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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