Why Did NVIDIA Create Shield?

NVIDIA (NASDAQ: NVDA  ) took the wraps off Project Shield, its new portable gaming device, on Sunday. The next day, the company promptly saw its shares fall in reaction to the device. In the following video, Austin Smith and senior technology analyst Eric Bleeker discuss one of the most surprising products of this year's Consumer Electronics Show.

Shield is troubling because NVIDIA has seen R&D expenses rise by 69% since its fiscal year that closed in January 2008 while revenue has been flat. That R&D increase is largely a result of the company's diversifying into new areas such as mobile processors. As a company in a challenged PC market, NVIDIA would naturally see its R&D exceed sales as it looked to new opportunities and markets. However, Eric worries that the device is a distraction from more pressing areas and an example of R&D inefficiency and bloat. Shield by itself won't make or break NVIDIA, but all the same, its chances of kickstarting more popular graphically intensive games in mobile gaming look remote at best. To see Eric's full thoughts, watch the following video.

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Read/Post Comments (3) | Recommend This Article (3)

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  • Report this Comment On January 09, 2013, at 7:43 PM, setsuna2000 wrote:

    I can understand why they are doing this. They want to create a new market for Tegra 4. They managed to create a new market for their video cards in the form of GPU compute. Sadly, I think Shield is going to be a failure. I'm a gamer and even I don't like it.

  • Report this Comment On January 10, 2013, at 12:48 PM, Reginhild wrote:

    Shield is an early move toward cloud computing gaming and eventually will take off. Just like NVIDIA inventing the GPU they are taking the lead early. Before major adoption takes place the Shield device will likely not sell greatly but, not so important to NVIDIA since they lead all competitors and R&D was already spent last year. However, the device will likely lead to increased market share of NVIDIA PC GPUs where they already lead AMD 2 to 1. This may be a death knell for AMD as they are already on hard times.

  • Report this Comment On January 11, 2013, at 7:30 PM, jwtrotter wrote:

    I think one of the comments here and Eric are simply clueless about the role Shield will play in expanding their place in the gaming industry as well as add to their revenue. I don't see where the R&D increasing 69% going back 4 years(!) really is that significant compared to the competition's R&D. The total slant to push down Nvidia's benefit from R&D while keeping cash around $4 billion is in my mind disingenuous. And the comment above is practically the only 'gamer' that has said they don't like Shield. EVERY person that has tried it at CES, I mean used it for REAL, either loved it or said they will be buying when it's ready for the market . . every person. I don't think the person commenting is serious about gaming (especially with Android or PC games) or really cares about gaming as he or she says.

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