NVIDIA 2016 Annual Report Download - page 156

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multiple generations of GPUs and Tegra Processors, including GPUs for high-performance computing, and Tegra SOCs
for SHIELD and other mobile products using independent design teams. Our research and development efforts include
software engineering, hardware engineering, very large scale integration design engineering, process engineering,
architecture and algorithms.
A critical component of our product development effort is our partnerships with industry leaders. We invest significant
resources in the development of relationships with industry leaders, often assisting these companies in the product definition
of their new products. We believe that forming these relationships and utilizing next-generation development tools to design,
simulate and verify our products will help us remain at the forefront of visual computing and develop products that utilize
leading-edge technology on a rapid basis. We believe in leveraging our significant research and development depth and
scale to create differentiated products.
As of January 31, 2016, we had 6,566 full-time employees engaged in research and development. During fiscal years
2016, 2015 and 2014, we incurred research and development expense of $1.33 billion, $1.36 billion and $1.34 billion,
respectively.
Competition
The market for our products is intensely competitive and is characterized by rapid technological change, evolving
industry standards and declining average selling prices. We believe that the principal competitive factors in this market are
performance, breadth of product offerings, access to customers and partners and distribution channels, software support,
conformity to industry standard Application Programming Interfaces, manufacturing capabilities, processor pricing and
total system costs. We believe that our ability to remain competitive will depend on how well we are able to anticipate the
features and functions that customers and partners will demand and whether we are able to deliver consistent volumes of
our products at acceptable levels of quality and at competitive prices. We expect competition to increase from both existing
competitors and new market entrants with products that may be less costly than ours, or may provide better performance
or additional features not provided by our products. In addition, it is possible that new competitors or alliances among
competitors could emerge and acquire significant market share.
A significant source of competition comes from companies that provide or intend to provide GPUs and mobile SOC
products. Some of our competitors may have greater marketing, financial, distribution and manufacturing resources than
we do and may be more able to adapt to customer or technological changes.
Our current competitors include:
• suppliers of discrete and integrated GPUs, including supercomputers and chipsets that incorporate 3D graphics
functionality as part of their existing solutions, such as Advanced Micro Devices, or AMD, and Intel Corporation,
or Intel;
• suppliers of SOC products that are embedded into automobiles and smart devices such as televisions, monitors,
set-top boxes, gaming devices and automobiles, such as Ambarella, Inc., AMD, Apple, Inc., Avago Technologies
Ltd., Intel, Marvell Technology Group Ltd., Mediatek, Mobileye N.V., Qualcomm Incorporated, Renesas
Electronics Corporation, Samsung, ST Microelectronics, and Texas Instruments Incorporated; and
• licensors of graphics technologies, such as ARM Holdings plc, or ARM, and Imagination Technologies Group plc.
Patents and Proprietary Rights
We rely primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure
agreements and licensing arrangements to protect our intellectual property in the United States and internationally. Our
currently issued patents have expiration dates from April 2016 to December 2034. We have numerous patents issued, allowed
and pending in the United States and in foreign jurisdictions. Our patents and pending patent applications primarily relate