Graphics Chips (NVDA, ATYT, etc) (fka GPHX)

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Graphics processors take center stage
Enhanced game performance gives dormant PC industry some life

http://www.ebnonline.com/story/OEG20020920S0059

By Bruce Gain
EBN
(09/20/02, 03:14 PM EST)

The troubled PC industry might have graphics processors to thank for keeping a lackluster year from being a train wreck.

Improvements in the processing performance of graphics processors (GPUs) are serving as the principal differentiator for PCs, as well as sparking strong sales of game consoles, analysts and observers said.

Just as word processing and spreadsheet programs and connection to the Internet drove the PC industry's growth for its first two decades, compelling gaming is becoming today's must-have application.

Game software companies are enjoying annual sales of $2.88 billion in the PC market, in addition to $1.93 billion for consoles and $800 million for handheld games, said Jon Peddie, an analyst at Jon Peddie Research, Tiburon, Calif. That translates to 38 million PCs being used for games on top of 15 million consoles, “which is a very conservative estimation,” Peddie said.

“Graphics processor makers and OEMs clearly see the opportunity of the results of graphics applications. Consumers, for example, can very clearly see and notice smooth rendering of images offered by graphics processors,” said Richard Doherty, an analyst at the Envisioneering Group, Seaford, N.Y. “It's the visual verification that is rewarding, and which also makes consumers pull their credit cards out of their wallets.”

Graphics processors offer a visual and performance improvement that is much more noticeable by the user, compared with CPU clock speed gains of more than 1GHz that can offer little or no noticeable improvement in PC performance, according to industry analysts.

“There's no doubt, for visually intensive applications there's an extreme difference measured by factors of five to 10 in terms of productivity you can achieve by investing a couple of hundred of dollars in your machine to move to the next level of graphics,” said Dave Orton, president and chief operating officer at ATI Technologies Inc., Markham, Ontario.

“If you look at pure performance and step up, it's not just like moving from a 2Gig to 2.6Gig CPU where there is a 25% performance gain, but you get a true 2X or more gain in capabilities with the GPU,” Orton added.

Many of the top-tier PC OEMs, such as Dell, Gateway, and Hewlett-Packard, have lowered their financial expectations after the second half has not picked up as predicted. Analyst firm Morgan Stanley, New York, for example, cut its PC unit shipment estimates for the second half by about 2.3 million units, to 65.2 million. Game-console sales, however, which live and die by graphics performance, are expected to grow this year by 28.9%, to 43.7 million units shipped, according to IDC, Framingham, Mass.


GPUs vs. CPUs
Despite increased demand for graphics processors, prices are holding steady. According to Dean McCarron, an analyst at Mercury Research in Cave Creek, Ariz., the average selling price of a GPU should remain at $18 through the rest of the year. While average per-unit CPU prices have been steadily declining from $174 in the second quarter of 2000, the average price is expected to level off at around $130 by the end of this year, more than six times the price of the average GPU.

“OEMs have to build PCs on a particular budget, and they have to buy the best graphics at that price,” McCarron said. “Even though graphics performance has dramatically improved, the GPU sweet spot remains at $18.”

GPUs have the ability to take advantage of parallelism, which lends itself well to several pixel-rendering applications that run simultaneously, vs. the CPU's pure processing muscle that is geared for more specific computational tasks, said Neil Trevett, senior vice president at 3Dlabs Inc., Sunnyvale, Calif., which Creative Technology Ltd. purchased earlier this year. “The CPU's role will eventually be reduced to that of the smart overseer,” he said. “I also don't think CPU suppliers fathom this yet.”

Additionally, GPU suppliers are offering more transistors per device than CPUs that are made by Intel and AMD, and that translates into more raw performance gains, analysts say. “The GPU outscales and outperforms the CPU by a factor of two or more,” Peddie said. “Just on transistor count alone, a good GPU has twice the number of the transistors compared to a CPU, and that ratio isn't going to change.”

But high-end, graphically intensive applications require both strong CPU and GPU power, said Tony Tamasi, general manager of the desktop graphics group at Nvidia Corp., Santa Clara, Calif.

“Specifically, the sophisticated algorithms create the pixels, which are limited by the transistor count, while the algorithms that animate the characters are driven by the pure and raw computing power of the CPU,” he said. “The most interesting gaming experiences are on high-end computers with very fast CPUs and high-end graphics. The really fast CPU animates the characters faster and makes the artificial intelligence better, and the high-end graphics processor renders the image more beautifully at higher resolutions and higher frame rates.”

Examples of high-performance graphics applications are shadows or the rippling effects of water, which require very high frame rates, complex algorithms, and fast computing power.


Others give it a try
Other players have emerged or re-emerged after witnessing the good fortunes of Nvidia and ATI in discrete graphics applications. A month ago-after ATI launched its latest family of high-end Radeon graphics processors, and Nvidia made plans to up the performance ante with its new GeForce line-Trident introduced its first desktop discrete graphics processor for the mainstream market following a half-decade hiatus from the business.

Earlier this year, other players made similar moves to carve out a share in the discrete market, including Creative (3D-Labs), Matrox, SiS, and Via. The hands- down leaders in discrete graphics, however, remain ATI and Nvidia, which represent more than 90% of the market.

The opportunities in graphics are attractive, but the entry barrier is high, said Dennis Young, an SiS product manager for multimedia in Taiwan. “The GPU offers great value in terms of capabilities per die size as IC suppliers continue to put more gates and transistors on the devices and algorithms become more complicated,” Young said. “Any device out there that doesn't at least match [the competition's GPU capabilities] will not survive in the market.”

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