NVIDIA Corporation is a market leader in digital media processor technology, dedicated
to creating products that enhance the interactive experience on consumer and professional
computing platforms. We design, develop and market graphics processing units,
or GPUs, media and communications processors, or MCPs, ultra-low power media processors,
or UMPs, and related software that are integral to a wide variety of visual computing
platforms, including enterprise personal computers, or PCs, consumer PCs, professional
workstations, notebook PCs, personal digital assistants, cellular phones, game
consoles and digital media centers. We were incorporated in California in April
1993 and reincorporated in Delaware in April 1998. Our mission is to be the most
important visual computing company in the world .
Original equipment manufacturers, or OEMs, original design manufacturers, or
ODMs, add-in-card manufacturers, system builders and consumer electronics companies
worldwide utilize NVIDIA digital media processors as a core component of their
entertainment and business solutions. Our award-winning GPUs deliver superior
performance and crisp visual quality for PC-based applications such as manufacturing,
science, e-business, entertainment and education. Our MCPs perform highly demanding
multimedia processing for broadband connectivity, communications and breakthrough
audio capabilities. Our UMPs deliver a great visual experience by accelerating
graphics and video applications while implementing design techniques that result
in high performance and ultra-low power consumption.
Programmable DirectX 9 GPUs
The combination of the programmable GPU with Microsoft Corporation's, or Microsoft's,
DirectX 9 high-level shading language are known as DirectX 9 GPUs. The flexibility
and power of DirectX 9 GPUs can enhance high-definition digital video, image
processing and editing for digital photographs, as well as bring a "cinematic
look" to computer graphics. Technology and market leadership in this generation
of GPUs is a key element of our corporate strategy. In fiscal 2004, we offered
a top-to-bottom family of DirectX 9 GPUs for desktop and notebook PCs. As consumer
awareness and demand grew throughout the year, DirectX 9 GPUs gained market
share. We are the segment share leader for desktop standalone DirectX 9 GPUs
according to Mercury Research, reflecting the success of our strategy and the
depth and strength of our GeForce FX family of programmable GPU products.
Media Center PCs
Media Center PCs, the latest of which are currently powered by Microsoft Windows
XP Media Center Edition 2004, are complete Windows XP PCs enhanced for home
entertainment. These computers represent the latest stage in the evolution of
home PCs into digital media hubs that bring together entertainment choices and
allow access via a remote control. Media Center PCs represent one of the most
exciting growth opportunities in the PC and consumer electronics market. Driven
by the proliferation of digital content, home networking, and digital displays,
there is excitement around this platform, which is capable of recording, storing,
sharing, and processing our growing libraries of digital content. Over a million
Media Center PCs were sold during calendar 2003. The combination of our D irectX
9 GPU with high-definition digital video technology, digital media software,
and our close working relationship with Microsoft helped us become the technology
partner of choice for 46 of the 50 Media Center PCs that shipped worldwide during
our fiscal 2004. We believe Media Center PCs have a legitimate opportunity to
be the center of home entertainment in the future and represent one of the most
exciting ways to participate in the digital media era. We are engaged with customers
around the world in Media Center PC designs of all price points and form factors.
MCPs
NVIDIA's nForce family of products represents our MCPs for Advanced Micro Devices,
Inc., or AMD,-based desktop, notebook and workstation PCs. Our nForce2 platform
processor was recognized by Tom's Hardware Guide as the "Chipset of the
Year." The nForce2 propelled us to the leading position in the AMD Athlon
XP microprocessor segment. In September, 2003, we announced our newest platform
processor, the nForce3. The nForce3 was developed specifically for AMD's 64-bit
microprocessor architecture and is positioned for AMD's new Athlon64 product
family. In the short time NVIDIA has been in the platform processor business,
we have shipped over 10 million units to date. Our st rategy remains to aggressively
innovate, bringing new levels of performance in system bandwidth, networking
and communications, while addressing critical needs such as network security.
UMPs
Our successful acquisition and integration of MediaQ in August 2003 has added
significant momentum to our handheld product development efforts. We are entering
the era of multimedia and feature-rich handsets. Over the next several years,
digital media processing technologies will play a key role for the handheld
industry. With innovative technologies, such as ultra-low power digital media
processors, future cell phones will be able to receive television programs,
record digital video like a camcorder, enable video phone calls and be a portable
game player. We see an exciting opportunity to leverage NVIDIA's resources and
expertise in digital media processing to offer products for the multimedia handset
era. The handheld business is building momentum with respect to megapix el camera
phones and new video telephony designs.
Our worldwide sales and marketing strategy is a key part of our objective to
become the leading supplier of performance GPUs, MCPs and UMPs for PCs and handheld
devices. Our sales and marketing teams work closely with OEMs, ODMs, system
integrators, motherboard manufacturers, add-in board manufacturers and industry
trendsetters, collectively our Channel, to define product features, performance,
price and timing of new products. Members of our sales team have a high level
of technical expertise and product and industry knowledge to support a competitive
and complex design win process. We also employ a highly skilled team of application
engineers to assist the Channel in designing, testing and qualifying system
designs that incorporate our products. We believe that the depth and quality
of our d esign support are key to improving the Channel's time-to-market, maintaining
a high level of customer satisfaction within the Channel and fostering relationships
that encourage customers to use the next generation of our products.
Competition
The market for GPUs, MCPs and WMPs for PCs, handhelds and consumer electronics
is intensely competitive and is characterized by rapid technological change,
evolving industry standards and declining average selling prices. We believe
that the principal competitive factors in this market are performance, breadth
of product offerings, access to customers and distribution channels, backward-forward
software support, conformity to industry standard APIs, manufacturing capabilities,
price of digital media processors and total system costs of add-in boards or
motherboards. We expect competition to increase both from existing competitors
and new market entrants with products that may be less costly than ours, or
may provide better performance or additional features not provided by our products.
In addition, it is possible that new competitors or alliances among competitors
could emerge and acquire significant market share.
We expect substantial competition from Intel's publicized focus on moving
to selling platform solutions dominated by Intel products, such as the Centrino
platform. An additional significant source of competition is from companies
that provide or intend to provide GPU, MCP and WMP solutions for the PC, consumer
electronics and handheld segments. Our competitors include the following:
'suppliers of MCPs that incorporate a combination of 3D graphics, networking,
audio, communications and Input/Output, or I/O, functionality as part of their
existing solutions, such as ATI Technologies, Inc., or ATI, Broadcom Corporation,
or Broadcom, Intel, Silicon Integrated Systems, Inc. and VIA Technologies, Inc.,
or VIA;
'
suppliers of standalone desktop GPUs that incorporate 3D graphics functionality
as part of their existing solutions, such as ATI, Creative Technology, Matrox
Electronics Systems Ltd. and XGI Technology, Inc.;
suppliers of standalone notebook GPUs that incorporate 3D graphics functionality
as part of their existing solutions, such as ATI, Silicon Motion Corporation,
and the joint venture formed by SONICblue Incorporated (formerly S3 Incorporated)
and VIA; and
suppliers of WMPs for handheld devices that incorporate advanced graphics functionality
as part of their existing solutions, such as ATI, Renesas Technology, Broadcom
and Seiko-Epson.
If and to the extent we offer products outside of the PC, consumer electronics
and handheld segments, we may face competition from some of our existing competitors,
as well as from companies with which we currently do not compete. We cannot
accurately predict if we will compete successfully in any new segments we may
enter.