Did Google Just Place Three Big Bets on Nvidia?

NEW YORK (TheStreet) -- Google (GOOG) is in increasing competition with the main computing ecosystem players. Among the biggest fights Google is engaging, are the following three:

  1. Apple (AAPL): Google needs to out-gun Apple in mobile computing -- smartphones and tablets.
  2. Microsoft (MSFT): Google needs to out-gun Microsoft in traditional PCs and gaming.
  3. Facebook (FB): Google needs to become the main alternative to Facebook in social networking.

In the last few days, it appears that Google's weapon of choice to fight these three battles may be Nvidia ( NVDA). Let me tell you why:


Apple and the iPhone/iPad: At the annual Google i/o developer conference last week, the Android development leadership was on stage and answered questions from the very large audience. One question was -- and I am paraphrasing -- what Google considers the biggest opportunity for Android going forward?

The answer from Google's Android engineering panel was that the GPU (graphical processing unit) has only recently been able to fully satisfactorily handle simply rendering the screen graphics. Now the challenge going forward is to find a use for the GPU to take on additional tasks, leaving the CPU to do fewer things.

This follows a pattern we have just begun to see over the last year in supercomputing. If you look at the major scientific labs and research facilities -- from corporate to military -- you will see that more and more of them have suddenly starting adopting Nvidia GPUs as their source for massive computing power.

In this case, Google did not mention Nvidia's name. It is also clear, that in the near term, Google's main efforts in this field are bearing fruit with Qualcomm ( QCOM), which has the lion's share of the 2013 design wins with Google and its partners.

However, in speaking with Google's engineers at i/o, I got the lurking feeling that their longer-term engineering efforts -- well beyond 2013, starting near the end of 2014 and building massively in 2015 -- could be geared to a new GPU chipset with massive, almost supercomputer-like, GPU processing power.

This would be the chipset that follows Nvidia's Tegra 4, which just entered production. Such a dramatically more powerful chipset would be available from Nvidia probably in late 2014. It would have GPU processing power orders of magnitude greater than anything else in the market.

Basically, Nvidia is taking its current PC desktop GPU chipset and is in the process of shrinking it to the size and power requirements of a cell phone. While every chip maker -- including Intel, AMD, Broadcom Broadcom ( BRCM) and Qualcomm -- is doing this, Nvidia has a particular combination of strengths that makes for a unique pedigree for accomplishing this task.

Conclusion No. 1: I draw the conclusion that Google is working very closely with Nvidia for a new set of mobile computers - smartphones and tablets -- with dramatically higher computer power, to be announced starting in late 2014. These smartphones and tablets would be more powerful than almost all of today's PCs.


Microsoft and the Xbox: Everyone knows that Microsoft is about to announce a new Xbox, based on fairly "standard" Windows 8.1, X86 architecture and an AMD chip. This would have been a huge deal... five to six years ago.

Today, however, the world of gaming has moved on. Microsoft has sold only approximately 80 million Xboxes in the last decade, so in other words Microsoft has only as many subscribers here as Research In Motion's ( BBRY) BlackBerry.

What happened? Well, the iPhone, iPad and Android -- that's what happened. Nowadays, gamers with need for performance, use PCs. These PCs are many times more powerful than a traditional Xbox-style gaming box. At the other side of the spectrum, the new mobile devices are far more convenient than something tethered via a wire to your TV.

The big question everyone has been asking is: How about an Android gaming device, that looks like a gaming controller, and can be used by itself or in conjunction with any PC or TV?

Nvidia has answered this call with the Shield device. You can order it now, and it will ship in June. It's $349. It was prominently featured by Google at i/o this year. Consider this: The only thing Google otherwise had to show, was a Nexus version of the Samsung Galaxy S4.

Conclusion No. 2: It was clear that the Nvidia Shield is now Google's big play for the gaming market -- at least for this year. It is a big part of Google's plan to make Microsoft's Xbox... simply irrelevant.


Facebook and cloud photo processing: If there ever were a thing that could show how Google can do really big things, really quickly, its reveal that it has secretly launched a new photo enhancement service certainly qualifies.

Google announced that it has employed massive cloud computing power to enhance every single photo uploaded to Google+. Seeing as this is the default photo service on Android phones, potentially up to 900 million people now have had their photo collections improved by Google.

In essence, Google's server farms now became everyone's "lazy" darkroom. Basically, when you take a photo -- let alone hundreds of them, for example coming home from vacation -- you no longer have to crop, enhance, sort and delete among them. Google has already done it for you.

How does Google do it? With GPUs, most likely. Again, Google stayed away from mention Nvidia, and I have no evidence Nvidia is a vendor here. But that's not the point. The point is that this shows the power of what GPUs can do for you in the cloud, putting otherwise idle computing power to use in terms of processing graphics-intensive tasks.

Nvidia may already be supplying Google here, or it may be doing so in the future -- or never. What is for certain is that this has inspired many players in the social and photo fields to consider this approach.

Facebook is of course the world's largest repository of photos.

Instagram, which Facebook acquired a year ago, dominates its field.

Much of what goes on at Facebook is about photos.

Therefore, if Google can now use GPUs to provide a superior photo service, this is a huge thing in its quest to make a dent in Facebook's dominance. The verdict here will be rendered over the next many months.

Conclusion No. 3: Google's innovative use of GPUs in cloud photo processing could lead to higher demand for Nvidia's GPU cloud servers.

I wrote Nvidia Is to Intel What Salesforce Is to Oracle, on March 26 that Nvidia is three years into a six-year transformation from a PC gaming company to a mobile and GPU cloud services company.

These latest indications from Google suggest that 2015 and 2016 have the potential to be breakout years for Nvidia in successfully completing this transition.

At the time of publication the author was long GOOG, NVDA, FB, BRCM, QCOM, AAPL, BBRY, and short MSFT and AMD.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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