uploads/2016/08/Series-138-A6-1.png

Nvidia’s Pascal GPUs Take the Gaming Market by Storm

By

Updated

Gaming

In the previous two parts of this series, we saw that Nvidia’s (NVDA) GPU (graphics processing units) and Tegra processors witnessed strong demand from its gaming, deep learning, and automotive customers. The company especially benefited from the timing of the launch of Pascal GPUs in the Gaming segment.

Nvidia is moving away from PCs to its four key segments: Gaming, Professional Visualization, Data Center, and Automotive. The company’s exposure to these segments increased from 85% of its revenue in fiscal 2Q16 to 88.6% in fiscal 2Q17, with Gaming commanding the highest share of 54.7%.

In fiscal 2Q17, Nvidia’s Gaming revenue rose by 18.3% YoY (year-over-year) to $781 million, reflecting the July 2016 sales of the Pascal-based GTX 1070 and GTX 1080 GPUs.

Article continues below advertisement

New Pascal GPUs for gaming

Nvidia launched two Pascal-based gaming GPUs—GeForce GTX 1070 and GTX 1080—on June 29, 2016, at prices of $599 and $379, respectively. According to reviews, GTX 1070 and GTX 1080 were the highest-powered gaming GPUs available in the market in July 2016. They supported VR (virtual reality) applications.

Nvidia versus AMD

Rival Advanced Micro Devices (AMD) launched Polaris GPU Radeon RX 480 at a striking price of $199 a month after Pascal’s launch. The launch time of Pascal GPUs gave Nvidia a competitive edge over AMD, and the former was able to cash in demand from gaming enthusiasts.

Nvidia is also competing with AMD’s striking price of $199 for the 4GB (gigabyte) version and $239 for the 8GB version, with its recently launched GTX 1060 priced at $249.

Article continues below advertisement

Titan X

Moreover, Nvidia also launched its high-end Titan X GPU based on Pascal architecture in July 2016. Titan X packs 12 billion transistors on a single chip compared with 7 billion transistors on Intel’s (INTC) high-end processors.

Carrying a price tag of $1,200, Nvidia expects Titan X to not only attract gaming enthusiasts but also artificial intelligence specialists. Nvidia’s president, Jen-Hsun Huang, hinted that more Pascal GPUs are set to arrive in fiscal 2H17. This may further boost gaming revenue.

Potential market for Pascal gaming GPUs

So many product launches raised the question whether the market has the capacity to absorb all these products.

At the fiscal 2Q17 earnings call, Nvidia’s president, Jen-Hsun Huang, explained that of the 80 million active GeForce users worldwide, only 33% have upgraded to Maxwell. Very few users have upgraded to Pascal in July 2016, leaving a significant upgrade opportunity.

Moreover, the PC gaming landscape is changing, with eSports emerging as a global phenomenon and VR making inroads into the gaming market. This would encourage users to upgrade to the more-powerful VR-ready GPUs.

Advertisement

More From Market Realist