrate carrier billing, perhaps Oppo/BBK/Meizu/Lenovo users would pay for apps as well.

  • What would be the benefit to OEMs using a hypothetical “Tegra Zone 2.0” vs. Google Play with stock Android? Tegra Zone is all about highlighting games/apps that are “optimized” for Tegra, which makes some sense. But why would I go to Tegra Zone to get a standard app (or media) vs Google Play? I mean it sounds nice in theory from Nvidia’s perspective to have a strong app/media store, but why would consumers ever prefer that to the larger and more well-known Google Play? And if consumers won’t prefer it, why would it be compelling to OEMs?

    • OEMs would get a portion of revenues from app sales. I would assume Samsung has its Samsung Apps store for that reason. 😉

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