NVIDIA’s CEO Gets in Console Manufacturers’ Face

NVIDIA’s CEO Shoots on Consoles

During a post-earnings investor Q&A, NVIDIA’s CEO Jen-Hsun Huang was asked about NVIDIA’s gaming market and how they could compete in the market with not only their competitors AMD, but the growing console market as well. He loosened his tie, undid his cufflinks, and then straight up shot on the console market with some financial truths about GeForce gaming cards:

“The average selling price of the NVIDIA GeForce is about a third of a game console. That’s the way to think about it. That’s the simple math. People are willing to spend $200, $300, $400, $500 for a new game console, and the NVIDIA GeForce GPU PC gaming card is on average far less.”

Nvidia's CEO Shoots!

Shots fired! It’s true that NVIDIA has been mindful of pricing for their mid-range and older cards, unless you want a GTX 1080 Ti, which will hurt your wallet at $700. But Huang also addressed this issue, stating that people will pay more if they care about their gaming PC, and they are in the upper-echelon of NVIDIA’s market:

“There are people who just absolutely demand the best. And the reason for that is because they’re driving a monitor or they’re driving multiple monitors at a refresh rate well beyond a TV. So if you have a 4K or you want 120 hertz or some people are even driving it to 200 hertz, those kind of displays demand a lot more horsepower to drive than an average television, whether it’s 1080p or 4K at 60 frames a second or 30 frames a second. And so the amount of horsepower they need is great. But that’s just because they just really love their rig, and they’re surrounded in it, and they just want the best.

But the way to think about that is ultimately that’s the opportunity for us. I think GeForce is a game console. And the right way to think about that is at an equivalent ASP of some $200 – $300, that’s probably potentially an opportunity ahead for GeForce.”

Sounds like Huang is cooking a plan to capture that lower-end market, targeting those console gamers looking for a cheaper alternative. NVIDIA’s CEO reinforced the point that graphics cards and consoles share the ups and downs of the gaming market:

“When we think about GeForce, these are the parameters involved. How much of our installed base has upgraded to Pascal? How much of our installed base is growing? How is gaming growing overall? What are the driving dynamics of gaming, whether it’s team sports or MOBA or using games for artistic expression? It’s related to the AAA titles that are coming out. Some years the games are just incredible. Some years the games are less incredible. These days the production quality of the games have just become systematically so good that we’ve had years now of blockbuster hits. So these are really the dimensions of it.

And then it’s overlaid on top of it with some seasonality because people do buy graphics cards and game consoles for Christmas and the holidays, and there are international holidays where people are given money as gifts and they save up the money for a new game console or a new game platform. And so in a lot of ways our business is driven by games, so it’s not unlike the characteristics of the rest of the gaming industry.”

Does this mean NVIDIA is throwing the gloves off and taking the fight to the console market? Or is NIVIDIA’s CEO quietly stating facts that the PC gaming base is growing? You decide.