Don’t Get Excited About NVIDIA’s Tegra 4 Just Yet

Don’t Get Excited About NVIDIA’s Tegra 4 Just Yet

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After an initial launch delay and price cut, graphics chip supplier Nvidia (NVDA) released its handheld game player, Shield. But don’t expect initial sales figures to impress. The handheld game market is already dominated by Sony (SNE) and Nintendo (OTC:NTDOY). And smartphone games are growing even faster. Meanwhile few quality games have been designed for the Shield, and its streaming capabilities only work on local networks, compared to the PS4’s Remote Play feature which can stream games wirelessly. Considering these challenges, what happens next for Nvidia in light of the Shield launch?

The Shield is meant to showcase the company’s quad-core Tegra 4 technology. A teardown of the Shield reveals that the device has active cooling and a very large battery. Since tablet devices and most other handheld game units lack any fan cooling, Nvidia may be hard pressed to attract buyers. Despite the stiff competition in portable gaming, it is too early to declare Shield a failure. Expect revisions and updates to improve the functionality of the product.

Other Challenges

Shield offers very limited functionality for consumers beyond the PC space. And playing games on a PC may be more appealing, since it makes use of a bigger monitor, better sound, and a full keyboard for game control.

Click on the image below to see sales data over time. Quarterly sales sourced from Zacks Investment Research.

What If Nvidia Had Made A Steambox

Instead of building a game device, Nvidia could have expanded the PC capabilities into the living room. If Shield brought PC video and audio capabilities, along with a game pad control, PC functionality could have been migrated outside the realm of the desktop.

Conclusions

Investors should still keep an eye on the Tegra 4. China’s ZTE Corp (ZTCOY) looks to be making the first phone in the world powered by this quad core processor – comparable to the Qualcomm (QCOM) Snapdragon 800 chipset. The ZTE U988S phone is also expected to have a 5-inch full HD display, 2GB of RAM, microSD storage expansion, and possibly a 13-megapixel rear camera plus a 2-megapixel front camera. Unfortunately, the phone design looks mediocre, and availability in the US could be delayed or not happen at all. For now, it looks like the prospects for Tegra 4 will come from sales of tablets, like the HP (HPQ) SlateBook x2. In other words, initial sales of the Tegra 4 processor could be light.

 

Written by Chris Lau

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