Staying on the Grid
Issue: Volume 36 Issue 3: (Mar/Apr 2013)

Staying on the Grid

Project Shield, Nvidia’s Android Tegra game controller with a screen, is striking when first seen. However, the configuration is not novel. Game controllers that hold a mobile phone or a tablet have been available for a while.

Project Shield consists of a console-like game controller with a dedicated and permanently attached five-inch, 720p multi-touch display, powered by Nvidia’s latest ARM-based processor, Tegra 4, running Google’s Jellybean version of Android.

It is an appealing product and irresistible to pick up. But is that enough to make it disruptive? Mobile phones certainly existed before Apple introduced the iPhone, yet not many would dispute that it was a transformational and disruptive product – but was it?

In Clayton M. Christensen’s 1997 best-selling book The Innovator’s Dilemma, he separates new technology into two categories: sustaining and disruptive. Disruptive technology lacks refinement, often has performance problems because it is new, appeals to a limited audience, and may not yet have a proven practical application.

The description of “disruptive” hardly fits Nvidia’s Project Shield, or the iPhone for that matter. It is doubtful that Project Shield will have many, if any, performance problems any more than any new product does, including the iPhone. It may have a limited audience, namely game players, but there are about 30 million of them (hard-core gamers for all platforms approach 300 million), and so it is a matter of scale when making the determination of “limited.” In addition, the iPhone and Project Shield certainly have proven practical applications.

A Grid Peripheral?

Announced at Nvidia’s 2012 GPU Technology Conference, Grid is the company’s approach to an on-demand gaming service. Nvidia claims it will provide advantages over traditional console gaming systems. In addition, it is an “any-device” gaming service, and according to Nvidia, it offers high-quality, low-latency gaming on a PC, Mac, tablet, smartphone, or TV.

Nvidia has combined its development of running a game on an x86-based PC with a GeForce graphics add-in board (AIB) and streaming the game to a non-x86 device. That technique uses the non-x86 device as a thin client (TC), allowing the TC to send commands as well as display the streamed results. Except for the latency, which is a function of the network, the user’s experience is as if the powerful AIB was in his or her local device – be it a smartphone or tablet. Nvidia has schematized the concept in the Diagram.

What is not shown in the diagram is a picture of the equipment that comprises the (green cloud-like) Grid in the middle. That presumably will be a generic server with an Nvidia GeForce AIB and Nvidia’s lowlatency encoder and fast frame buffer capture technology. According to Nvidia’s calculations, Grid will be able to deliver the same throughput and latency as a console.

Added to list of devices that can connect to the Grid is the new Project Shield. Furthermore, through its HDMI output, Project Shield can also drive a large-screen TV as its display, making it even more console-like.

A Disruption?

But, is any of this disruptive? I think not. Interesting, yes. Clever, yes. Well executed, time will tell. But Nvidia’s track record suggests it will be.

Jen-Hsun Huang, Nvidia’s charismatic president and founder, said he built Project Shield because no one else was going to make a mobile device like it. He told GamesBeat, “We’re not trying to build a console. We’re trying to build an Android digital device in the same way that Nexus 7 [users] enjoy books, magazines, and movies. This is an Android device for enjoying games. It’s part of your collection of Android devices…. The reason why I built this device is because only we can build this device.”

If only Nvidia can build the device, and if the device only runs from an Nvidia Grid server, and only on an Nvidia Tegra processor, then Nvidia has built a proprietary, closed garden of sorts. If other services, such as Amazon, Google, Steam, or Origin, take up the Grid, then it will be more catholic. However, until other providers embrace Grid, the performance on Project Shield may be less than stellar, or Nvidia will have to become a streaming game service like Microsoft, Sony, and others. That could be a licensing nightmare and suck enormous resources from the company – not something Huang will undertake lightly.

Nvidia thinks it is a bit of a stretch to compare Project Shield to closed-garden consoles. Although Grid is a component in the marketing of Project Shield, it is not the main component. Nvidia sees Project Shield as an Android device player.

Assuming the content distribution part of the equation can be worked out – and I have no doubt it will be if it hasn’t already been – Nvidia wouldn’t have made these announcements with an empty gun, and the adoption of Project Shield becomes one of economics. Huang has indicated he is not interested in the hardware-subsided game console model, nor should he be since he does not own any content. Therefore, Project Shield has to sell for cost-of-goods (COG) plus margin, and Nvidia has plenty of pressure from investors about maintaining margin. By my reckoning, the COG of Project Shield is about $175.

Therefore, to allow some margin for distributors and resellers, the unit will probably sell for $250 to $300, which is about twice as much as an add-on controller device like the MOGA, but almost the same as the Phone- Joy’s expected price.

Smartphones with 5.3-plus-inch, 1280x768 screens will challenge Project Shield’s 5-inch, 1280x720 screen. And whereas Haung says Project Shield will be “part of your collection of Android devices,” a lightweight controller that your phone can snap into might be a better choice. Moreover, smartphones can drive an HDTV, too.

Disruptive to Nvidia’s Business?

By introducing Project Shield, Nvidia has put itself in competition with its customers. Nvidia would argue that there is nothing quite like Project Shield; it’s unlikely that Nvidia’s customers will see it that way. Sony, one of those customers, will certainly see the competition for console and handheld players. Nvidia might argue that Sony only offers games for Sony handhelds and consoles, whereas Project Shield is an Android game player. Therefore, Project Shield only enhances the competition to Sony from Android.

In addition, Lenovo, one of Nvidia’s partners, has certainly noticed Project Shield. Peter Hortensius, president of Lenovo’s product group, told CNET, “I don’t think it should surprise anybody that people are trying things.... If [Nvidia] gets a lot of success and wants to move into our space, OK, we’ll compete with them. But people look at being in the device business, and there’s a lot more to this business than they realize. We’ll see how many of them are still around doing that in a few years.” That sounds like throwing down the gauntlet to me. It also sounds like Lenovo may have a phone controller of its own in the works.

It also is surprising to hear that Nvidia did not pre-brief Hortensius on Project Shield. I would have imagined Nvidia showed, if not the device, the plans for it to all its partners, looking for someone to build and market it, if nothing else.

One Tiny Thin Mint?

In an old (1983) movie, Monty Python’s The Meaning of Life, a large diner, Mr. Creosote, explodes after eating a tiny thin mint. Nvidia may think Project Shield is such a small device in price and size that it would not bother its partners. Yet, it may be more explosive than Nvidia thinks. It is also surprising that loyal partner Asus would not have taken on such a product.

The fact is none of Nvidia’s partners have the reach into the technology – and the gamer ecosystem – that Nvidia does. Remember, Nvidia got started serving the gamer community, and although it has expanded and brought out lots of other products, it has never lost its relationship to the gamer market. In fact, the game market is the second-highest revenue producer for the company.

The Other Stuff

If you’re new to Nvidia and think of it as being a semiconductor supplier, an end-user product like Project Shield may seem like a strange, distractive, and maybe even dangerous product diversion. If Nvidia were only a semiconductor supplier, it would be strange, and dangerous. For one thing, you need a serious dedicated support team for end-user devices to take calls, offer help, receive, repair, and return units, not to mention the marketing costs. However, Nvidia already has all those parts in place and has had them for a while.

Take note – Nvidia sells mid-range Nvidiabranded AIBs in the retail channels like Best Buy. It sells end-user consumer products, like 3D Vision, all sorts of paraphernalia, like caps, T-shirts, and jackets, and even remarkets other companies’ products, like Jambox and FinePix cameras. As for support, it has had a support team almost since day one – ever hear of thing called a driver?

Adventurer or Aggregator?

Project Shield couldn’t be done by a start-up, no matter how well funded. An existing consumer supplier like HP or Microsoft probably can’t do it, either. Nvidia has pulled together all the stuff it has done elsewhere in the company and brought those technologies, infrastructure, and talents to make Project Shield. Once the company decided to do it, it didn’t take very long to produce it.

Nvidia’s focus with Project Shield is raising the bar for native Android gaming, and allowing PC gamers to extend their gaming experience to anywhere in their house. Project Shield, Nvidia emphasizes, is a “stock Android [device],” with access to all the Google apps and ecosystem.

Why is this important? The company surveyed its customers and found that 82 percent of them play games on multiple platforms. “Gamers” are called that because they like to play games. And they will play games on various devices, in various situations (home, on a bus, in a waiting room, and so forth). Just as we use different devices for listening to music or watching a video depending where we are, game playing requires (needs) devices suited to the environment the users find themselves in.

Jon Peddie is president of Jon Peddie Research, a Tiburon, CA-based consultancy specializing in graphics and multimedia that also publishes JPR’s “TechWatch.” He can be reached at