That's the quick and not entirely complete explanation for why Nvidia (nasdaq: NVDA - news - people ) moved last Sunday to counter Intel's (nasdaq: INTC - news - people ) foray into processors for mobile devices with an expanded low-power processor line of its own, dubbed Tegra.
The longer explanation is that both companies see the markets for their processors going where Apple (nasdaq: AAPL - news - people ) Chief Executive Steve Jobs is busy building an empire: mobile devices that combine computing, connectivity and multimedia content. Build the chips, and someone, whether it is Jobs or Microsoft (nasdaq: MSFT - news - people ) Chief Executive Steve Ballmer, will help turn them the gadgets consumers will crave.
Intel is pushing its mobile processor line, dubbed Atom, as a way to cram the ability to run a bite-sized, power-sipping version of the chips that power desktop computers into ever smaller devices. Nvidia, meanwhile, is pitching the ability to tackle desktop-quality multimedia on a tiny power budget. The Tegra 650, announced Sunday, will join a previously announced Nvidia chip, the APX 2500, to make up a a new product line for the Santa Clara, Calif.-based company.
The Tegra 650 crams together a motley collection of processors onto a single piece of silicon. The chips will include an 800-megahertz ARM central processor--the same power-sipping design powering many smart phones--with a high-definition video processor, an imaging processor, an audio processor and a tiny, low-power version of the GeForce graphics processors Nvidia pushes for desktop and laptop computers.
"We think it's a complete computer on a chip," says Mike Rayfield, general manager of Nvidia's mobile business.
The result: Nvidia claims its Tegra processors get as much as 10 times the power efficiency of existing products in battery-operated gadgets running applications such as games and video. The company said it expects products built around the new chips will arrive by year-end for pocket-sized, multimedia-friendly gadgets.
But while Tegra will be powering devices running Microsoft software, Apple could offer the best example of where Nvidia and Intel see the future going. When Intel wants to show investors the kind of devices that will use future generations of even more power-efficient Atom processors, it flashes a slide with an image of an iPhone. And when Nvidia wanted to grab a spot in the market for mobile multimedia gizmos, it bought PortalPlayer, the company that supplied the silicon for the original iPod. Smart people at both companies are betting big on the same idea.
Steve Jobs is too. In April, Apple bought chip designer P.A. Semi for $278 million in cash. (See "Apple Buys Chip Designer.") The move gives Apple a cadre of experienced microprocessor designers who will set to work designing new chips for Apple's iPhone and iPod music players. So there's no guarantee that either Nvidia or Intel will ever win a spot inside of future Apple gizmos.
Then again, the ability to help Apple's competitors beat down whatever Jobs comes up with promises to be a mighty juicy consolation prize.
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