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NVIDIA's Shield Threatens AMD and Nintendo

When it was released last year, NVIDIA's (NASDAQ: NVDA  ) Shield was sort of a strange novelty, hardly worth its $299 asking price. While it saw some demand, the Shield was hobbled by its library -- it was only capable of playing Android games.

Owners of Nintendo's (NASDAQOTH: NTDOY  ) rival 3DS have access to exclusive high-quality titles including Pokemon and The Legend of Zelda -- NVIDIA's Shield, in contrast, could only offer up Angry Birds and other games easily accessible to just about anyone with an Android-powered smartphone.

But it's been nearly a year since the Shield debuted, and in that time, NVIDIA has made some remarkable improvements to its device. Next month, the Shield will get even better, and its continued improvement threatens both Nintendo and NVIDIA's longtime rival AMD (NASDAQ: AMD  ) .

The ultimate handheld console
Last October, NVIDIA updated the Shield, patching in a feature known as GameStream. As its name implies, GameStream works by beaming games from the owner's PC directly to their Shield. While the PC runs the game, the Shield receives it, allowing the tiny handheld to play even the most graphically demanding of games. PC gamers, tired of sitting at their desk, can play their games in any room of the house -- perhaps in the living room or lying in bed.

To some, the feature may sound superfluous, but there's obviously demand for it. Nintendo has been praised for offering something similar with the Wii U (Sony's PlayStation 4, paired with the Vita, also offers remote play).

But next month, GameStream will get much better -- NVIDIA plans to add a feature Nintendo's Wii U can't match. Soon, GameStream will work outside of the home, giving players the ability to access their PC games from literally anywhere.

Of course, there are some technical limitations, but with the ability to use GameStream outside of the home, NVIDIA's Shield is now a legitimate competitor to Nintendo's 3DS. With the Wii U falling far short of its expectations, Nintendo is relying on its handheld gaming business more now than ever before. While I wouldn't expect NVIDIA's Shield to completely cannibalize the market for Nintendo's handhelds (or even come close), it will put further pressure on a business that's already showing signs of weakness.

A killer feature AMD lacks
It's not just Nintendo that's threatened by NVIDIA's Shield -- AMD could be poised to sell fewer graphics cards if NVIDIA's handheld catches on. In order to use NVIDIA's GameStream technology, PC gamers need more than just the Shield -- they also need a an NVIDIA graphics card.

Collectively, AMD and NVIDIA control the market for PC graphics cards. NVIDIA has generally maintained a slight lead in terms of market share, but AMD has been working hard to take a larger chunk of the market. If the Shield becomes a popular piece of hardware, however, it could result in AMD selling fewer graphics cards -- gamers looking to take advantage of GameStream would have no choice but to purchase an NVIDIA card.

The limitations of streaming
But as I said, there are some technical limitations, and it's worth noting them before getting carried away.

Obviously, GameStream requires an Internet connection, but not just any connection will do: NVIDIA recommends gamers have a home broadband connection with at least a 5Mpbs upload (not download) speed. That's not rare, but it's far from common -- Comcast, for example, offers it, but only on its more expensive Internet packages. NVIDIA also encourages gamers to use the Shield with high-quality routers.

But even with its limitations, NVIDIA's Shield is an exciting product, one that stands to push the boundaries of PC gaming. If it catches on, it should be great for NVIDIA, but not so great for Nintendo and AMD.

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Read/Post Comments (24) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 27, 2014, at 11:12 AM, TMFAeassa wrote:

    Nice article, Sam!

  • Report this Comment On March 27, 2014, at 12:04 PM, jkubinak1339 wrote:

    "the Shield will get even better, and its continued improvement threatens both Nintendo and NVIDIA's longtime rival AMD "

    this article is completely out of touch - im quite sure "The Shield" is the least of AMD's worries. Also, Nvidia has done everything but "release a product" lately.

    Nice continual insider sales too! 4 in the last 60 days - Nvidia is and has been losing Workstation marketshare for several quarters now - so good luck with Shield.

  • Report this Comment On March 27, 2014, at 12:10 PM, romeras wrote:

    The Nvidia Shield Will Be $100 Cheaper Next Month

    nobody wants to nvidia Shield

  • Report this Comment On March 27, 2014, at 12:27 PM, romeras wrote:

    NVIDIA (NASDAQ:NVDA) EVP Ajay Puri sold 48,226 shares of NVIDIA stock in a transaction dated Wednesday, February 26th. The shares were sold at an average price of $18.97, for a total transaction of $914,847.22. Following the transaction, the executive vice president now directly owns 185,027 shares in the company, valued at approximately $3,509,962. The transaction was disclosed in a document filed with the

  • Report this Comment On March 27, 2014, at 12:28 PM, romeras wrote:

    be careful in their investment

  • Report this Comment On March 27, 2014, at 6:26 PM, umgoblue2008 wrote:

    Yes I am sure the miniscule amount of Nvidia Shield has sold is going to threaten the 42.74 million units of 3DS sold (up to end of december 2013). People still buy game systems to play GAMES, and people love Nintendo franchises on the go.

  • Report this Comment On March 28, 2014, at 10:00 AM, justreadding wrote:

    Are you kidding????? why is it only AMD and Nintendo..... especially nintendo..... you wouldn't even consider including xbox one or ps4 hahahha. this article is so bias. I really think people are so ST*P*D for always posting garbage articles like this. Don't you have better things to do.... oh I forgot, you gotta protect your dividends from Nvidia, otherwise people will start selling their stocks and lose it's value.... sigh****good luck with your nvidia. As what they say, what goes up, must come down.....

  • Report this Comment On March 28, 2014, at 10:50 AM, keeperoftheq wrote:

    From what I have seen, the Sheild has not been selling. It is just as dead as the Ouya. I do not consider that even close to being threatening to AMD or Nintendo. The Shield has sold less than 1% for what Nintendo hand held has.

  • Report this Comment On March 28, 2014, at 11:08 AM, MikeCC wrote:

    I would rather sit and play on the computer that has a bigger screen over the Nvidia's Shield that has a much smaller screen.

  • Report this Comment On March 28, 2014, at 11:12 AM, jwtrotter wrote:

    There are almost 10 comments already for a product that isn't even a threat. Why do the lonely, obsessive AMD fanbois post so much if they don't seem threatened? If the Shield isn't a threat, then why bother commenting here? It just cracks me up the behavior of those that can't help themselves but to post so pretty petty immature comments over and over on any article that even remotely is negative about AMD in something. Really, if AMD is not threatened, then why are you folks that clog all these comment sections with your supposed non-threatened votes of 'confidence'?

  • Report this Comment On March 28, 2014, at 11:22 AM, TEBuddy wrote:

    This has got to be the dumbest article I have ever read. Does anyone actually believe this nonsense? That author included?

  • Report this Comment On March 28, 2014, at 11:26 AM, bugsy1339 wrote:


    " If the Shield isn't a threat, then why bother commenting here?"

    Because the article is misleading in a careless way - ill give you an example so you can follow next time - if this article was about maxwell and how power efficient it is- and that this was a threat to AMD then it would make sense or at least have the facade of honesty - the author along with TG and AE - i seriously think MF lets them post just to get these responses - this is the least credible website i have seen.

  • Report this Comment On March 28, 2014, at 11:42 AM, jwtrotter wrote:

    Well then 'bugsy1339', you are just making sure they post more of the same then, when you respond at all, aren't you? If the article is bogus then ignore it; otherwise, maybe there is something there there. Really, most of the posters, often making very immature comments, need to be doing something else away from the computer imo.

  • Report this Comment On March 28, 2014, at 12:15 PM, wownwow wrote:

    "NVIDIA's Shield Threatens AMD and Nintendo"

    Why not "Tesla's Model S threathens GM and Toyota" :)

  • Report this Comment On March 28, 2014, at 2:13 PM, rav55 wrote:

    According to Charlie Demerjian, NVidia is dumping Tegra as it's junk.

    An ARM IGP is no threat to Radeon. Nintendo isn't selling anyway, hardly due to Shield.

  • Report this Comment On March 28, 2014, at 2:39 PM, jwtrotter wrote:

    Okay, since this is already being filled with inane comments:

    @wownwow Tesla actually IS a threat to GM and Toyota, why do you think everyone is trying to get to that point that Tesla has already reached with the range their cars attain on one full charge?

    @rav55 The fact you even quote Charlie at all discredits anything else you say. Nvidia and every other credible analyst and observer sees that Tegra is not only NOT junk but at the core of their evolving philosophy to unify their architecture. Charlie's attempts to discredit Nvidia are sensationalist tripe meant to distract and gain readership, that is all.

  • Report this Comment On March 28, 2014, at 3:19 PM, rustianowski wrote:

    I play video games on 3 different platforms i am in guilds with over 500 people each and I cannot find a single person who has purchased an Nvidia Shield. These things were a garbage idea and will never take off.

    Not to mention anyone that wants to play their pc games prefers a full keyboard annd a mouse and most pc games are not designed for a controller.

    This story is incorrect, you would have had better luck convincing me that the nintendo power glove is getting brought back.

    Nvidia is a company that is relying on marketing to seel their products rather than the products themselves. Seriously is anyone going to buy a titan Z, or a shield and feel like they got a good deal on a great product?... No they won't, instead they will be upset cause they just overpaid for a lousy, overhyped nvidia product.

    The maxwell cards aren't significant gains and pascal will require everyone to buy a new motherboard before they can use the cards.

    Dear Nvidia, Selling your product only to the Ultra-Gaming enthusiaists will not increase your profits. Selling affordable quality products to the mases will, which is exactly what AMD is doing.

  • Report this Comment On March 28, 2014, at 11:15 PM, awang0718 wrote:

    I don't know how much NVIDIA's Shield has sold, but I am willing to bet a lot of money that sales of that device hasn't even hit half a million.

    If your device hasn't even sold half a million units, how the hell is it supposed to compete with Nintendo 3DS, which has sold 43 million units (as of December 2013) or AMD, whose graphics cards power all three 8th Generation consoles. (Total sales of PS4, XB One and Wii U are at 16 million units)

    Typical Motley Fool BS...

  • Report this Comment On March 28, 2014, at 11:25 PM, awang0718 wrote:

    I am a firm believer that the the market for Android-based consoles is nonexistent. Why buy a NVIDIA Shield to play Angry Birds when you can simply use your smartphone?

    The Ouya, Gamestick, and now the Shield. None of these devices have sold well. Thses devices cannot compete against Nintendo or AMD (or Microsoft or Sony)

    Heck, even Sony's Playstation Vita TV has sold poorly (only 100,000 units sold in 4 months), and that device represents Sony's "take" on this market.

  • Report this Comment On March 29, 2014, at 3:06 AM, Manaphy2007 wrote:

    graphics do not make the game any better, its gameplay and nintendo has a lot of high quality games, angry birds does not qualify as a game, neither is candy crush. im pretty sure nintendo will do fine even if nvidia is a success or nvidia shield will flop like ouya

  • Report this Comment On March 29, 2014, at 3:21 AM, Manaphy2007 wrote:

    plus how will nvidia compete with nintendo, sony, and, microsoft in the world of gaming? can the shield play killzone? no. can it play super mario 3d world? no. can it play dead rising 3? no. can it play pokemon x/y? no. can it play any games? no. it can only play apps and things that look like games but do not qualify as games. i would rather buy an x-bone with nsa spy camera than buying the shield that claims that it can compete with the big 3. btw you fools as in you "journalist", wii u is not a flop, its struggling and it will make a comeback, ps vita? it might also, and while it looks like nintendo is loosing a lot of money, they can survive until 2052 or longer as they have so much money in the bank that they can afford to make flops. also sony is losing money faster and a lot more than nintendo and the only think keeping sony alive is the playstation brand and they may not survive long but then again they may pull through. and one last thing, nintendo will never go 3rd party and they would close its doors before that happens, nintendo will only make games for its console, making games on non-nintendo console would actually make people not buy a nintendo console

  • Report this Comment On March 29, 2014, at 7:20 AM, Stuart511 wrote:

    Although the author claims no position in Nvidia stock, the Mutley Fools do.

    I tend to read these reports as a form of entertainment.

    How can the "Fools" be objective when they have positions in stocks they report on?

    Good luck........

  • Report this Comment On March 29, 2014, at 4:33 PM, Uconfan wrote:

    I asked my gaming tenagers who use Xbox play station and WI and they never herd of the shield and none of thir friends herd of it or use it either. Sounds like a Navidia pipe dream, and it supports almost no games. Alike a threat to AMD (NOT).

  • Report this Comment On March 31, 2014, at 9:18 AM, Bpig12 wrote:

    considering hte fact that a similer service alredy exsits for xbox 360,ps3,pc and wii games being broadcasted to any android 4.X tablet and the ipad I dont think the shield is that innotive and the abundance of cheaper gaming tablets with bigger screens isnt giving a proper incentive to buy the shield

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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