NVIDIA 2009 Annual Report Download - page 24

Our business results could be adversely affected if the identification and development of new products or entry into or
development of a new market is delayed or unsuccessful.
In order to maintain or improve our financial results, we will need to continue to identify and develop new products as well as
identify and enter new markets. As our GPUs and other processors develop and competition increases, we anticipate that product life
cycles at the high end will remain short and average selling prices will decline. In particular, average selling prices and gross margins
for our GPUs and other processors could decline as each product matures and as unit volume increases. As a result, we will need to
introduce new products and enhancements to existing products to maintain or improve overall average selling prices, our gross margin
and our financial results. We believe the success of our new product introductions will depend on many factors outlined elsewhere in
these risk factors as well as the following:
• market demand for new products and enhancements to existing products;
• timely completion and introduction of new product designs and new opportunities for existing products;
• seamless transitions from an older product to a new product;
• differentiation of our new products from those of our competitors;
• delays in volume shipments of our products;
• market acceptance of our products instead of our customers' products; and
• availability of adequate quantity and configurations of various types of memory products.
In the past, we have experienced delays in the development and adoption of new products and have been unable to successfully
manage product transitions from older to newer products resulting in obsolete inventory.
To be successful, we must also enter new markets or develop new uses for our future or existing products. We cannot accurately
predict if our current or existing products or technologies will be successful in the new opportunities or markets that we identify for
them or that we will compete successfully in any new markets we may enter. For example, we have developed products and other
technology in order for certain general-purpose computing operations to be performed on a GPU rather than a CPU. This general
purpose computing, which is often referred to as GP computing, was a new use for the GPU which had been entirely used for graphics
rendering. During fiscal year 2008, we introduced our NVIDIA Tesla family of products, which was our entry into the
high-performance computing industry, a new market for us. We also offer our CUDA software development solution, which is a C
language programming environment for GPUs, that allows parallel computing on the GPU by using standard C language to create
programs that process large quantities of data in parallel. Some of our competitors, including Intel, are now developing their own
solutions for the discrete graphics and computing markets. Our failure to successfully develop, introduce or achieve market acceptance
for new GPUs, other products or other technologies or to enter into new markets or identify new uses for existing or future products,
could result in rapidly declining average selling prices, reduced demand for our products or loss of market share any of which could
cause our revenue, gross margin and overall financial results to suffer.
If we are unable to achieve design wins, our products may not be adopted by our target markets or customers either of which
could negatively impact our financial results.
The success of our business depends to a significant extent on our ability to develop new competitive products for our target
markets and customers. We believe achieving design wins, which entails having our existing and future products chosen for hardware
components or subassemblies designed by OEMs, ODMs, add-in board and motherboard manufacturers, is an integral part of our
future success. Our OEM, ODM, and add-in board and motherboard manufacturers’ customers typically introduce new system
configurations as often as twice per year, typically based on spring and fall design cycles or in connection with trade shows.
Accordingly, when our customers are making their design decisions, our existing products must have competitive performance levels
or we must timely introduce new products in order to be included in our customers’ new system configurations. This requires that we:
• anticipate the features and functionality that customers and consumers will demand;
• incorporate those features and functionalities into products that meet the exacting design requirements of our customers;
• price our products competitively; and
• introduce products to the market within our customers’ limited design cycles.
If OEMs, ODMs, and add-in board and motherboard manufacturers do not include our products in their systems, they will typically
not use our products in their systems until at least the next design configuration. Therefore, we endeavor to develop close relationships
with our OEMs and ODMs, in an attempt to better anticipate and address customer needs in new products so that we will achieve
design wins.
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Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research℠