Nvidia faced a major competitive challenge after initial market failures with its NV1 multimedia card in 1995
. This led to a significant strategic rethinking that involved diagnosing the core issues and adapting to the evolving market
. The major diagnoses of the competitive challenges Nvidia found were:
- Inferior product Nvidia's NV1 multimedia card was not considered better than its competitors and was difficult to program, leading to unoptimized games
- Standards adoption Nvidia initially picked its own lane and went off in its own direction, which ended up not being what everyone else picked, which put them at a disadvantage
- Underestimation of Moore's Law Nvidia did not project out the exponential change that would come from Moore's Law, which put them at a disadvantage
- Memory costs Nvidia's chips were designed to be super, super tight on memory
. The memory cost about $200 in component parts to go into their chips
. Their competitors had more memory that was costing them $50
- Competition from Intel Chip king Intel noticed NVIDIA making money and gaining traction
. Intel decided to act like the dominant player, essentially saying, “We’re going to snuff them out,” and told PC makers to wait for their i740 chip
. This destroyed NVIDIA’s pipeline
- Lack of developer attention Nvidia had no ability to uniquely get its own developers, at least at that point in the company's history
To overcome these challenges, Nvidia made a strategic pivot, focusing on the development of GPUs for 3D graphics
. They adopted the graphics pipeline approach and focused on maximizing their GPU's performance
. Nvidia also fostered a culture of intellectual honesty, encouraging its engineers to compete on performance and out-engineer their competitors
