NVIDIA Smiles From the Sidelines of the Console Wars

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As the gaming console wars rage on for yet another generation, NVIDIA (NASDAQ: NVDA  ) is sitting on the sidelines as Sony (NYSE: SNE  ) and Microsoft (NASDAQ: MSFT  ) take shots at each other.

Microsoft is being universally derided by both gamers and the media over its decision to allow restrictions over used games, as well as for its online requirement, where the new Xbox One has to check in to the company's servers daily. When Sony announced this week that the PlayStation 4 was sticking to the traditional model of used games and offline gaming, it received massive cheers. That response bolstered Sony's confidence, and the Japanese company has now boosted its sales forecasts for the upcoming console.

NVIDIA is not participating in gaming consoles this generation. It powered the graphics in the PlayStation 3, but the company said it decided to pass on the PlayStation 4 because Sony wasn't offering enough money. Rival Advanced Micro Devices is powering both the Xbox One and PlayStation 4 as a result.

However, NVIDIA isn't too concerned with missing out on this generation. In fact, NVIDIA exec Toni Temasi is "glad" that the new consoles are about to launch, since it will "raise the bar" with gaming. The exec takes the opportunity to point out that NVIDIA's GeForce GTX Titan offers 2.5 times the performance of the PlayStation 4. The next generation of consoles could help spur demand for gaming PCs, even though the new consoles will actually close the performance gap with NVIDIA's graphics cards (the previous generation GTX 680 had 13.2 times the performance of the PS3).

The key will be developers. Since the performance gap is smaller, it will be easier for developers to scale up their content from console games to PCs. Developers will have an incentive to broaden their reach with less developmental effort than in previous generations. That may increase the amount of gaming content available for PCs.

As paradoxical as it sounds, passing on next-gen consoles may still help NVIDIA yet.

NVIDIA was ahead of the curve launching its mobile Tegra processor, but investing gains haven't followed as expected, with the company struggling to gain momentum in the smartphone market. The Motley Fool's brand-new premium report examines NVIDIA's stumbling blocks, but also homes in on opportunities that many investors are overlooking. We'll help you sort fact from fiction to determine whether NVIDIA is a buy at today's prices. Simply click here now to unlock your copy of this comprehensive report.

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  • Report this Comment On June 13, 2013, at 3:38 AM, Gashen wrote:

    All I hear from this is, that the grand I spent on a gaming Pc is now worthless, because the new consoles make my Gtx 560ti sub-par so devs. will no longer optimize games enough for me to actually play.

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