NVIDIA Dials Up Video

Are movies and TV finally going to hit it big on your cell phone? Motley Fool Stock Advisor pick NVIDIA (Nasdaq: NVDA  ) certain hopes so -- and its new chip might make those hopes a reality.

NVIDIA makes graphics chips for PCs, video game consoles, and, yes, mobile phones, including the uber-cool RAZR. On Monday, it released the GoForce 5500, its latest chip for devices on the go, at the 3GSM World Congress in Barcelona, Spain. The new chip attempts to change the game among competitors by improving phones' ability to play video, power 3-D games, and snap high-resolution digital photos.

The GoForce 5500 is a graphics processing unit (GPU), a separate chip specifically designed to handle a cell phone's video streaming, digital photography, and other graphics-intensive tasks. Other approaches either use one fast, non-specialized chip for all the phone's functions, or one chip for common phone functions and a separate digital signal processor (DSP) for graphics. According to NVIDIA, those phones aren't optimized for broadcasting video to mobile screens.

NVIDIA's timing couldn't be better. According to industry researcher Yankee Group, the market for mobile video is expected to reach $2 billion by 2008. That's doubly impressive when you consider that Apple's (Nasdaq: AAPL  ) iTunes had sold 8 million videos at $1.99 each as of last month's Macworld Expo. According to those numbers, iTunes, already the heavy in mobile video with the iPod, accounts for just $16 million in sales. That can't comprise the entire global market, but it's probably not an insignificant portion, either. If Yankee's estimates are even within spitting distance of being correct, there's stratospheric growth ahead for digital video sales.

If NVIDIA can convince the likes of Nokia (NYSE: NOK  ) , Motorola (NYSE: MOT  ) , and Samsung to go along with its plan, look out. The graphics company will have a very short hurdle to clear as this market leaves the starting line in the dust.

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Fool contributorTim Beyerswould buy a video phone. He's just that kind of geek. Tim owns shares of Nokia. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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