NVIDIA JUST FINISHED their fiscal Q4/2011 conference call, and it was mercifully short and content free. That said, there was one thing that stuck out, GPU margins.
If you recall, in their Q3/2011 conference call, Nvidia proudly proclaimed that they would claw back notebook marketshare, something that they reiterated this call. Currently, it stands at around 40%, and Nvidia stated that it will climb to 60% or so once Sandy Bridge ramps, but the exact timing is dependent on what Intel does. So far, so good.
How can Nvidia come close to doubling their marketshare in such a competitive market in less than a year? That is easy, they bought it. Since last fall, OEMs have been telling SemiAccurate that Nvidia sales people have been coming in and making offers to them at unheard of prices. Prices so low that no sane company would match them, and for some reason, none did. If this information was right, the marketshare increase is/was flat out purchased.
Without all the contracts in hand, those deals are just anecdotal, but given the sheer number of sources that all tell the same story, it was very likely to be the case. There was no hard data to back it up.
At CES, several buy-side people told SemiAccurate that Nvidia was leaking them numbers, or at least flat out telling them numbers. The one thing they said was that notebook GPU margins would be below that of desktops for Q4, something unheard of in the industry. The only way this could happen is if notebook GPUs were blown out the door in mass quantities at obscenely low prices.
When talking to the financial people, especially those that directly buy and sell stock, everyone has a motive. Even if their stories back up the anecdotal evidence, that is not hard proof. Without knowing their positions in great depth, always take stock traders with a grain of salt the size of a Fermi die.
On today’s conference call, all of this came together with the proof. Doug Freedman asked questions about mobile, and when the usual corporate lack of specificity kicked in, he asked for clarification. We didn’t get the exact wording, but the question was basically, “Would mobile [GPU] margins be below desktop?” The answer from a suddenly much more hushed Nvidia person was, “Yes”.
There you go. Now you know how Nvidia plans on gaining mobile marketshare. As we have long been saying, it isn’t through product strength, it is via checkbook. It makes you wonder about how sustainable this trend is, doesn’t it?S|A