NVIDIA (NASDAQ:NVDA), known for its powerful graphics cards, has struggled to find applications for its line of Tegra mobile chips. After giving up on the mainstream mobile market, automotive applications now make up the bulk of NVIDIA's mobile sales. The rest comes from NVIDIA's own devices, a portable gaming system and a tablet, both of which run Android and are powered by Tegra.
Last week, NVIDIA announced its newest device, the NVIDIA SHIELD, a $199 game console powered by its latest Tegra X1 chip and running Android TV. Priced between the major game consoles, which sell for around $400, and set-top boxes like Amazon's Fire TV, which sells for $99, SHIELD is an attempt to bring PC-quality gaming to the masses, lowering the cost of entry substantially.
A look at the SHIELD
The SHIELD is powered by NVIDIA's Tegra X1 chip, which features an 8-core 64-bit ARM CPU and 256 Maxwell graphics cores. It's built on a 20nm process, and it supports outputting 4K video at 60 frames per second.
The X1 is extremely powerful and extremely efficient. The SHIELD console will use 5-20 Watts of power and provide 512 GFLOPs of theoretical GPU performance. This is more than twice the performance the Xbox 360's GPU is capable of, using just a fifth of the power.
The console runs Android TV, thus supporting the vast Android ecosystem. Normal Android games can be played on the console, and NVIDIA is also working with developers to port various PC games to the SHIELD. Some examples include Crysis 3, Borderlands: The Pre-Sequel, and DOOM 3.
Also coming with the console is NVIDIA's GRID cloud gaming service. GRID is currently in beta, but it will officially launch alongside the console. GRID allows players to stream PC games running in a cloud data center directly to the console, bringing true PC-quality games to the SHIELD. In addition to supporting GRID, the SHIELD also allows those with an NVIDIA-powered gaming PC to stream games over a home network to the SHIELD console.
An uphill battle
While SHIELD is more powerful than last-gen game consoles, it's still far less powerful than either the Xbox One or the PlayStation 4. The PS4's GPU, for example, has a theoretical performance of 1.84 GFLOPS, more than triple that of the SHIELD console.
The SHIELD doesn't really compete directly with the game consoles, then, instead trying to appeal to those who want high-quality games but are unwilling to buy either a game console or a gaming PC. Bringing AAA PC games to a device that costs just $200, both directly and through GRID, certainly makes SHIELD an interesting device.
But it's going to take more than some old PC games to move consoles. NVIDIA is going to need exclusive titles, not just PC and console ports, and so far, there doesn't appear to be any of those. There's nothing you can play on the SHIELD that you can't play elsewhere.
NVIDIA does have relationships with developers: The company provides various software tools and libraries to help game developers, and it works directly with developers to optimize games for its graphics cards. But both Sony and Microsoft have networks of studios making games only for their respective consoles. Ultimately, exclusive games boost game console sales.
GRID is the wildcard, here. Pricing hasn't been announced, but there will be a basic and a premium tier. It's possible NVIDIA will make the basic tier free in order to sell consoles, although the service requires a very good Internet connection to function properly. Playing a game locally will always provide a better experience than cloud gaming.
I'm not sure who's going to buy a SHIELD console. It may be NVIDIA's long-term plan to seriously challenge the game consoles, but the first iteration of SHIELD is unlikely to succeed. NVIDIA is going to need both exclusive games and to close the performance gap between the SHIELD and the current generation of consoles.
Of course, Microsoft's first Xbox was vastly outsold by the PlayStation 2, and now Microsoft is a major player in the console market. Even if the first SHIELD console does poorly, future iterations may fare better. As the catalog of SHIELD games grows, particularly if a large number of PC games are ported to the system, the console starts to look more attractive.
It will be interesting to see where NVIDIA goes with this. If it wants to be a serious contender in the console market, it may need to start developing games itself, either by buying game developers or starting its own development operation, like Microsoft and Sony have done. It could also strike deals to bring games exclusively to the SHIELD, although it will take a decent install base for that to make sense for developers.
NVIDIA's SHIELD is a tough sell, especially priced at $199, and I doubt it will see much success in its first iteration. This may just be the first step in NVIDIA's plan to disrupt the console market, but I don't think Sony and Microsoft have much to worry about in the short term.