Notebook Discrete GPUs

The picture in the notebook market seems completely different; shipments are up and NVIDIA is gaining share extremely rapidly. AMD had the vast majority of that market 12-18 months ago, but the tides have turned, presumably because of NVIDIA's performance-per-watt advantage. As for the quarter we are analyzing today, let us first consider exactly what information is publicly available on the subject. International Business Times (link) had this to say, based on the Mercury Research report:

Part of Nvidia’s success has been its growth in unit shipment, which went up 30 percent quarter over quarter compared to the rest of the market which grew only 3 percent, according to analyst Sidney Ho of Merrill Lynch.

Ho attributes Nvidia’s growth to its ‘disproportionate presence’ in notebook computers equipped with Intel’s Centrino mobile platform.

The Inquirer (link), on the other hand, reported the following based on Jon Peddie's report:

It's the notebook market where all the action is, said the firm, with quarterly shipments soaring by 13.8% compared to the previous quarter, and 34.1 per cent year on year.

Discrete mobile ships grew by 16.2% during the quarter. Why? Jon Peddie reckons the laptop market has gone large screen and multimedia-ish. "The criterion for performance is being able to play a full length movie on one battery charge," he said. Obviously he means Hollywood rather than Bollywood movies. The latter are considerably longer than the former, by and large.

Nearly 26 million mobile graphics devices shipped in the fourth quarter, with 19.7 million of those being integrtated chipsets.

So, based on that, let's do some basic math. If AMD's discrete notebook shipments grew by 3% from Q3 to Q4, and NVIDIA's grew by 30%, while their shares were 53% and 47% respectively, we can conclude that the overall market grew by approximately 17.31%. Thus, Mercury Research's numbers match those from Jon Peddie, even though the two research firms are not focusing on the same information.

Jon Peddie is attributing this growth to the increasing momentum of GPU-based video decoding acceleration, and it is most likely true that video acceleration is becoming more importan than 3D acceleration in certain parts of the market. However, Mercury Research adds an important element for our analysis: NVIDIA has mostly been gaining share in Intel-based notebooks, rather than AMD-based ones.

It seems very unlikely to us, looking at other vendors' financial reports, that the overall notebook shipments have increased by nearly as much as 15%, as reported by Jon Peddie. What this implies is that some units are being counted twice, because they are shipping with both an IGP and a discrete GPU unit. This seems to mostly be happening on the Centrino platform, possibly because the IGPs there are weaker than the ones available for AMD's notebooks. Notebook shipments have increased a lot anyway, just probably not as much as these numbers would imply.

But what's causing OEMs to add discrete GPUs to their notebooks? Say hello our good friend the Vista Effect! Indeed, several of Intel's current IGPs for that market are not strong enough for Vista Premium compliance - and the average selling prices of Vista Basic notebooks are likely going to be lower than those with Premium capabilities. So, by adding a low-end or mid-range GPU to an existing notebook model, OEMs can easily and significantly increase the product's value.

This confirms our earlier analysis (link) from September 2006, where we stated that short-term increases in discrete GPU penetration were likely for the notebook market, but that the overall effect wouldn't last. Indeed, in the AMD desktop and notebook segments, it doesn't seem to be happening all that much if at all - precisely because IGPs are already ready for Vista Premium and HD Video today!

For the Intel platform, on the other hand, several IGPs aren't quite ready for Vista yet. And Microsoft is going to increase the requirements for Vista Premium in the middle of 2007, as they define the platform as a moving target; every year, the requirements will likely change, in order to maintain the logo's signifiance in the eyes of potential buyers. Thus, It is perfectly possible that some Intel IGPs that are currently borderline on the requirements (such as GMA950) will soon lose their Premium status. This could both further increase discrete GPU penetration temporarily, and be a good opportunity for other chipset vendors (and AMD) to gain share.