NVIDIA's GameWorks: The Birth of a Competitive Advantage

NVIDIA (NASDAQ: NVDA  ) and Advanced Micro Devices (NYSE: AMD  ) compete against each other in the graphics card market, and until recently price and performance were the main differentiating factors between the two companies' products. But the landscape has shifted, and building faster hardware is no longer the only way to achieve a performance advantage. Both companies have created software, AMD with its Mantle graphics API and NVIDIA with its GameWorks suite of tools, which aims to create a performance advantage, but I suspect that only one company will succeed.

Selling more hardware using software
AMD's Mantle graphics API was an attempt to offer an alternative to Microsoft's ubiquitous DirectX by removing much of the computational overhead involved. AMD largely succeeded in delivering these performance gains, particularly on systems with weaker CPUs, and some high-profile games like Battlefield 4 included the API. Mantle is only supported by recent AMD graphics cards, although NVIDIA could technically implement support if it wanted to, but the goal of the project was undoubtedly to give AMD cards an edge over those of NVIDIA.

But Mantle has a serious flaw. Since the AMD cards that support the API represent only a fraction of the market, and integrating the API requires developers to dedicate a substantial amount of time, Mantle was always going to be an extremely tough sell. It was reported that AMD paid Electronic Arts millions of dollars in order to get Mantle into Battlefield 4, and while some other developers are supporting the technology, like Firaxis for its upcoming Civilization game, the next iteration of Microsoft's DirectX will provide the same performance enhancements. With a fire lit under Microsoft to ensure that Windows remains the premier gaming platform, Mantle doesn't stand much of a chance in the long-term, and it is unlikely to provide AMD with any advantages.

NVIDIA is taking a different route. Instead of trying to introduce a new graphics API to compete with DirectX, the company offers developers a series of software libraries called GameWorks. NVIDIA provides code for various graphical effects, like soft shadows, effective rendering of skin, and ray tracing, as well as for physics, and these pieces of code can be directly integrated by developers. This saves developers time, since many of these systems would be difficult to build and optimize from the ground up.

The catch is that these libraries are specifically optimized for NVIDIA hardware. This makes it more difficult for AMD to optimize its own drivers for games that use GameWorks, and that could result in a performance advantage for NVIDIA. One could argue that this is bad for consumers, like a recent article on Forbes did, but AMD attempted something similar with Mantle.

NVIDIA is more likely to succeed with this strategy because the company created something that makes developers' lives easier. While Mantle provides performance enhancements on lower-end systems, it actually makes the game development process longer, since a second graphics API now needs to be built in. NVIDIA's GameWorks libraries free developers from having to create and optimize complicated systems like clothing physics and global illumination, providing a solution that is already optimized for NVIDIA's hardware, which represents around 65% of the market.

GameWorks is now integrated into the Unreal 4 Engine, the latest iteration of a major line of game engines which many high-profile games have used in the past. It appears that GameWorks is going to see fairly rapid adoption because of this, and that should give NVIDIA's hardware a distinct advantage going forward. Not a huge advantage, since optimization only gets you so far, but when the difference in performance between AMD and NVIDIA graphics cards at the same price points is relatively small, any performance advantage matters.

The bottom line
NVIDIA has been helping game developers optimize their code for a long time, but GameWorks is the first time this help has been offered as an actual product. The path to gamers is through developers, and with GameWorks being included in high-profile games like the recent Watch Dogs, as well as the Unreal 4 Engine, an increasing number of games are going to be optimized specifically for NVIDIA hardware going forward. This cements NVIDIA's status as the leading graphics card company, and it makes an AMD comeback even more unlikely.

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  • Report this Comment On May 28, 2014, at 9:34 PM, rav55 wrote:

    @Timothy Green

    "Since the AMD cards that support the API "

    This is not quite correct.

    First of all the software generally supports the hardware, and...

    ...every AMD HSA APU will be supported by the API, NOT just the discrete graphics cards.

    AMD and Nvidia are essentially tied @ 16+% graphics market penetration. Of course nVidia does sell more discrete cards BUT AMD sells enough APU to more than make up for that defficiency. The ONLY IGP that nVidia sells is Tegra but you know that already right?

    Of course Intel has the lions share with it's "special needs" HD graphics and that is AMD's real target.

    And despite what you think Mantle does have 40+ studios on-board.

    http://www.fool.com/investing/general/2014/05/28/nvidias-gam...

    And Game Works is at the bottom line enabled by x86-64 and is still a Direct X 11 product, Direct x 12 is still vaporware and is likely to disappoint.

    Game Works is also an UNKNOWN quantity, has NO benchmark performance track record and is just another desperate release by nVidia FUDsters.

    So before you get all Ashraf Eassa on us why don't we see what the numbers show shall we?

    Then we can evaluate the efficacy of this product based on facts rather than hyperbole.

    You don't have a problem with facts do you?

  • Report this Comment On May 28, 2014, at 9:51 PM, rav55 wrote:

    @Timothy Green

    Here's that last piece that you wrote trying to shoot down AMD's Mantle API.

    http://www.fool.com/investing/general/2014/03/25/its-officia...

    The comments there reveal just how little your readers respect your opinions.

    What is also curiously missing is any support for your opinions. One can only assume that even folks who might agree with you do not feel compelled to take the time to offer it.

    That's pretty sad. You have become irelevant.

  • Report this Comment On May 28, 2014, at 10:02 PM, rav55 wrote:

    "NVIDIA's GameWorks: The Birth of a Competitive Advantage"

    The title of this piece is ironic.

    What Timothy Green seems to be saying is nVidia currenlty has no competitve advantge; without GameWorks.

    And since GameWorks is yet unproven, nVida then has still no competitive advantage.

  • Report this Comment On May 28, 2014, at 10:46 PM, MrClean wrote:

    Thanks for the Facts Timothy Green

    Debt laden AMD had to pay EA millions of dollars in order to get Mantle into Battlefield 4 and now their fanboys cry us a river when Nvidia flexes its monetary muscle.

    All of AMD's bottlenecking lame gaming APUs suck at gaming you have to drop visual quality features to get playable FPS making your new games look like ones years old. Nvidia and Intel are delivering to gamers the the Virtual Reality gaming future now while debt hobbled AMD and its watt sucking multi GPU strangulating CPUs can't. AMD sends their FUD posting fanboys to all the investment/tech sites to post hype pumping propaganda. Nothing from AMD and its horde of paid Intel/Nvidia hating bashers is to be believed, EVERY product that AMD has peddle has been vastly over hyped. AMD NEVER walks its hype pumping talk, after each epic APU/CPU fail AMD just sends its fanboys out to fling the FUD and put out the AMD dooming fires desperately trying to hide the Facts.

    btw: Timothy Green, your fine investment site is infested by AMD pump boys, it needs a FUD fumigator like you.

    Thanks for being Fact Finding FUD fumigator.

  • Report this Comment On May 29, 2014, at 1:48 AM, ta152h wrote:

    Advancing rumors as fact is a clear indication of a weak article, and someone that doesn't have any facts.

    AMD has so many competitive advantages, including winning all the consoles, and having x86 APUs, little ones like Gameworks aren't likely to have much impact. As developers continue to develop for GCN, the tools for it will continue to get better.

    Also, there is a big difference between the performance of AMD GPUs and NVIDIA GPUs at the same price point. Not a little one. Now that AMD can finally make enough GPUs to meet demand, NVIDIA will probably have to drop prices or continue to lose market share. Even then, with their failures in tablets and phones, it's difficult to see NVIDIA doing anything in a price war, whereas AMD will still be getting solid revenue from the consoles that NVIDIA lost in.

    I'm not that sanguine on NVIDIA. They failed in phones, and tablets, and haven't been able to create an differentiating technology. In graphics, they can only maintain market share when AMD is selling out. In professional graphics, they lose share every quarter to AMD.

    Where do they turn? It's hard to see any market they will grow in.

  • Report this Comment On May 29, 2014, at 3:36 AM, rav55 wrote:

    @Timothy Green

    "AMD's Mantle graphics API was an attempt to offer an alternative to Microsoft's ubiquitous DirectX by removing much of the computational overhead involved."

    Again Mr. Green is wrong. AMD's did more than attempt, they succeeded.

    And over 40 studios are on board.

  • Report this Comment On May 29, 2014, at 3:36 AM, rav55 wrote:

    @MrClean

    Perhaps your nose needs cleaning. It's a bit brown.

  • Report this Comment On May 29, 2014, at 10:05 AM, rav55 wrote:

    @MrClean

    "Debt laden AMD had to pay EA millions"

    Prove it. Put up the link.

  • Report this Comment On May 29, 2014, at 10:38 AM, nonbiasfool wrote:

    How could I have guessed when I saw the 8 comments that the AMD fanboyz would attack the author? AMD is a $3 stock with a market cap 4 times lower than NVDA. AMD has been a public company since the 1980s, and after all this time they have produced almost no sustainable success in anything they have tried..

    NVDA Tegra 1K just got signed by Xiaomi, the #1 electronics maker in China, probably looking 10 million tablet sales this year alone. New reports suggest Tegra 1K just got into Nexus 8, another huge win. Almost all of NVDAs attempts to penetrate a new market have been successful, while AMD, can't or can barely even turn a profit and can't seem to gain critical mass for the long term with any product. Yet, the AMD bloggers will always come here and claim AMD is the best thing in the world. I'll continue to reinvest my money in NVDA, AMD will stay on my screen, sure, but don't be surprised if they continue to flop.

  • Report this Comment On May 29, 2014, at 12:12 PM, rav55 wrote:

    @nonbiasedfool

    "AMD is a $3 stock "

    WRONG.

    The author should be called to task for writing garbage.

    10 million units of Tegra is a drop in the bucket for a cheap chip. When Intel stops paying nVidia $250 million per year in cross license fees in 2016 that 10 million units just might cover that loss. First they have to make the sales though.

    Actaully the APU is a huge sutainable success.

    The console wins alone made them profitable with somewhere around 12 million units sales to date and the console lifespan is at least 7 years. That's what is called sustainable.

    The ATI acquisition saved the company from Intels illegal and monopolistic business practices. And the release of the FIRST on-die inegrated APU is another huge AMD innovation.

    And in 2007 AMD annnounced the business plan that foretold Mantle API, and coined the term APU. They are executing that plan. That is another sustainable success.

    Radeon 295 x is the top of the heap for half the price of Titan Z. In fact AMD stole nVidias Christmas when it dropped prices on Radeon 290 series right before the holidays after nVidia had their whole inventory in the channel.

    AMD Radeon also outperforms GTX in crypto mining and now that the production levels have been increased they are seeing huge gains in that serendipitous market niche.

    Basically nVidia is the frog giving the Scorpion (Intel) a ride across the river. How did that work out for the frog?

    Intel will likely drop PCIe in 2016 also. As Intel IGP and AMD APU will eliminate the need for mid range discrete graphics cards. Intel released Oak Trail without PCIe reasoning that it wasn't necessary with HD graphics on-die. The Justice Dept. disgreed and orderd Intel to maintain PCIe at least until 2016 when it renegotiates nVidia's new cross license agreement. However Justice allowed Oak Trail to live without PCIe.

    Intel has no discrete graphics to drive design of their IGP. They will solve that problem too.

    Oh yeah...

    "Xiaomi Announces the MI3 - Tegra 4 and MSM8974AB inside" That ws announced on September 2013. That is far from "just announced" So how is that working out for them now?

    http://www.anandtech.com/show/7276/xiaomi-announces-the-mi3-...

    Xaiomi is a very confused company and they are using the shotgun approach with different silicon in every madel.

  • Report this Comment On May 29, 2014, at 7:16 PM, lrkbik5 wrote:

    @rav55

    Who was talking about the Xiaomi MI3? Could you be confused with the recently announced Xiaomi MiPad?

  • Report this Comment On May 29, 2014, at 9:12 PM, rav55 wrote:

    @Irkbik5

    There is no confusion.

    nonbiasfool stated this:

    "NVDA Tegra 1K just got signed by Xiaomi, the #1 electronics maker in China, "

    My response was the Xiaomi didn't "just sign them".

    He was wrong with his facts. Xiaomi signed them last year for their MI3. And that has hardly worked out for them. Did they get some sales yeah, but Snapgragon outperforms.

    nVidia has 3 sources of income.

    $66 million per quarter from Intel agreement and that goes away in 2016...

    ...about $139 million from Tegra...

    ...and decling revenue from GPU sales currently at $898 million.

    Tegra is a cheap cheap hardly the point of any spear. But it needs to show growth and it isn't, this is especially so since Intel is giving away silicon in the tablet market further offering competition for the consumers dscresionary income.

    There was no confusion, Xiaomi has been on-board for almost a year no and nothing is really coming of it so far. But hey Intel is supposed to sell 40 Million tablet IGP this year and now nVidia is going to sell 10 million.

    That is 25% of the addressable tablet market.

    Hmmm...somebody is being irrationally exhuberant.

  • Report this Comment On May 29, 2014, at 9:55 PM, rav55 wrote:

    “Mantle was always going to be an extremely tough sell.”

    Wrong again.

    Mantle is in fact a fairly easy sell. nVidia and AMD have each roughly 16% of the x86 GPU market that spans discrete cards at all levels and APU’s as well.

    Intel owns the balance with HD IGP. Hardly a graphics performance competitor to either nVidia or AMD but certainly in volume.

    Mantle was designed to give to give the APU an edge so it can compete against the low to midrange discrete GPU card thereby ameliorating nVidia’s slight edge in that market.

    So lets here it from the developers themselves shall we?

    From Firaxis:

    “Simply put, Mantle is the most advanced and powerful graphics API in existence. It provides essentially the same feature set as DX11 or OpenGL, and does so at considerably lower runtime cost.”

    http://www.firaxis.com/?/blog/single/why-we-went-with-mantle

    Oxide Games' Dan Baker

    “Maximum PC: Do you see a world where developers will have to write for DX and Mantle? How much of a challenge is it to write for both APIs?

    Baker: APIs come and go. Once you support more than one, it's pretty easy to support a dozen–assuming there is parity in the hardware features, and assuming you don't have to rewrite your shaders in an entirely different language. If you release a title right now, you would end up with likely six paths. An Xbox360, a PS3, a PS4, a Xbox One, a DX9, and a DX11. For us, the graphics system is just a module that talks to the API. All we did for Mantle was replace the D3D module with a Mantle one. It's about 3,000 to 4,000 lines of code for the Mantle version, which took me personally about two months to write. In terms of support, at least for us, it wasn't terribly difficult.”

    http://www.maximumpc.com/AMD_Mantle_Interview_2014

    In short;

    “By reducing the CPU cost of rendering, Mantle will result in higher frame rates on CPU-limited systems. As a result, players with high-end GPUs will have a much crisper and smoother experience than they had before, because their machines will no longer be held back by the CPU. On GPU-limited systems, performance may not improve, but there will still be a considerable drop in power consumption. This is particularly important given that many of these systems are laptops and tablets. The reduced CPU usage also means that background tasks are much less likely to interfere with the game’s performance, in all cases.

    Finally, the smallness and simplicity of the Mantle driver means that it will not only be more efficient, but also more robust. Over time, we expect the bug rate for Mantle to be lower than D3D or OpenGL. In the long run, we expect Mantle to drive the design of future graphics APIs, and by investing in it now, we are helping to create an environment which is more favorable to us and to our customers."

    So Mr. Green do you just make your stuff up? Why do you ignore facts?

    Facts must just be a minor inconvenience to you.

  • Report this Comment On May 30, 2014, at 8:15 AM, bugsy1339 wrote:

    Tim

    loved the article - there is nowhere else i can find a more lopsided Nvidia loving pumpster.

    stay green my freind.

  • Report this Comment On May 30, 2014, at 1:04 PM, nonbiasfool wrote:

    Blah, blah, blah, Rav.. If AMD was such a great company you won't be a $3.98 stock with a 3 Billion market cap..

    Based on your replies AMD shoukd be headed for total greatness. You must be so excited to see your shares quickly rise in value.. You pro-AMD posters constantly saturate the comments sections, attacking anyone who dares to say anything negative about AMD.. Where's the return on an investment with AMD?? Oh, there is none?? wow..

    BTW, Tegra 1K is for TABLETS and yes, this is recent news with Xiaomi (FOR TABLETS)..

  • Report this Comment On May 30, 2014, at 8:48 PM, rav55 wrote:

    @nonbiasfool

    "Blah, blah, blah, Rav.."

    Is that the best you got? What is your source for that!!! RTFLOL

    Hmmm... that is just the rapier wit, the snappy reparte and the 6th grade rejoinder I've come to expect from the AMD bashers such as you on the site. So really, seriously, are you in the 6th grade or something?

    You people amaze me. AMD is the best friend the IT consumer ever had. AMD keeps Intel honest. Without AMD to kick around Intel would be enjoying 100% margins on single core cpu's that would be running at half the speed they are now.

    Every major CPU innovation comes from AMD's design team. They had to be innovative to survive Intel's illegal monopolistic behavior. Yeah they paid a lot for ATI but it paid off. And now their INNOVATIVE APU has Intel very scared. Scared enough to sell cheap chips in the Tablet market at a $6 BILLION loss just to try and keep AMD out.

    Yet you continue to treat AMD like a pariah.

    I personnally do not believ AMD is headed for "greatness" as you so sarcastically put it, but rather they are recovering from the effects of the banking collapse and a declining PC market just as most tech stocks are. I expect them to return to levels that they enjoyed just a few years ago.

    It's called a come back. That is tough enough to do without peoeple trying to belittle and deride the effort.

    AMD's success does not depend on anyone's failure, least of all Intel.

    I also think that with their current product lineup they will not only recover, but profits will continue to grow.

    And that makes them successful. Which is all I or any other investor wants.

    But what is particularly troubling is why folks like you and this miserable excuse for a journalist have a need to flat out LIE about a companies prospects.

    "BTW, Tegra 1K is for TABLETS and yes, this is recent news with Xiaomi (FOR TABLETS).."

    Frankly I really do not care about your little factoid. Bravo, you managed to actually use Google and find one, there is hope for you yet. I was not disputing the fact the nVidai and Xiaomi have a business relationship, just the posters apparent ignorance regarding the timing and extent of that relationship and how it has not so far born any fruit.

    What I do care about is NOT presenting distortions of the truth, FUD and out right lies in the guise of journalistic analysis.

  • Report this Comment On June 01, 2014, at 11:50 AM, Uconfan wrote:

    Everyone probably agrees that NAVIDIA is a great company with great products. Thier stock is not a good buy. It is fairly valued, with a price to sales ratio five times that of AMD. A value investor like myself holds AMD as the stock has the potentil for a multi bagger return to be valued the same as NAVIDIA. When the valuations are similar (2to3 years max) I will go hunting for another bargain.

    It needs to be reinforced that all you discuss is a software problem and the hardware between the two are similar. In fact AMD seems to have put Titan Z in check (not check mate), with Thier new card at half the Titan wish price. A software answer will be written (probably written by the earlier responder), and the "competitive advantage" will turn out to be fools gold.

  • Report this Comment On June 02, 2014, at 9:28 AM, rav55 wrote:

    @uconfan

    Go Huskies!!!

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