The world is changing around us and anyone trying to live in the past with the rules of the past is doomed. The old sage about evolve or die is with us more these days than ever before, and it’s not going to get any easier.
Notebooks are rapidly replacing desktops, moving the venerable desktops into the specialty category of gamers and power users, which includes workstations and GP-compute systems—volume-wise the desktop is flat.
Handhelds have slowed in sales, and monitors are in steep decline, things are getting adjusted in the face of the new economics and the new investment strategies of major companies, consumers, and investment firms.
Therefore, anything you hear that may have sounded absurd, or ridiculous five months ago should now be given some consideration. One such idea that is floating today is an acquisition or merger of Apple and Nvidia.
With all the turmoil in the market and changes in fortunes between companies, Nvidia has shifted from being a potential suitor of AMD to being a possible consideration for Intel and, of late, a potential target for Apple. I can find some sense in an Apple deal. Unlike the rumors a couple of years ago when AMD bought ATI and some people thought Intel might buy Nvidia, an Apple acquisition is not ridiculous or impossible short of a few deaths.
Jobs and Huang have a mutual respect, they could (do) work together. Huang is a proud, smart, and energetic man and wouldn’t take to a bureaucratic and sluggish organization, and Apple is anything but that.
Apple has no clear heir apparent, so acquiring Nvidia and making Jen-Hsun CEO while ailing Steve Jobs moves upstairs to COTM would provide the environment Huang needs. Huang is ready for a bigger canvas and a combined Apple and Nvidia could be just the thing for his ambitions and vision.
If, as the Wall Street sharpshooters predict, Nvidia’s share price will never get above $10 again—and may have difficulty staying north of $5—Huang’s best shot at increasing shareholder value would be to accept an offer of $11 from Apple—no one wants to be the next Jerry Yang. With the market fluttering the way it is, striking a deal that would have to be renegotiated every 30 days would be the trickiest part.
The acquisition of Nvidia would swell Apple’s cash position giving it even great war chest for other acquisitions and/or R&D purchasing power.
Nvidia has the largest collection of the best graphics engineers in the world. Both Jobs and Huang respect engineering power and how it provides the platform for growth. And both Jobs and Huang have provided their engineers with the latest and best tools, so they are totally in synch on those points. Jobs would probably visibly salivate at the prospect of Nvidia’s engineers being part of Apple.
Apple clearly sees the value and power of the GPU and can easily imagine offering computers with Atom processors and powerful graphics. Scenario two of this premise is that Apple also buys VIA and gets total independence. A kind of back-to-the-future of vertical integration, something Apple has shown a desire to do in many ways from manufacturing to marketing.
A GPU product line would fill out Apple’s self sufficiency and expand it into newer markets with the kind of margins it desires—and its shareholders demand—in order to sustain the high PE that it has.
Nvidia’s Tegra becomes iPhone III and/or the game machine I’ve speculated Apple will bring out. And, as good as it is, Nvidia’s UI can teach Apple something about UIs—the Windows OS may be a small problem, but easily overcome.
To round things out, Apple launches a line of AMD Shanghai-based HPC servers with Telsa GPU-compute racks using a combo of OpenCL and CUDA.
Jobs can’t/won’t share the spotlight with anyone.
Apple offers an insulting (sub $10) price.
Even Apple isn’t a big enough environment for Huang’s vision and ambitions.
Apple is in the best shape it has ever been in. Nvidia is bruised but still an extremely valuable company with strong resources in IP, people, and cash and would be an amazing asset for any company assuming a suitor would be acceptable to Huang and the Nvidia BOD.
Apple and Nvidia need to get out of the shadow of Intel to thrive. Apple is a product company that needs components to maintain its vision and independence, and the components have to be world-class with long legs—what company beside Nvidia could claim such a position? The combo would ignite Apple’s share price and stabilize speculation about the future for Jobs the thaumaturgy. And Huang could take Apple to new heights.
I like both companies a lot, I really like the notion of the synergy between them.