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NVIDIA Corporation (NASDAQ:NVDA)

Deutsche Bank dbAccess Technology Conference

September 10, 2013 5:30 PM ET

Executives

Chris Evenden – Head of Investor Relations

Unidentified Analyst

Here we go. All right. Thanks to the more than few in the crowd that are making us to the very end of the day, and we appreciate Chris from NVIDIA coming in from the IR side to talk us through their story. No presentation today, we’re just going to go straight into Q&A and to the extent, you do have questions as I’ve said 17 times today, please wait for the mike coming so that those in webcast can hear you. So one way, I have been starting off and it’s a little more specific for you guys and some of the broad based analog guys et cetera, but then starting of asking questions about current business conditions and generally what you’re seeing in the comparing contrast that might help frame it because I know you can’t really change any guidances.

In the last couple of years the back half of the year has been generally disappointing for most companies as business has gotten a bit choppy. Or you could talk about it from a seasonal perspective, but either way how we’re seeing current business conditions versus what we’ve seen in years past in the second half.

Chris Evenden

So we are in a number of businesses, I will try and take that by segments. If you’re going to GeForce business, our consumer graphics business, there are two great different dynamics of operating in that market on the best top side of the business that's cheaply gamer business and that seems to be – immune there could be a strong way, but it seems to be – right now it seems to be it’s still growing very strongly.

It’s immune from the PC that is what I was going to say and because it continued grow to strongly ASPs are growing and that market is continuing to do very well, PC gamersPC still want to play games. The other side of that business is the OEM business, which is largely notebook graphics and that is – rest of the PC netbook market is where it is going to consumers, so it is very expensive consumer side and if you look at the numbers on the PC market no surprise that the consumer is doing well in commercial and we are feeling anybody else is.

And so that is new thing you were immune revenue wise it is approximately flat but of course the profits are going up because the gaming business is much more profitable than the notebook OEM business. Quadro which is workstation business that is currently looking very strong with our two consecutive quarters of strong growth, 80% of revenues in that business is driven by manufacturing, CAD is the biggest application area for Quadro and the manufacturing data looks pretty good the PMI data looks good, just to kind of uptick last month, and everyone knows car manufacturing data has been fantastically good recently. So there were reasons to continued optimism on that, I mean the reason I focus on the market there is because we have over 90% of the dollar share of that market.

So what we have a bunch of promising initiatives to try and grow the market. The biggest – dominant time in the equation if you like is the market itself so its been pretty well, and then our other business is – its that small growth business in bigger markets, so I can’t give you any extra market insight from our result there, because it’s a really share gain story at Tesla. Tesla’s doing extremely well, we talk about that more later but it’s a small part of a massive platforms competing market. So it’s not necessarily the one that’s expected and this at Tegra as well, Tegra is relatively small part of the mega computing market.

Unidentified Analyst

Why don’t we start to diving into the segment then? The GPU side obviously that the bread and butter of the company and we’ll stick with the consumer’s session as well. The consumers side first. And leave the – what you used to call the professional servicing business or the PSB before. So in the GPU side I things, talk a little bit about the strategy there, you guys have done an incredibly good job in an otherwise challenging PC environment of only making the margins raise but the revenue side of the equation has been relatively strong as well. Talk a little bit how you have been able to deliver that?

Chris Evenden

Part of the share gain, so we had very competitive products I mean you cant run the architecture the current generation of GPU architecture is genuinely a very good architecture, so it’s a better chip and I think we fixed some of the problems we had before and so now we are back on track in with sort of 65% market share which feels like a good level. It’s a big to be at, part of it is the nice strength of that that the gaming market that it’s genuinely strong and genuinely independent of – apparently independent of the reflections that affect in the rest of the PC market – mobile market, I guess that is where it is.

So the PC market, the PC gaming market is a difficult one to measure, it is difficult to find could takes from that. But we believe it’s growing about 10% annually based on software sales and software sales are actually difficult to measure, because some thing like at 80% of PC gaming revenue now goes online it’s through online only 20% is packaged software sales which is so you can’t take yourself down that on the Best Buy and that engage the health of the PC gaming market, but that will give you a very misleading picture of health of gaming market. Some of that 80% online revenue is downloaded games, but an online version of just behind the streamline software, but increasingly large part of it is subscriptions in game purchases, micro transactions as well as things and a new model of generating micro software.

Frankly, China – the Chinese software situation force game developers to find new ways of generating revenues as people are buying software in China and that innovation has quote on. And you see, I mean frankly, you see on the phone platforms as well. People are now use to paying $0.99 for a game or getting a game for free. I mean I could Grand Theft Auto online, My Shield android gaming device for $499 the full version of Grand Theft Auto. So it’s a very different model and that’s driving a lot of success in PC gaming, but it’s very difficult to count. So but at the end of the day it seems to be the right number.

Unidentified Analyst

When you talk about the double side the ultimate consumer side going down, because the market not because of anything specific to NVIDIA then you have the core PC gaming side. How closer we to the level where you’ve kind of started stabilizing on the notebook side and the core gaming is all that’s left in the revenue that you guys have?

Chris Evenden

That’s a good question. It’s hard to say. I think a lot of the weakness on the notebook side is driven by the fact that tablet is a better solution for most consumers than a PC. And I feel if you are just using your PC for general computing task by surfing the web, Facebook, reading much of an e-mails then the tablets are much better solution for the vast majority of people. It’s much more convenient, it’s on, it’s always connected, it’s more portable PC. That’s obviously [indiscernible] 10 minutes to beat.

So that’s why those general purpose PC users are just migrating to tablets. However, like I said before the gamers they have a PC for specific purposes, specialized purposes just like designers have a workstation specific path as researches have Tesla workstation for specific path as like a destination they have in mind growing and something they need to do is fine. People have to have a – have to do e-mail on separate way beyond Facebook is just function of ad hoc in the 21st century and this is one of those backgrounds same has to be done [ph]

Unidentified Analyst

Kind of scarring isn’t it?

Chris Evenden

Yes, it is. Well, it’s hiring on the ad hoc from, I’ve learned from my children and the old people on Facebook into them is actually the way they go.

Unidentified Analyst

So tablets are already not little anymore.

Chris Evenden

Yeah.

Unidentified Analyst

So if we get the gaming side of the equation and also stick with even the desktop side of things, what impact do you think the new console refresh has on that whole process and then we get into some of the complicated questions…

Chris Evenden

Yeah.

Unidentified Analyst

And why you are not playing in there as much this generation?

Chris Evenden

There is a very little data, I wouldn’t back to look data, because we have people in the company who here strongly completely opposite points of view how the console refresh will affect the company.

So [indiscernible] coming back to most they done really in the base one on how effective forces, it’s very difficult to tell to pass from the data how effective. The downside obviously is the PC gamers typically and one point next consoles and that the gamers and that money to buy new console purely that comes out of the same wallet that’s used to buy PC games and PC gaming hardware. However, PC gamers spend a $1,000 to $5,000 in a PC that fairly well off compared to a typical gamer.

So that might mitigate that. And then there is the argument that actually since these PC, these new consoles are very close to being PCs actually they are like entry level gaming systems. So they are now within the band of gaming PCs where is the [pull] that was so far below, it’s very difficult to pull software across because you actually have to do so much work, I guess you have to generate assets specifically for the PC games as much higher quality gaming experience.

Now, you’ve got a sort of entry level PC gaming experience on a console, so the argument goes that developers who before would just developed console games will now find it is so much easier to pull the games across the PCs so they are more likely to see greater amount of high quality consoles in PCs and that would drive PC gaming sales. So you can argue them both ways. Honestly, I don’t how it’s going to pan out. This console generation is going to be an interesting one, because the market has changed I alluded to this earlier. People have spent the last seven years learning to buy software for free or $0.99 in credits and the idea now is spending $560 on Xbox One and then another $60 on a copy of Halo before you start playing, it’s an estimate of a large proportion of modern gamers.

So we will see. I mean the pre-orders from what I’ve read the pre-orders looks like satisfactory , it’s been interesting to see how they got the studies often whether it will stop or whether it will continue to evolve beyond that

Unidentified Analyst

Right. I mean, it’s hard to figure out that how much is complementary and how much can be substitution effect, because even the bulls and the bears and your company and your prospects could argue that 99% games shouldn’t be a good thing for a company that sells very high in graphics. In general if you just talk…

Chris Evenden

Well.

Unidentified Analyst

For growth that…

Chris Evenden

Yes and because $0.99 is typically is the not the only source of income for those games. And one of my colleagues recently bought a game, a car racing game, I think he paid $299 for on the Android marketplace. And he subsequently spent over $40 on buying car. So I bought.

Unidentified Analyst

I bought the soccer game.

Chris Evenden

Yeah, I bought the same game and I’m still racing the price, and he has got a Porsche, so I’m going to take him on, but the point being that they have ways and means of extracting value from the customers. So some people will pay $299 for the games, decide its rubbish and just not never come back. Other few will pay $299 for the game, it’s not actually quite likely, but they would really deny next call up. So none has spend $5 for that. And then well, we’ll say I already have one black car and although car is part of these bundles, if I spend $15 instead of buying just the car I want, I go to the other car, so I saw would like, as well.

Before you know, a $40, $40, lighter. That’s a little bit fast high bandwidth connections as that you can spend a lot of money very quickly, without even filling it. But the point being is there is funding for high-end games in even at a $0.99 entry level.

Unidentified Analyst

Right, I’m not arguing about the funding side, I was more taking the opposite side that many people would have said the take it out for now, but that devices like this where you can play games like you said and your shield device for $0.99 you can play Grand Theft Auto V, you know…

Chris Evenden

[indiscernible]

Unidentified Analyst

All the PC games including your PC game market as actually done quite well.

Chris Evenden

Yes.

Unidentified Analyst

So the…

Chris Evenden

I think…

Unidentified Analyst

And your analysis…

Chris Evenden

Yeah I think there are two different types of games, right, so most of those spend on some games are casual games. Now we can, we have decided to get some decent high-end games now for that sort of entry level price. But it’s a different sort of experience, it has the lean backward, as supposed to the lean forward experience, degrees to talk about that. And PC game as especially loyal to PC gaming, the mass keyboard interphase you will hear, though run the dive before continuing that not the best in [indiscernible] playing game. And the very loyal to that, as I mentioned earlier, they will buy other gaming platforms as wellm, because PC gamers are gamers and PC could be the favorite platform probably the one they invest in us, so they will don’t have like that, don’t have the licensed android phone as well. So I’m not sure how much cannibalization you get from that. You will see people doing that.

Unidentified Analyst

So be back to the original part of the topic get back to the game console side. You guys played some roles the IP side of things more so then actual silicon in prior generations. This time gone to the AMD side of the equation, why did that happen? Why did you not focus on in as much?

Chris Evenden

As I think that's really a good question to ask the console manufacturers. I mean, there is reasons to be in the game, the console game industry. There is dangerous of – danger of participating in the console industry, because you lose focus on your core markets. So I want to participate, these are the reasons why those companies would choose also AMD and I don’t want to speculate on that.

Unidentified Analyst

With the architectural change looking more like a PC and integrating how AMD causes as an APU putting the CPU together as a GPU and to a single diet something that you guys have the GPU side, which you don’t have a X36?

Chris Evenden

We don’t waste it, we don’t have X36 we have our own, right, so we have Tegra and so again, it’s really a question for [indiscernible] do they won specifically X36 upon that story.

Unidentified Analyst

Okay. Let me switch over to, you talked about gaining share was part of the drivers that you had going back about the 65% level with capital involved. How do you view that dynamic going forward, this is the steady statement now you kind of more limited to what the market itself grows or do you think that maybe with your competition focusing more on the game console side there is some share you could define.

Chris Evenden

I think if you take a step back and look at where the market is it feels pretty stable at about this level. If you zoom in close obviously we are with fighting the amount for obviously the design win. We are fighting aggressively at every area and we are fighting aggressively in the channel and we are working very hard and so you’ll see they’ll bring some wins, we’ll bring some wins and there is a room full of acquisition for us. It’s an equilibrium, but it’s a very dynamic equilibrium when you zoom in and I think sometimes people try to zoom in too much and they try to have conceptions [ph] with me what OEM are, this OEM or that the other and I think when I have this conception I try very hard to make sure that we’re not mistaking to go with trades and try to save that on the big picture.

So I step back. I think 65-35 essentially a good level. AMD has worked very hard on that aggressively with their software bundling promotions. It also didn’t have any effects on share that we certainly didn’t have a feel decision to ever have to adjust prices in spite the fact they were giving away $240 a software with over a graphics card, which is extremely expensive promotion for them even thought they’re not paying $60 that we’re paying a significant amount given the cost of the GPU in that system. And they’ve got some new products coming out in a couple of months.

We feel we got a pretty good beat on they are and how we would counter that and of course at some point we’ll have new products and again it’s that simple as 555, but at the end of the day probably stable. There will be some ups and downs, but at a 20,000 per, I think it’s probably a fairly stable.

Unidentified Analyst

From that same 20,000 – you without asking to pre-announce anything of course, but when do you think they will respond the Kepler comes on, when does your subsequent architecture after Kepler came out, just roughly speaking, middle of next year, early next year?

Chris Evenden

Well, I think their response comes out in the next few weeks, that is my understanding. So we’ll see them where that puts him and just whether that’s a significant advancement kind of stay tuned and what that does to the corporate liner [indiscernible]

Unidentified Analyst

The answer is right.

Chris Evenden

[Indiscernible] any announcement, yeah.

Unidentified Analyst

Right, right. What about the just a bit ancillary to this discussion, but it was part meant not too long ago. The shrinking side of the equation, you don’t have small die and the challenging getting access at a reasonable price and some of the arguments about partnership versus customer relationships with some of the foundries et cetera. How important is chasing Moore's Law for you and how do you fight against what appears to be in ever increasing cost for changing – chasing Moore's Law.

Chris Evenden

So I think it’s important to [indiscernible] the architecture trans process every time. So obviously a small purchase is generally better than logic [indiscernible] but the architecture has a much more significant impact on the performance, in fact, the software you put on that architecture at a much more significant impact from the performance.

So that and I can put the new reasons on the password also ACI were ahead in purchase note behind on performance. And you can see that throughout the history of the company’s competition or each other. Having said that, moving to new process notice viable, because we can add transistors and we have to find new way to differentiate and value consumers as long as we can find ways to make the consumer experience noticeably better that moving to a small, it’s a good thing as well keep doing that.

We innovate on the same process now as well, and so you can improve your architecture, you architecturally carry on tuning your existing architectures to make it more and more efficient,0more compact, more power efficient, more performance, I’m not going to waste dimensions and so on. And so the good thing about not moving so fast from one process to the next. It mean we don’t have the – we spin our chips so often. We would want to move nodes at some point because at some point you want to mutually to introduce a new step function and graphics functionality and features. So slowing down the movement from node to node, it could actually be a good thing for us because it enables us to reduce those node transition cost.

Unidentified Analyst

And imagine not being the guinea pig for the node any longer?

Chris Evenden

That’s always good.

Unidentified Analyst

Another benefit as well, we got some of the big, the other asset that would do that.

Chris Evenden

I would take little learning how some products are the most advanced main value. It’s just a question of how quickly you transition. There is not quite the same pressure. When you advanced in terms of cost and performance, not a stock as it has been in the past, but it is not the same pressure to move to rapidly and so you make a choice which products you maybe want.

Unidentified Analyst

Last question on the traditional graphics side of things is the integration, you guys used to play in the chipset side and that got pulled into the CPU or APU as AMP calls it. That integration of graphics capability out of the chipset into the actual CPU, was that was a big concern and yet again over the last couple of years you guys have grown rather nicely whether through market share gains or pricing or what not. How do you see that dynamic, that threat of integration at the low end impacting your business?

Chris Evenden

The interesting thing is, so going back the way I described all GeForce market before we have this gaming PC market, which are quite approximately to desktops and it’s OEM market, which are quite approximately to notebooks. It’s not quite back to correlation because there are OEM desktops and they are gaining notebooks, but that’s the first order of approximate. Now, these gamers like PCs because they buy PC games, gaming PCs because they are playing games. It’s something like they do as part of who they are. It’s part of their self actualization.

The OEMs buy graphics not on graphics performance, but because they want the screen graphics to differentiate laptops. Exactly no OEM can survive just selling the whole laptop they want to sell a $500 laptop, $600 laptop and so on and so how do they justify that increasing cost part of it is the Intel data i3, i5, i7 and part of it is [indiscernible] and so those consumers buying those laptops are general purpose consumers I talked about that before looking for the variant notebook and they are using price as proxy to quality.

And so they are getting graphics not by accident that to strong term. But almost incidentally as qualifying but of course if you say and they get some real benefits from that of course but they are not buying at on graphics but those guys are not looking at the 3D advantages scores of their $600 notebook. Just like URLs [indiscernible] there are people out there of course have benchmark in term benchmarking guys but how many peoples you know that worked on a software that’s why $80 bottle, $100 bottle is closed 80 in pocket now on to $45 bottle wine and it closed $92 in pockets.

So in terms of points that’s much better bottle of wine I think I’ll buy that one. There are people like that and those are non-PC gamers right, they are PC games buying that one absolutely but most of it’s buy wine based on prices of course it is quality. I’m thinking alone I might want $15 bottle of wine If I’m trying to impress my girlfriend transmitting [indiscernible] a $40 bottle of wine. I want to keep the mix for the – because I don’t think he covered the $40 bottle of wine but that is important point as well because the reason you spend that amount of PC is how important is technology to you and how much money do you have and so some of those might buy $700 laptop because we love technology and others might realize that’s actually $400 needed for just – refine that, they need just like people like expensive cars and cheap cars right? The Camry is the basic function of cars the Toyota company is just as good as a BMW car, but there is still – those of us who like the idea of riding a BMW or even at attractive price. So this is a very long rambling story at the end of the day. Just to say that these people buying these laptops are not buying on performance, so Intel getting better graphics, performance does not displace discrete graphics right?

There are themes that could displace discrete graphics like the bump caused pressure from the touch screens but that’s the one thing that Mac displays, discrete graphics. But it’s a graphic performance and not all of those things. And we’re having was the data over 10 years I can met when I first started in the graphics industry it was one of the 10 years ago. Having this today with the general display background about Intel we’ve just launching 945G Chipset and that has much better graphics and this is different environment that was it for the entry level discrete graphic, it’s recurring today. And the reason it never happens is because they are not buying one graphics performance.

Unidentified Analyst

Right. Let’s switch gears over to the Tegra side, smaller is part of your business but probably larger in the frequency of questions you have on that. In the recent quarter, is the July quarter end for you guys? That was a tough quarter and I know some of the reasons why you’ve guided up significantly in this next quarter, somethings are ramping nicely, but you’re still down between the two quarters 50% to 70% roughly year-over-year.

Chris Evenden

Yeah, yeah.

Unidentified Analyst

Talk a little bit about this transition away from Tegra 3 and to Tegra 4 and I guess, the biggest picture question that really comes out of this for me is how do you win in this game when even the [indiscernible] from a merchant perspective don’t seem to be getting the best of margins coming up the other side.

Chris Evenden

So there is a bunch of questions on this. Firstly the price moto and how they grow. So the price moto on this year is Tegra 4 was too late and that obviously, ment we were disadvantaged in competing for the big tablets, the important tablets because we were competing with Tegra-3. That the reason for lateness was some of it was just – some product delayed and some of that was deliberate in the sense that we decided that we want to double down Tegra-4 and Tegra-5. So we made sure that if we were going to miss the deadline for Amazon and Google with Tegra-4 at least Tegra-5 would be on schedule. And at least Tegra 4i we can bring in and accelerate that to market Tegra-4i being integrated product, the mainstream smart phone products.

And so what are you seeing now is we’ve been something Tegra-4i since February, we’ve started sampling the project label, which we presumed will become Tegra-5 in the fullness of time and we actually demoed that as early as July with the sampling as was always. So we are on a very good schedule now, so we are in the right place now to compete fro the Amazon and Google tablets and the company is very, very focused now on bringing Tegra-4i to market and bringing Tegra-5 to revenue as quickly as possible so software team is very focused on that, hardware team is very focused and the sales team is very focused on that.

So, yes, it means certainly the first half of this year is very difficult from the revenue standpoint. But it was difficult – the right things to do because it puts us in the right place for future years, I mean we could have doubled down on Tegra-4 and probably still be too late to win those things and then perhaps Tegra-5 would have pushed being too late with the next year and they you are really in trouble and then you propend and play catch-up forever. This is why we actually have really good products available at the right to compete for this one.

Unidentified Analyst

So I guess the second part of question is, what’s assume Tegra-5 hit the market in the time for Google and the Amazon refresh et cetera, is the market for standalone as process was big enough to more until this investment

Chris Evenden

Yeah, so if you look android, android is all about being big android is everywhere, we’re going to see it everywhere and all slow manner devices not just phones and tablets. We are going to see it cars, we are going to see it on TVs, we are going to see it in set-top boxes probably a whole bunch of category that have in Philadelphia. And many of those applications, visual computing will be important and we are a visual computing company and that's weathered by – that is the value we bring to our customers products and the differentiation that our consumers can see.

So wherever android intersects with visual computing that's where Tegra consists and so that phones and tablets set and all devices I mentioned that’s a very large market. So large in fact that if we’re not succeeding firm Tegra can still be a success.

And how do – well, I should emphasize that we are fully committed to the succeeding times then we’ve got a great ship with Tegra 4A. And how can we succeed? But if you look at you talked about the states of the merchants that exists market for application process say its not very attractive market. PC market isn’t a very attracted market either.

Yet our PC business, PC gaming business is extremely attractive 10% a year growth and mid-50s gross margins, highly defensible as well. Right and then because we put a lot of software around that, but it is actually in terms of drivers and also a lot of work we’ve done with ecosystem here. Hundreds of engineers have really just functioned to work with developers to get the latest features our features in to their games.

So they have this very defensible market there. Now let’s see if we can replicate that in the mobile computing market as well because then, then we can wait in a growth specific segment the segment that we have unique skills and experiments and what it would likely be the sensible and prior for the long time as well.

Going head-to-head with some of these competitors across the whole phone and tablet market, which seems to be a suicide, so we have find the defensible segment, where we have unique advantage. And dig into section visual computing and android is specifically what we can make gaming matter. I think that’s a good place for us to be. And it’s to a point it’s certainly big enough suppose to be fund the development of Tegra.

Unidentified Analyst

We’ve been going a long way, but let’s open it up for questions from the audience. If you can bring up the microphone, please there is one up here on your right.

Question-and-Answer Session

Unidentified Analyst

Hi. Just wanting [indiscernible] status the difficulties the markets had in general and integrating communications of the particular into the processor in the mobile space. It’s something that you manage to do now and certainly [indiscernible] down, but it seems to be something that is being a lot harder than I think a lot of people had a feeling would be. So I want to understand really why that was so hard and whether that give you a sustainable advantage given this really anyone one of the competitor now when you have to test that?

Chris Evenden

So I think we are in a pretty good position right now and we have a 3G voice and data modem that’s been shipping for a couple of years. We have a 4G data modem that’s been shipping for every year. We have a 4G voice and data modem that’s currently well on its way through qualification. We have a 4G data modem that’s lucky to have qualification in the next month or so. So I think we are probably in a pretty good position, I mean it does a lot of things and we have claims from other companies with difficult [indiscernible] where everyone is, but is still that we are light of the front and the pack at least.

I think five years from now none of this will match and 4G will be at times an important part of your buying decision as the WiFi manufacturers today, right, its connectivity. But it’s so important today, because there is one company that doe it. And so it’s focusing everyone’s mind. So I think it will be an advantage for us. Even more important being an advantage for us it’ll cease to be such a headwind. If you think about it, we operate just in the high end of the market solely in the high end of the mobile computing market and to operate in that market without access to an LTE modem, it’s a tough proposition, because LTE becomes essential to high-ends front and so the fact we’ve had any success at all is being the progress for us.

Jen-Hsun Huang

The question was can we talk about the inspiration to the chip. I don’t know if I want to go into any great detail about the technical challenges. I think the issue is not much the inspiration, but the LTE is more complex than lot of people what we believe and we sold that recently both compound the same, but seems WiMAX company, WiMAX has a lot of features in common with LTE, but it’s not LTE and it’s a bigger step from WiMAX and LTE and I think they are anticipating and loss we are expecting in this, but the installation itself, I don’t think there are any particular hurdles there, I think it’s actually just building an LTE modem and it is computation of very intensive task and it’s very complex in terms of particularly handling the voice calls in hand, so there is a lot of work that needs to be done.

If you look at the integration, it took us between us acquiring Icera and actually sampling a chip with integrated LTE modem was 20 months. We feel pretty good about that. I think that’s the testament that some of the engineering’s who are involved, but like I said I think there is obviously technical challenges we are integrating products like that, but I think the big challenge is the LTE modem itself.

Unidentified Analyst

Any other questions from the audience? Well, we have two minutes left. Little bit different question, but strategic question in nature. With SHIELD getting into the hardware side a bit and some chatter earlier this week about potentially having your own tablets, NVIDIA branded tablets. Talk a little bit about the thought process behind getting into hardware on one side confirmed and maybe even…

Chris Evenden

So rumors I can never comment on rumors, I’ll try to be quick [indiscernible] so far. On the SHIELD side there is a couple of things I should say, we want to make money by selling it. But also we have a way SHIELD succeeds for us is by helping us build this fortress of gaming inside mobile computing space because it is a bridge if you like between our strength in PC gaming to our soon to be strength I hope in mobile gaming.

So it’s a great for us. Now why do we go with ourselves? Generally I am pretty conservative about the company’s capabilities, but I genuinely think there is no other company out there that knows as much about gaming hardware and software as we do. We only got experience in mobile and PC in console markets we have the hundreds of people who spend their entire life working directly with game developers.

We’ve got 20 years experience in this market. So and we have a huge brand with gamers over 70 million GeForce users today know who we are, brand awareness, brand preference particularly in countries like China, huge we have over 90% market sharing in iCafes in China. For example, so there is a big, big brand equity that we can leverage as we launch our own products.

So if we can succeed, I don’t think anyone is more likely to make this product succeed than we think we are, and it’s a niche product. We are not going to sell tens of millions of units this year, so I don’t think it is going to offend our existing customer base. They see it as a very specific niche and they understand that we just communicate directly before the launch to explain how. So, yes, I think we are the right people to build this product.

Unidentified Analyst

Great, we are you can ask question afterwards because we are on time at the end of the day so thank you all for making it to the end of the day, and Chris thank you for bringing in a strong passion.

Chris Evenden

Thank you. Got around at the end of the day.

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Source: NVIDIA Corporation's CEO Presents at Deutsche Bank dbAccess Technology Conference (Transcript)
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