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BACKGROUND
Nvidia founded in the USA that produces the world's largest graphics technologies and
motherboard chips. It is a brand based in Santa Clara and California. It has become one of the
biggest brands in the sector with the mobile GPUs designed for mobile devices that need
innovative graphic solutions with increasing processing capacity.
In 1999 Sony released the PS4. This product was thought to be the end of PC games. In
response to this product, Microsoft released Xbox. Microsoft decided to work with Nvidia.
However, Microsoft requested a discount on the amount paid. Nvidia did not accept and they
were sued. There was a last-minute development, and Microsoft decided to switch to Intel
CPUS for Xbox by breaking its deal with AMD. Shortly after these events, Nvidia took 3dfx
and Gigapixel. This movement caused Nvidia to remain with a single competitor in the sector
and it was the ATI Technologies.
Briefly speaking about Nvidia's most important competitor, ATI. ATI was established in 1985
in Toronto. In response to Nvidia's GeForce product, ATI launched its Radeon series.
Between the years 2000 and 2006, these two competitors continued to struggle in the graphics
card market. In 2005, Microsoft and ATI worked together for the Xbox 360 and failed. Even
called “Red Rings of Death”.
In 2004, Nvidia signed an agreement with Sony for a GeFOrce-based graphics processing unit
called RSX for use on the playstation 3 console.This agreement was a first for Sony, often
designing and producing its own graphics processing unit, and for Nvidia it was a huge
success.
In 2006, AMD announced the acquisition of ATI for $ 5.4 billion, which shocked the
industry. Nvidia was the first target for AMD. But Nvidia's current CEO, Huang, used to
work at AMD, and Huang wanted to become CEO of this company if it merged. So AMD
turned to ATI.
While AMD and ATI was dealing with the merger of companies, Nvidia introduced the G80
and which was a new micro-architecture called Tesla and this event was called the game
changer in the industry.. NVIDIA's G80 "Tesla" microarchitecture caused the GPGPU
revolution. And at the same time Nvidia maintained its leadership thanks to the micro
architecture of the "Fermi".
The GeForce 580 GTX was released in 2010 and it was the best Fermi-oriented consumer
graphics card. In 2012, Alex participated in the artificial intelligence recognition competition
using 580 GTX and upset the competition with 85 percent accuracy. After this event, artificial
intelligence leadership was definitely Nvidia's and this was a key event for the company..
Nvidia acquired PortalPlayer in 2006. PortalPlayer was a SoC hardware designer. Nvidia
launches its new Tegra SoC product line. Despite its successful performance, this product has
had limited success in the competitive market. In 2011, Nvidia released the Tegra 3. Audi and
Tesla announced that they will use Tegra 3 in their infotainment systems of all vehicles in the
world. In this case, Tegra 3 became a strategic product for Nvidia and at the same time,
Nvidia entered the automotive field.
Nvidia was trying to compete with the mobile giant Qualcomm and in 2011 acquired another
company, Icera, from the same sector. Nvidia was planning to add an LTE modem to the next
generation Tegra, but 4 years later, Icera was sold and Nvidia completely out of the mobile
processor market.
Microsoft and Sony wanted to increase market share for their new consoles. There were 2
options: AMD and Nvidia. Nvidia's Tegra was eliminated because it was ARM-based.
Eventually Microsoft and Sony decided to work with AMD. Nvidia did not want to participate
in this competition because it was thought that it would not benefit financially.
Nvidia has lost both in the mobile industry and consoles, and has created a new Pascal
microarchitecture to close this gap. Nvidia released this product to improve deep learning
performance. Later in the process, Nvidia released a product called ‘AI super computer in a
box. This product was the first in the industry and in the history of Nvidia, and then the first
product produced was donated to Elon Musk’s non-profit AI research company, OpenAI.
Nvidia's strategy is to focus on the markets in which their architectures give a competitive
advantage and to gain strong returns to R & D departments from these sectors. With this
strategy, Nvidia showed itself in 4 sectors: gaming, Professional visualization, automative,
data centers. Until 2018, Nvidia was in a successful and fast growing position in artificial
intelligence and deep learning. but Nvidia had companies that would challenge its position at
the top, such as Intel, AMD, Google and Slikon valley start-ups.
PESTEL ANALYSIS
According the NVIDIA 2017 Annual Report expressed external factors that may affect the
company and the industry.
‘’Any one of the following risks could harm our business, financial condition, results of
operations or reputation, which could cause our stock price to decline’’
PESTEL analysis was performed as a result of this information and sectoral research.
1-POLITICAL
NVIDIA is an international company that manages its production and sales in countries
outside the United States. Therefore the situation of foreign countries has a major impact on
NVIDIA. the most important raw material of the company ‘’semiconductor wafers’’ are
manufactured, assembled, tested and packaged by third parties located outside of the United
States.
• international economic and political conditions, including as a result of the United
Kingdom's vote to withdraw from
the European Union, and other political tensions between countries in which we do business;
• unexpected changes in, or impositions of, legislative or regulatory requirements, including
changes in tax laws;
• differing legal standards with respect to protection of intellectual property and employment
practices;
Whether or not a company’s intellectual property (IP) is protected. For example, a country
that has no policies for IP protection would mean that entrepreneurs may find it too risky to
invest in Nvidia.
2- ECONOMIC
Exchange rate fluctuations: Although the effect of foreign currency trading income or loss on
the determination of net income is not significant for the 2017, 2016, and 2015 fiscal years,
increases or decreases in the currencies of foreign countries affect the purchasing power of the
consumer and the costs of raw materials or parts produced in foreign countries.
‘’ United States’ dollar relative to other currencies would make our products more expensive,
which could negatively impact our ability to compete. Conversely, decreases in the value of
the United States’ dollar relative to other currencies could result in our suppliers raising their
prices in order to continue doing business with us. Additionally, we have international
operations and incur expenditures in currencies other than U.S. dollars. Our operating
expenses benefit from a stronger dollar and are adversely affected by a weaker dollar.’’
On the other hand,a high level of unemployment in the country would mean there is a greater
supply of jobs than demand, meaning people would be willing to work for a lower wage,
which would lower the costs of Nvidia.
3-SOCIAL
Social structure refers to customers and employee identities, which are the main points for all
companies.( The demographics of the population, meaning their respective ages and genders,
vastly impact whether or not a certain product may be marketed to them.)
4-TECHNOLOGY
NVIDIA and its industry are technology-oriented.
The most important strategy for the company is to follow the developing technology, world
trends and R & D studies correctly.
According to NVIDIA’s report technology is a critical issue about company success.
If we fail to meet the evolving needs of our markets, or identify new products, services or
technologies, our revenue and financial results may be adversely impacted.
If we fail to anticipate the changing needs of our target markets and emerging technology
trends, or if we do not appropri ately adapt that strategy as market conditions evolve, in a
timely manner to exploit potential market opportunities, our business will be harmed.
5-ENVIRONMENTAL
‘’Business disruptions could harm our business, lead to a decline in revenues and increase
our costs.’’
Our worldwide operations could be disrupted by earthquakes, telecommunications failures,
power or water shortages, outages at cloud service providers, tsunamis, floods, hurricanes,
typhoons, fires, extreme weather conditions, cyber-attacks, terrorist attacks, medical
epidemics or pandemics and other natural or man-made disasters, catastrophic events or
climate change. The occurrence of any of these disruptions could harm our business and result
