Nvidia cofounder, president, and CEO Jen-Hsun Huang is a big, big fan of the Android operating system – a fact that he made abundantly clear when speaking with analysts and reporters after announcing his company's financial results for the third quarter of its 2014 fiscal year on Thursday.
"Android is the most disruptive operating system that we've seen in a few decades, in a couple of decades," Huang said.
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"Android is not just about phones," he added, citing its appearance in not only smartphones, but also in tablets, set-top boxes, gaming systems, and all-in-one PC such as the HP's Slate21.
The Slate21, not coincidentally, is powered by Nvidia's quad-core Tegra 4 processor, revenues for which more than doubled from the previous quarter, helping Nvidia hit or slightly exceed analysts' expectations despite declining GPU sales in mainstream PCs. For the quarter just passed, Nvidia booked revenues of $1.054bn, resulting in an earnings-per-share of $0.20.
Tegra's success is closely tied to Android success, and Huang waxed enthusiastic about Google's operating system. "Android is probably the most versatile operating system that we've ever known," he said, "and has the benefit of also being connected to the cloud. And so the day that you turn it on, it's incredibly useful, with all kinds of applications already on it."
The Tegra 4 is also in Nvidia's Android-powered Shield gaming system, which Huang called "our initiative to cultivate the gaming marketplace for Android. We believe that Android is going to be a very important platform for gaming in the future, and to do so we have to create devices that enable great gaming to happen on Android."
Shield, however, won't be a big revenue driver for Nvidia. According to Huang, "Our investment there is modest, or expectations are modest, and our distribution is modest."
Expectations for Tegra sales, however, are not modest. When asked what would be the company's biggest driver of growth during 2014, Huang was unequivocal. "In terms of absolute dollars, I would say number one would be Tegra," he said.
Not that Nvidia's core GPU business is chopped liver. Nvidia's VP for investor relations Rob Csongor, also speaking on the call, extolled the popularity of PC gaming, where high-end kit such as Nvidia's new GeForce GTX 780 Ti bring in the bucks, helping keep the company's balance sheet in balance despite a slide in the PC market overall.
"PC gaming represents almost 40 per cent of the worldwide gaming market," Csongor said, "larger than console, tablet, or any other gaming markets." Nvidia's GPU gaming revenues were up 6 per cent year-to-date when compared to the same period last year, he said, and notebook GPU gaming revenues have doubled in the last two years.
"Visual computing is increasingly important to more and more markets," said Huang in a statement. "It's creating demand for GPUs and opening up large opportunities."
Those large opportunities, however, aren't seen by the Nvidia brain trust to sweeten the company's bottom line anytime soon – it predicts that revenues for the fourth quarter of fiscal 2014 will remain flat at $1.05bn, plus or minus 2 per cent.
It's that damn shrinking PC market that's hurting Nvidia, as it is nearly every other company in the industry. If Huang and his fellow execs are fortunate, however, Android will metastasize into the entire computing ecosystem and boost demand for Tegra.
Remember, Android is the "the most disruptive operating system" to have appeared in decades – possibly disruptive enough to bump a flat revenue stream upwards. ®
Android devices powered by Tegra may be be Huang's BFF, but Microsoft's Surface 2 running Windows RT on a Tegra 4? Not so much. "The vast majority of Windows on ARM will be Surface," he said. "The vast majority of everything else on Tegra is Android."