Sales of high-end graphics cards are primarily driven by product launches, introductions of demanding video games as well as by general industry trends. In the coming quarters there will be four to three additional factors that could improve sales of graphics processing units, according to Jen-Hsun Huang, chief executive officer of Nvidia.
Nvidia’s revenue in the GPU business grew 5 per cent to $940 million in the first quarter of fiscal 2016 compared to the first quarter of the prior year. Sales of GeForce GTX graphics processors for gaming desktops and notebooks grew 14 per cent year-over-year, shipments of Quadro graphics cards for workstations declined compared to the Q1 FY2015, whereas sales of Tesla accelerators for high-performance computing got higher.
Many financial analysts these days are concerned that slowing demand for personal computers will affect Nvidia’s business performance in the coming quarters. While shipments of certain components will decline due to industrial trends, Nvidia remains optimistic about its GPU revenue later this year. Jen-Hsun Huang claims that as gamers transit to ultra-high-definition displays (with 3840*2160 resolution), start to use virtual reality headsets or simply want to play new games, they need to upgrade their graphics cards. In addition, Windows 10 launch will likely encourage people to get new PCs or hardware in the second half of this year.
“Gaming is growing […], in the second half of this year, you are going to see multiple growth drivers,” said Jen-Hsun Huang, chief executive officer of Nvidia, at the company’s quarterly conference call with investors and financial analysts. “4K monitor pricing is really coming down. VR is launching in the second half. Windows 10 with DirectX 12 are launching in the second half, not to mention all the great games coming out. I think that [these are our] growth drivers.”
Sales of gaming graphics cards are traditionally strong in the second half of the year because of various factors. Affordability of 4K Ultra HD displays as well as the upcoming launch of Windows 10 and new games will probably ignite sales of graphics cards. However, things like virtual reality headsets will hardly have a substantial effect on shipments of GPUs this year since VR in general is at an early commercialization stage. Moreover, the highly-anticipated commercial version of Oculus Rift will only be available in Q1 2016.
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KitGuru Says: It will be very interesting to see how the aforementioned growth drivers truly affect sales of graphics processing units this year. While demand for PCs in general seems to be slowing down, sales of gaming hardware have been increasing in the recent years even without so many new growth drivers.