Integrated graphics will kill discrete

FIGURE 1. Simple projection of Intel’s IGP growth in market share. (Source: Jon Peddie Research) I’ve made a lot of predictions in my 20+ years here at JPR/A, and fortunately most of them have been correct, making profits for our clients and allowing me to keep my job. One prediction I made in 1998 as SGI was about to launch ...

Robert Dow
FIGURE 1. Simple projection of Intel’s IGP growth
in market share.
(Source: Jon Peddie Research)

I’ve made a lot of predictions in my 20+ years here at
JPR/A, and fortunately most of them have been correct, making profits
for our clients and allowing me to keep my job. One prediction I made
in 1998 as SGI was about to launch the Cobalt IGP (which they called
Integrated Visual Computing, IVC, architecture) for their 320 and 540
workstations was that it was a harbinger of graphics processors for
the future. Mistakenly, sitting at Dave Orton’s desk (he was senior
VP and in charge of SGI’s workstations at the time), I said integrated
graphics will kill discrete. He’s never forgotten it and says it in
public from time to time when he thinks I need to be put in my place.

I also have the privilege of having told Jen Hsun-Huang
repeatedly while he was still at LSI Logic, Don’t go into the graphics
chip business.

Orton left SGI and took over the reins of ArtX, which
at the time had a contract to build the next generation of graphics
for Nintendo (with the team at SGI that built the first graphics for
the Nintendo 64 ), which became the Flipper chip. That design too was
an integrated part, and extending the concept further, in 1999 ArtX
developed the 3D graphics processor (the first IGP for the PC) for Acer/ALi’s
new Aladdin 7, a 128-bit Socket 7 integrated graphics chipset for AMD
K6-II and K6-III processors.

Did this not clearly show the way of the future? From
workstations to game consoles, integrated graphics were being developed
and entering the market. Integrated graphics were not a novel idea—SiS
offered its SiS6205 IGC in 1995 and VIA had its Apollo MVP4 in 1998.
ATI announced its integrated graphics and core-logic program in the
spring of 1999, and Nvidia and ALi introduced the Aladdin TNT2 integrated
graphics chipset with ALi’s Slot 1/Socket 370 north bridge design in
the fall of 1999. And in 1999, Intel introduced the 752 core in the
810 and 815 SDRAM IGC chipsets for the low-end Celeron PCs; although
they did have the Intel 430VX PCIset in 1996 (and, in those innocent
days, it was referred to as unified memory architecture—UMA; it
is now called Shared Memory Architecture—SMA). And just to be pedantic
for a moment, I have to mention that Dell was actually the first company
to try it with an experimental ASIC it developed in 1991 called JAWS
and it used UMA for graphics memory. All these parts are IGCs, integrated
graphics controllers, and not Integrated Graphics Processors (IGP),
which, as the difference in name implies, offers programmability.

It took ArtX to prove that an IGP wasn’t going to work
in the high end. The ArtX IGP had T&L, a notion that was just beginning
to get traction in discrete PC parts with the introduction of Nvidia’s
Riva in early 1999 (the workstation folks like 3Dlabs had it for years).

What ArtX found out, the hard way, was there just wasn’t
enough bandwidth in the systems of 1999 to do a UMA, and so the part
was dropped, and no one came out with a true IGP again until Nvidia
announced its Nforce for the AMD platform in 2001.

In the meantime Intel steadily took market share with
their IGC from the discrete segment, growing from zero in 1999 to 55%
by the second half of 2001—that got a few people’s attention. And
in Q1’05 the company surprised everyone with their dramatic growth in
integrated graphics in mobile platform due their remarkably successful
marketing campaign with Centrino—possibly the most successful campaign
since Intel Inside. If you project the curve they will own the entire
market in a short matter of time (see Figure 1).

But can they sustain it, and is it the death knell for

I don’t think so, and here are the reasons why.

Party’s over. Intel was super successful with the Centrino
marketing program, and surprised everybody in Q1, including themselves.
They’ve gotten that pop, and it’s winding down—every-one who
wanted a Centrino has one, so all that’s left is the late adopters.

New competition. Two powerful companies have entered
the IGP segment, ATI and Intel. That has had a couple of impacts.

1. There are eight market segments in the PC: Desktop and Mobile—which
are split into AMD and Intel, which are split into Discrete and
Integrated. Intel participates in two of the eight, and ATI and
Nvidia participate in all eight.

2. AMD is growing market share. AMD-based IGPs will grow with it,
decreasing Intel’s overall market share in Integrated.

3. An incumbent in any market always loses market share when new
companies enter.

4. ATI and Nvidia, as well as VIA/S3, will introduce much more
powerful IGPs than Intel and thwart any growth by Intel into a higher-performance

Cached GPU. Nvidia introduced the concept of using
system memory with an external GPU (UMA again), and called it Turbo
Cache. ATI matched them and introduced Hyper Memory. Both concepts
rely on the high bandwidth of PCIe (and remember, bandwidth was what
stopped higher performance IGPs in the past) and allow for the abandonment
of local private frame buffer memory. This will further stop the growth
of IGP and offer a much greater price/performance ratio for a mid-
to low-end mainstream solution.

Longhorn. To get all the graphics richness Longhorn
is promising the systems of 2006 will have to have powerful GPUs and
lots of overlay memory. IGPs can’t do it, and so there is a special
limited class of Longhorn for them and lower power or older systems.

Need for high end. There will always be a need for
high-end graphics. The challenge the GPU suppliers have been facing
is how to expand the market. When the lame-ass game developers catch
up with GPU development and start to offer more challenging and visually
stimulating games, GPU sales will rise. There’re 25 to 30 million
users out there just waiting for a good reason to buy up.

Jon Predicts

here I go again out on a limb with a saw—just can’t help myself
it seems. First, let me be very clear about what I’m saying. Intel recently
suggested they could hit 80% market share on desktop graphics (based
no doubt on their position of 72% in integrated desktop parts Q1’05
and steady growth of share—see Figure 2). I’m saying they can’t
do it, for the above reasons and a few more. However, I’m not saying
they are going to crash and lose all the IGP market—they’ll still
do damn well, and have significant share. Intel has substantial marketing
and sales power, branding, co-op marketing dollars, bundling deals,
one-size-fits-all motherboards, and good old-fashioned arm-twisting.
I am saying I think they’ve hit the peak and they will start to see
market share loss, albeit not significant loss, but a break in the slope
of the curve.

FIGURE 2. Jon’s crystal ball forecast. (Jon Peddie

Integrated will continue to steal market share from Discrete
until demanding applications show up that make better use of the GPUs.
ATI and Nvidia will participate in the erosion of the GPU space with
their own IGPs and so the migration won’t kill the two companies that
are single handedly providing all the development in 3D and graphics
today. Intel will ride that pony for free basically, and enjoy the power
of its brand.

Like I said, don’t go selling your Intel stock just yet,
but also don’t go believing there’s no limit to the company’s growth
in the integrated market.