Nvidia’s Data Center Segment Becomes its Biggest Revenue Contributor for Q1 2022

Nvidia reported a 48% YoY revenue growth in Q1 2022 at $8 billion. The company’s data center segment surpassed the gaming segment for the first time to become the largest revenue contributor. The GeForce RTX 30 Series’ product cycle enabled the gaming segment to grow 33% YoY to achieve $3.6 billion in revenues. The A100 GPU, with large-volume deployments by hyperscale customers, proved to be a key factor in the data center segment’s revenue growth of 79.4% YoY to $3.6 billion.

Counterpoint Research nvidia Earnings Charts
Source: Counterpoint Estimates, Company earnings; Earnings are CY Quarter

Gaming revenue to decline in Q2 due to architectural transition, mixed global demand

Gaming revenue stood at $3.6 billion with 33% YoY growth. The demand was primarily fuelled by the GeForce RTX 30 series. Nvidia estimates that about one-third of the GeForce Gaming GPU installed base is now on RTX.

The geopolitical situation in Europe caused a demand softness along with COVID-19 lockdowns in China but was cushioned by the growing American demand. Uncertainties faced by the cryptomarket globally also added to the headwinds in the gaming segment. The company also expects a sequential revenue decrease due to architectural transitions.

We believe due to the inflationary environment and tumultuous consumer demand and price cuts, the segment may face a revenue decline in the coming quarters. However, the GeForce Cloud Gaming will continue to grow as more and more players move towards cloud gaming, which presents itself as an inexpensive alternative to premium device gaming.

Pro visualization grows 79.5% YoY to achieve $629 million in revenues

The professional visualization segment’s growth was driven by mobile workstation GPUs enabled by remote office infrastructure against the backdrop of hybrid work environments.

Omniverse enterprise software also proved to be a support for the revenues. The software is being currently used for digital content creation by major enterprises like Sony and Medtronics. Amazon, Kroger and Pepsico are using the software’s digital twin capabilities to optimize their business processes.

As enterprises adopt more Omniverse technologies in their processes, premium GPU configuration systems will become a necessity than an option, and services revenue will continue to contribute to this segment’s growth.

Automotive declines 11.5% YoY at $134 million with uplifting short-term outlook due to Drive Orin SoC

The automotive market declined due to new product cycle ramping in later quarters. Additionally, deals are in pipeline that will take a couple of quarters to materialize. At the time of earnings, the win pipeline was at $11 billion over the course of the next six years.

The segment will be a major growth driver in the coming years due to consumer AV and commercial robotaxis. But as of now, as this market is in its nascent stage, the revenue growth will remain muted in the next quarter.

Data center is the crown jewel with 79.4% YoY growth at $3.6-billion revenue

The A100 GPU drove the data center segment’s revenue past the gaming revenues. Large-volume deployments by hyperscalers and consumer internet companies, financial services, and telecom expansion of IT Infrastructure remained the key growth drivers. From a workload perspective, recommender systems, conversational AI, large language models and cloud graphics were the top workloads that warranted the sale of GPUs and DPUs along with networking to achieve the system architecture required for building systems that can sustain the unique requirements emerging from these workloads.

Outlook for Q2 2022

We expect the data center demand to remain strong for the next quarter due to the H100 systems’ ramp-up, I/O upgrades in servers and large installations – deep recommender systems, large language models and AI models. The almost full-stack solution from Nvidia provides the platform for enterprises to deploy these models in a cost-effective manner.

COVID-19 lockdowns in China and Russia-Ukraine war will impact the gaming market by about $400 million in revenues, with a muted growth in Q2.

Gaming, Data Center Shine in NVIDIA’s 2021 Show; Shortages Hit Networking Revenues

NVIDIA has reported a 62.3% YoY increase in its 2021 revenues to $26 billion. In Q4 2021, revenues were at $7.5 billion, a 52% YoY increase. Gaming, data center and professional visualization segments contributed to the overall growth in revenues. In terms of products, high-end desktop/laptop gaming processors, data center GPUs and AI rendering workload-specific hybrid workstations contributed to revenue growth. Networking revenues suffered most from the shortages and disruptions in the supply chain, followed by GPUs.

Counterpoint Research Nvidia earnings 2021
Annual revenues are CY estimates; Source: Company Earnings, Counterpoint estimates

Segment Revenues

Gaming gets biggest slice of revenues with 46.7% share at $12.2 bn

  • Gaming revenue grew 63.7% YoY to $12.2 billion in 2021

The revenue came primarily from its RTX 30 series of GPUs. Steam grew 50% over 2 years and had nearly 28 million active users by the end of Q4 2021, the second largest for a cloud gaming platform.

RTX GPUs help NVIDIA realize $2 bn in professional visualization segment

  • Professional visualization revenue almost doubled to $2 billion in 2021, realizing the best year for the segment.

Growth due to the COVID-19 driven consumer and enterprise shift to remote workstations that can take higher workloads of AI, 3D renderings and visualizations.

Supercomputer compute helps data center to shine in best revenue year ever

  • Data Center segment reported a growth of 59.1% to $10.2 billion in 2021 to make it a record year for NVIDIA.

Offerings across GPU, networking and software, along with synchronization of technologies stemming from the Mellanox acquisition, have made NVIDIA the leader in accelerated computing. The whole suite of offerings and mass adoption of AI technologies in enterprise applications fueled the demand for accelerators. Supercomputing contributed to <1% of overall Data Center revenues.

Additionally, demand from hyperscalars and cloud focusing on inference workloads and AI workloads contributed to the sales of NVIDIA A100 GPUs, a high-end accelerator. Specifically, Meta has purchased over 6,000 GPUs for SuperCluster, its AI supercomputer for natural language processing and visualization workloads.

Slower lap for automotive revenues with growth of 5.6%

  • This segment proved to be the outlier in NVIDIA’s growth story, posting only 5.6% growth at $573 million and a decline of 18.2% from its best year in 2019.

We believe the decline is due to shift from legacy cockpit processors and an increased focus on software suites that will contribute to revenues over a period of time.

OEM and Others’ segment sees 5.7% revenue growth on volatility

  • OEM and others reported $574 million in revenue, up only 5.7% from previous year
  • Crypto mining contributed about $24 million in the ‘OEM and Others’ segment for Q4 2021. The annual revenues from CMPs (cryptomining processors) were estimated to be about $550 million in 2021.

The visibility of crypto revenues is due to the changes in GPU software launched in Q1 2021 to detect Ethereum Mining Algorithm to ensure the intended supply of GPUs to gamers and dedicated CMPs.

The segment continues to be among the company’s key volatile segments as the revenues fell 77% sequentially from the previous quarter. The factors contributing to this volatility include limited stocks of the GPU processors, geopolitical tensions at the Russia-Ukraine border (Ukraine is one of the leading crypto miners in the world) and the increasing climate impact.

Strategic SHIFT Observation: Becoming Software HERO

According to NVIDIA CEO Jensen Huang, “NVIDIA is a software-driven business. Accelerated computing is a software-driven business”.

As the company comes close to executing its triple chip strategy – CPU, GPU & DPU, with the data center CPU coming next year and sampling late this year, it is extensively focusing on building next-generation software suites that support Metaverse, 3D and robotics.

FOCUS: The company is focusing on creating an end-to-end complete stack of firmware that complements and augments the functionalities of hardware that serves as a one-stop solution to implement upcoming technologies and the required compute demanded by them.

With the introduction of three prominent software suites, the company intends to have a comprehensive software portfolio covering all hardware products:

  1. NVIDIA DRIVE for automotive
  2. NVIDIA AI for data centers and enterprises
  3. NVIDIA Omniverse for individuals and enterprises for creation of virtual content

At last year’s Nvidia GPU Technology Conference, the company announced that the software suites, particularly the Omniverse, would be made available for free to all creators. The company is betting on the business that would materialize from the connection between a real-world entity like robots or connected cars and the virtual world through digital twins. The software would act as a bridge and the company would reap benefits as the bridge becomes busy and populated!

Analyst Takeaways and Future Outlook

Gaming: As announced at CES 2022, the introduction of the RTX 30 GPU series to laptops will bring the AAA gaming experience and accelerated computing to wider audiences, adding to revenues. Penetration of GeForce NOW in 5G mobile devices, smart TVs and newer titles will continue to augment revenues through software subscription.

Data Centers: As the hyperscalars enter the rush of the metaverse and enterprises focus on weaving the AI technologies across all processes, the workloads will increasingly demand the accelerators to achieve objectives. In the short term, the company would be looking to fill the demand gap due to semiconductor shortages in the networking product portfolio.

Cryptomining: In the short term, as economies around the world reel under inflation, rising fuel prices and geopolitical tensions in the East, we expect a limited demand coming from miners this year. However, as the metaverse gains momentum, crypto regulations become more clear and enterprises get familiar with the possibilities of the virtual world, the demand will again start shooting up from later this year/early next year.

Future Deals: Due to the termination of the ARM-NVIDIA deal, the company has now over $20 billion in cash and will look to augment its growing suite of software and hardware peripheries in networking to develop efficient solution stacks.

CES 2022: Chip Biggies See Loads of Action

Against the backdrop of COVID-19 and component shortages, the recently concluded Consumer Electronics Show (CES) kept its date with announcements and launches in the processor ecosystem. We saw multiple releases and announcements from AMD, Intel and NVIDIA for both CPUs and GPUs. Trends that stood out included:

  • Focus on mobile processors — enabling AAA 1080p gaming in mobile/ultra-mobile form factors.
  • Focus on device security by building hardware protocols.
  • Focus on software and hardware offerings that accelerate performance.

AMD: Mobile processors with integrated security, budget GPU

CPU launches

Notebook segment: AMD launched a new series of its Radeon RX 6000 mobile processors that are built on TSMC’s 6nm and have Zen 3+ as core architecture, RDNA2 graphic architecture with LPDDR5, DDR5, Wi-Fi 6E and USB 4.0 support. The processors achieve a clock speed of up to 5GHz, which AMD claims gives up to 69% faster video editing, 125% faster 3D rendering performance and double the 1080p gaming performance when compared to the Ryzen 5000 series. Additionally, these processors are the first ones to integrate Microsoft Pluton Security Processor that helps in eliminating attack vectors and protecting critical data.

AMD also introduced new power management features and an adaptive power control framework to improve the power efficiency of the new processors, promising up to 24-hour battery life, 30% less power consumption during a video conference and 15% less while web browsing.

Desktop segment: AMD launched the Ryzen 7 5800X3D featuring AMD 3D V-Cache technology, claiming it to be the fastest desktop gaming processor. It also teased Ryzen 7000 Series processors, the next-generation “Zen 4” core-based processors built on the 5nm process, to be released later in 2022. These processors promise to be the next big thing in AMD’s kitty since 2017 as they carry major architectural changes, like a pivot to LGA (land grid array) as compared to BGA (Ball Grid array), 5 GHz clock rate for all cores and PCIe 5 support.

GPU launches

Notebook segment: AMD launched a new series of discrete GPUs, Radeon RX 6000S, for the notebook and ultra-slim form factors. The series is purported to achieve up to 100 fps (frames per second) for the ultra-thin mobile gaming segment. AMD also expanded the Radeon RX 6000M series for its extreme gaming laptop to offer entry-level and mid-range options.

Desktop segment: For the GPU category, AMD launched its budget-friendly GPU RX 6500 XT at $199 with a 2.6 GHz game clock and 16MB infinity cache. It also launched the RX 6400 graphic card to bring 1080p gaming to the mainstream market. This can be considered as AMD’s effort to establish a stronghold in the GPU category and its acceptance of FSR technology (AMD FidelityFX™ Super Resolution).

Software announcements

AMD Software Adrenalin Edition will be upgrading its platform to enable low-latency and high-fidelity gaming. To be released in spring 2022, the upgrade includes AMD’s Radeon Super Resolution (RSR), a spatial upscaling technology to enhance gaming experiences at native resolutions. Additionally, it will feature AMD Link 5.0, an application that allows users to play their PC games on a phone, tablet, or Windows PC from virtually anywhere.

Intel: 20+ new mobile processors, 50 processors in total including discrete GPU

COunterpoint Research Intel 12th Gen Mobile Processors
(Credit: Intel Corporation)
CPU launches

Notebook segment: Intel released 22 new 12th generation processors, including a new P series of ultra-portable mobile processors. These bring dedicated levels of performance, earlier available in desktops and extreme gaming laptops, to thin-and-light laptops. Developed on the big.LITTLE architecture with both performance and efficiency cores, this single, scalable SoC architecture is built on Intel 7 process and supports DDR5, LPDDR 5, Wi-fi 6E and USB 4.0. The P series works as an intermediate offering between the H series of laptops, aimed at extreme workloads, and the U series, aimed at the ultra-portable segment. According to Intel, the H-series processors are the fastest mobile processors ever, outperforming even the Apple M1 Max in content creation.

The interesting thing about these 12th generation mobile processors is the implementation of the big.LITTLE architecture ARM style, as seen in the Alder Lake Desktop CPUs last year. The major upgrade comes due to the number of cores Intel is offering for the CPUs. The H and P series have 14 cores in total, whereas the U series has 10 cores, compared to 8 in the H series and 4 cores in the U series in the 11th generation.

Desktop segment: Intel launched 22 new processors (both in 65W and 35W), unveiling the complete range of 12th generation CPU processors that have clock rates up to 5.1 GHz and support DDR5 memory. Besides, it launched a new cooling system, Intel® Laminar Coolers, which accompany the new 65W processors.

GPU launches

Billed as its comeback in the discrete GPU market, Intel announced shipments of Intel Arc graphics (codenamed Alchemist) with 50 new mobile and desktop customer design wins. Intel Arc graphics offers industry-leading advanced features such as hardware-accelerated ray tracing, Xe Super Sampling (XeSS), AI-driven upscaling technology and Intel Deep Link technology. The Intel technologies help in intelligently routing power between CPU and GPU processing engines to boost performance by distributing workloads across multiple engines. This does not represent the introduction of any new technology but Intel’s ace execution of a strategy to gain market share.

Automotive launches

Intel Mobileye announced a new system-on-chip (SoC) that is purpose-built for autonomous vehicles (AVs). The EyeQ Ultra is built on Mobileye’s industry-leading EyeQ technology and brings the work of 10 EyeQ5 SoCs in a single package [176 tera operations per second (TOPS)] to deliver the technology required for a fully self-driving vehicle. The interesting thing is that it is fabbed on 5nm and is built on RISC-V cores.

Mobileye also announced a collaboration with Geely’s Zeekr brand to launch the industry’s first Level 4 consumer AV, expected to begin production in 2024. It also announced the launch and shipment to customers of the industry’s first fully capable Level 2+ vehicle equipped with a 360-degree surround-view sensing system and driving policy for the industry’s most advanced longitudinal and lateral control.

Software announcements

Intel announced the launch of its 3rd generation Intel Evo platform that meets the specifications and key experience indicators set by Intel’s Project Athena Innovation Program. The platform enables better responsiveness, battery life, instant wake function, fast charge, and intelligent collaboration. The intelligent collaboration aims to deliver enhanced experience through video-conferencing apps by leveraging AI-based background noise cancellation, integrated Intel Wi-Fi 6E (Gig+), Intel® Connectivity Performance Suite6, and optional AI-accelerated camera imaging effects.

Intel vPro platform

Intel announced an upgrade to its vPro platform that provides hardware-based security options to consumers with two variants – Enterprise and Essential – to cater to all businesses.

NVIDIA: New GPU cards for laptops, adoption of Drive Hyperion platform

GPU launches

Notebook segment: NVIDIA launched new GPU cards GeForce RTX 3080 Ti and RTX 3070 Ti for laptops for the first time. Aimed as extreme and mid-level performance variants, these GPUs feature 16GB GDDR6, which is a first for laptops, and promise to deliver higher performance than the desktop TITAN RTX. NVIDIA claims that these perform average seven times faster than the latest MacBook Pro 16 M1 Max in 3D renders.

NVIDIA also launched a budget GPU – RTX 3050 ($249), which allows consumers to play ray-traced games on a 50-class GPU at over 60 fps for 1080p gaming. This GPU is a bit above AMD’s 6500XT, which is more comparable to its GTX 1650. NVIDIA also teased its RTX 3090 Ti discrete graphic card, the most powerful discrete desktop graphic card till now.

Software announcement

NVIDIA announced the adoption of its Drive Hyperion platform that has 12 state-of-the-art surround cameras, 12 ultrasonics, 9 radars, 3 interior sensing cameras and 1 front-facing lidar. NVIDIA Drive Hyperion is computer architecture and sensor set for autonomous vehicles that are open to all. NVIDIA announced Desay, Flex, Quanta, Valeo and ZF as its platform scaling partners and Polestar, IM Motors, Li Auto, NIO, R Auto and Xpeng as the companies adopting the platform.

NVIDIA Studio: NVIDIA Studio, a platform for creators, has expanded its support for NVIDIA Omniverse to enable real-time simulation of complex 3D workflows.

Analyst takeaways

This year’s launches from chip companies focused on:

  • Introducing chips in an ultra-mobile notebook form factor that can offer desktop-level performances with the least compromise on battery life.
  • Product offerings spanning the whole spectrum from entry-level and mid-level to extreme performance focusing primarily on mobile/ultra-mobile form factors.
  • Making GPU affordable and consequently 1080p gaming.
  • Comprehensive software suites and upgrades to extract maximum efficiency from the hardware while harmonizing with the OS to enhance user experience and collaboration across apps.
  • A sneak peek into the wonders of the omniverse and, more importantly, how to ‘use’ it.

This year will continue to raise the bar as we await the release of next-generation CPUs and GPUs in the second half. The companies’ enthusiasm towards making technology accessible in all form factors and budgets opens the door to mainstream adoption of the fundamentals of the omniverse.

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Microsoft Bets Big on Cloud Gaming

The recently-concluded edition of the annual Electronics Entertainment Expo (E3), where the video game industry gets together and showcases the latest and greatest upcoming game titles, had many key announcements. Microsoft’s Xbox Cloud Gaming announcements demonstrated its ambitions to build out its cloud gaming offerings and services. Another console giant, Nintendo, announced two new cloud-based games for the Nintendo Switch. Nvidia’s GeForce Now, Google’s Stadia and Amazon’s Luna announced more additions to their libraries. However, all these announcements were dwarfed by Microsoft’s lofty goals for cloud gaming.

Current cloud gaming efforts

There are already multiple cloud gaming experiences available, each catering to slightly different consumer groups. Nvidia’s GeForce Now enables PC players to stream their PC games on different iOS and Android devices. Then there are exclusive cloud-based platforms such as Google Stadia and Amazon Luna which enable you to play games on your browser, streaming stick, and certain Android and now even iOS devices (for Stadia). Lastly, console makers such as Sony, Nintendo and Xbox have their own cloud-based offerings. PlayStation Now is the most traditional approach, allowing subscribers to stream older PS2, PS3 and PS4 games on demand on their latest consoles and Windows PCs. Nintendo has a cloud streaming service for the Nintendo Switch, called Nintendo Cloud Streaming, which enables players to run full games on their Switch that they are able to purchase from the eShop. It is the most nascent cloud offering, having only four titles so far. Microsoft’s cloud gaming service Xbox Cloud Gaming comes as an added benefit with its monthly Xbox Game Pass Ultimate subscription. Formerly known as Project xCloud, this cloud gaming service enables streaming of over 260 titles to various devices. There are various other cloud gaming providers as well.

Shadow (which just got acquired by Jezby Cloud) offers a cloud computing service that enables subscribers to have access to a high-end computer in the cloud that they can use for gaming or other processor demanding applications. Other players like Blacknut and Boosteroid specialize purely in video games streamed from the cloud. The market itself has slowly been consolidating. Hatch, which specialized in mobile cloud gaming, shuttered its offices in 2020 despite having early promising deals with carriers such as AT&T. Jump on This, another smaller cloud gaming provider specializing in indie-games, also ceased operations in 2020.

Cloud gaming competition 2021

Microsoft’s E3 announcements and follow-ups

Microsoft spoke at length about its vision for cloud gaming, and it didn’t stop at selling consoles. Xbox Game Pass Ultimate (which retails for $15 per month and is essentially an all-you-can-eat buffet of games) enables subscribers to stream video games through web browsers now, which gives Microsoft much farther reach as it can be used on iOS devices such as iPhones, iPads and Macs through browser support for Safari and Chrome. Xbox Game Pass Ultimate will also launch in Australia, Brazil, Mexico and Japan later this year.

Microsoft is further expanding its reach to more actual screens, as it plans to integrate directly into internet-connected TVs by working with TV manufacturers. It is also working on its own streaming device to enable cloud gaming on any display. Lastly, Microsoft is upgrading its data server racks to Xbox Series X servers to improve the streaming experience.

The server update went live just a week after the E3 announcements. Now, over 260 games can be played with the new Series X server blades enabling faster loading times, higher refresh rates and more graphics-related options. Not to be outdone, Microsoft has also hired Google Stadia design director Kim Swift to be a part of Xbox Game Studio Publishing to help build partnerships with independent studios for new cloud games.

Xbox Game Pass Ultimate

The Implications

These are by far the biggest announcements Microsoft has made on cloud gaming. With an aim to reach 3 billion players, the company is first integrating cloud gaming more into its core competency, i.e. consoles. Many products such as Google Stadia and Amazon Luna are using cloud gaming as a standalone model as they see this as the future of gaming. However, there are still issues of latency and connectivity that make cloud gaming cumbersome at times.

What Microsoft is doing is building the foundation for a future where cloud gaming will be the center of its strategy. For now, it is utilizing the technology and features of cloud gaming to bolster its console play. For example, it allows consumers to first try out a game via the cloud before purchasing and downloading the full version for the console. Cloud gaming will certainly continue to grow and improve on performance.

2021 may be a breakout year for cloud gaming, especially with current component shortages limiting the supply of consoles and other tech gadgets. 5G can be another driver for cloud gaming despite previous false starts. Stadia has previously partnered with Verizon 5G Home to offer Stadia Premier Edition, including a Stadia controller for free for three months, in 2020. In June 2021, AT&T began offering Stadia Pro for six months to new 5G unlimited wireless subscribers. The hardest part of these subscription offerings is providing a demonstrable value-add for consumers to continue paying for the subscription once the free period ends. 2021 looks to be the most promising time for these cloud efforts to become sticky and show growth.

First Impressions: Asus ROG Phone 5 Brings Promising Upgrade, But Competition Gets Fierce

  • The Asus ROG Phone 5 is powered by the latest 5nm Qualcomm Snapdragon 888 SoC.
  • It is one of the first smartphones to feature up to 18GB of RAM.
  • The gaming smartphone supports Sub-6GHz 5G and Wi-Fi 6E connectivity.

Asus has refreshed its gaming smartphone line-up by introducing the ROG Phone 5 series nearly three months earlier than the usual June time frame. This time around, there are three models – the regular ROG Phone 5, followed by the ROG Phone 5 Pro variant, and then a special limited-edition device, the ROG Phone 5 Ultimate. Compared to the ROG Phone 3 which we reviewed last year, the new smartphones bring a bold design language, powerful stereo speakers, and display with the lowest touch latency on a smartphone, among many other features.

One of the highlights of the ROG Phone 5 Ultimate edition is that it comes with a whopping 18GB of RAM from SK Hynix. I got a few hours to spend with the regular ROG Phone 5 and below are my first impressions.

Asus ROG Phone 5: Specifications, Pricing and Three Device Strategy

The bump in specifications along with new and improved features has also resulted in a price increase over the previous generation. While the ROG Phone 3 was priced around $560 in regions like India and around $820 in the US, the ROG Phone 5 starts at $950 in the US. In India, the same sees a jump to around $690. A lot of factors could contribute to the price rise, such as the ongoing global chip shortage, and increase in prices of key components like PMICs for 5G and display.

Commenting on Asus’ strategy, Senior Research Analyst Maurice Klaehne said, “The latest Asus ROG 5 devices once again push the boundaries for gaming smartphones a little further. The devices once again feature a 144Hz refresh rate and AMOLED screen, but bump up the touch-sampling rate to 300Hz, and touch-sampling rate of 24.3ms which is the lowest on a smartphone. The latest 5nm Qualcomm Snapdragon 888 SoC makes the phone blazing fast. Asus is also coming out with three different models to cater to its growing customer base. While the devices still lack wireless charging and camera features continue to fall behind the competition, Asus is clearly showing it wants to differentiate by focusing on gaming-specific enhancements and features.”

counterpoint rog phone 5 series specifications

Improved Gesture Controls Along with Unique Unboxing Experience

Right from the unboxing experience, Asus has given special attention to offering something unique to the users. After you unbox the phone and begin the setup process, a screen will prompt you to give camera permissions to be able to scan the augmented reality (AR)-based graphics printed on the box. It makes the characters come alive and is an experience that you will not find with other smartphones.

Talking about the design, Asus has constantly improved the look and feel of the ROG Phones. These refinements also aim towards offering a console-like gaming experience, and the ROG Phone 5 takes it a step further. It offers a glass back with a nice two-tone texture with gaming aesthetics. The RGB logo still exists, but it now has a dot-matrix anime style that stands out, without looking too flashy.

counterpoint ROG Phone 5 back

The four ultrasonic touch controllers (Air Triggers) on the right edge, along with motion control, rear touch and buttons on the aero active cooler, now offer a total of 18 controls to enhance your gaming skillset. Aeroactive cooler accessory is bundled along with the smartphone and offers a USB Type-C port for charging, a 3.5mm audio jack, a dedicated cooling fan, and a kickstand.

counterpoint ROG Phone 5 aeroactive cooler attached

Fastest Hardware, More Responsive Touch, and Immersive Audio

The Asus ROG Phone 5 features the fastest hardware available today to offer the best experience. This includes a 5nm Qualcomm Snapdragon 888 SoC with 8GB/12GB LPDDR5 RAM, and 128GB/256GB UFS 3.1 storage. As mentioned above, there is also an Ultimate edition model that gets 18GB of RAM and 512GB of storage. But Asus is not the only gaming smartphone maker to offer 18GB of RAM, even nubia Red Magic 6 Pro has a variant with the same RAM and storage configuration.

Moving to the display, you get a Samsung AMOLED panel with a 144Hz screen refresh rate and FHD+ resolution. But Asus has improved the touch sampling rate to 300Hz, and latency to just 24.3ms, which is the lowest on any smartphone to date. This should improve the touch response when gaming. Asus has also added a Pixelworks i6 co-processor for dark noise suppression, skin tone management, real-time SDR to HDR conversion, and more.

counterpoint ROG Phone 5 front

For sustained peak performance during your gaming sessions, keeping the thermal levels low is important. And the ROG Phone 5 comes with a centered CPU design, and a larger 3D vapor chamber cooling using graphite sheet along with direct airflow design. Asus says it helps in lowering CPU temperature by 10%, and surface temperature by up to 15%. With the entered CPU design, the ROG Phone 5 also comes with two separate 3,000mAh batteries with up to 65W HyperCharge technology. However, the box comes with a 30W adapter.

Lastly, Asus has also brought back the legacy 3.5mm audio jack. It features an ESS DAC and Dirac tuning for better frequency response, and clear audio. You also get front-firing stereo speakers on the smartphone. In the little time when I used the smartphone, the audio was loud enough with a wide soundstaging. The volume was the loudest I have experienced on a smartphone yet.

Initial Impressions: Can Powerful Hardware, Improved Gesture and Touch Controls be Enough?

The ROG Phone 5 brings a striking design that sets it apart from the competition. Under-the- hood improvements in terms of more RAM, new Snapdragon 888 SoC, dual battery and improved thermal management make it a promising upgrade. Asus has also improved the audio quality and refined the software among many other changes. Asus says it has fine-tuned the cameras as well. Given that the ROG Phone 3 cameras had mediocre quality, it will be interesting to see how the new smartphone does it better. We will answer that in our detailed review, so stay tuned for that.

Besides, the ROG Phone 5 also faces fierce competition from nubia RED Magic 6 series which brings 165Hz screen refresh rate, and top end model with 18GB of RAM. Even Black Shark launched the 4 and 4 Pro gaming smartphones yesterday, whereas Lenovo is set to launch Legion 2 Pro gaming smartphone on April 8. Certainly, more smartphone makers are now focusing on the hardcore gaming users.

BONUS VIDEO: Unboxing and Top 5 Features of Asus ROG Phone 5

Also Read: Strategic Reviews and Insights on Latest Smartphones

Podcast: Gaming Smartphones are More Than Just Flagships

Mobile gaming has come a long way over the past two decades. From popular Snake game on Nokia phones with a monochrome display to 2D games on color screen phones and 3D gaming on smartphones, it has evolved a lot. We have seen Symbian OS phones like the Nokia N-Gage, early Android phones like the Sony Xperia Play and dual screen phones like the LG G8X ThinQ. And now, there is a completely new breed of gaming smartphones out there, such as the Asus ROG Phone 3, Razer Phone 2 and Lenovo Legion, which is much more than just flagships.

The gaming smartphones are more powerful than the regular flagship smartphones in terms of hardware, design and capabilities. In fact, popular features such as high refresh rate displays, vapour chamber cooling and dedicated gaming mode were first introduced in gaming smartphones. But what differentiates these special phones from regular flagship smartphones? And who are these phones meant for? We discuss all that and more in a podcast.

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by Dinesh Sharma, Business Head, Commercial PC and Smartphone, Asus India, to talk about gaming smartphones, mobile gaming, 5G, cloud gaming and much more.

Hit the play button to listen to the podcast

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Google Cloud: Customer centricity critical for future growth

Over the past year, we have seen an evolution in Google Cloud’s strategy.  Building on the company’s strong technology and product foundation, Google Cloud has taken the next step by becoming more customer-centric.  As CEO Thomas Kurian put it in a recent interview, their goal has been to pair their expertise with “empathy for what [their customers] are facing”.  This focus on the customer mirrors the state of the cloud market, which effectively began as a SaaS product back in the early 2000s, to an efficiency play circa 2006, to what is today very much a problem-solving story.  This means offering solutions versus capabilities, requiring the tech giant to rely more on partnerships and acquisitions to help it move up the software stack and navigate market shifts quickly.

There have been numerous acquisitions in the past year which have enhanced Google Cloud’s capabilities across big data, analytics, storage, hosting, and gaming, ultimately expanding the ecosystem of solutions available to their customers.  The acquisitions include:

Exhibit 1:  Recent Google Cloud acquisitions/integrations

Google Cloud Acquisitions 2019
Source: Google Cloud. *Typhoon Studios was acquired by Stadia, Google’s cloud gaming division.

Google Cloud’s customer-centric transformation is being touted as a key factor in recent big wins, and examples below highlight the strategic role the company is enjoying across much of its customer base.  Significant customer wins and partnerships over the past year include:

Exhibit 2:  Customer wins and partnerships

Google Cloud Customer Wins 2019
Source: Google Cloud, customer announcements. *Banking, Financial Services, and Insurance Sector.

The cloud infra and services market will remain hyper-competitive as AWS continues to dominate, and other tech giants ramp up efforts to gain share in a market that is expected to continue double-digit growth through the medium term.  Google Cloud’s strength comes from its artificial intelligence and machine learning capabilities, which allows the ad side of Google’s business to understand consumers like nobody else.  Google Cloud’s ability to translate this strength to the enterprise will be a major factor in gaining market share, requiring not only an expanded team (the company is looking to triple its sales force over the next two years) but maintenance of the core ‘expertise plus empathy’ culture set forth by CEO Kurian during the company’s transformation last year.  In the end, like all transformation stories, success will depend as much on Google Cloud’s people as it does on their products and processes.

Playing in the Clouds

Cloud gaming is getting a lot of attention. While many companies have been quietly pursuing this concept for years now, like OTOY Inc., recent announcements from tech giants and the potential for 5G delivering cloud gaming, the sector has gained a sharper focus. This is a quick snapshot of recent developments and likely next steps in the still-nascent world of cloud gaming.

Cloud gaming and big tech

  • In March 2019, Google announced its cloud gaming platform, Stadia. It will launch later this year and will run on Google’s custom GPUs powered by AMD with around 10.7 teraflops of processing power. Individual gamers will benefit from an effective processor speed of around 2.7Ghz and 16 GB of RAM, roughly equivalent to a gaming PC.
  • With plans to launch Project xCloud, Microsoft is getting serious about adapting its strength and capability from the console arena to the cloud domain.
  • Other competitors include Snapchat, which is expected to launch a gaming platform in 2019. Parent Snap Inc acquired PlayCanvas, creator of an HTML5 game engine that will serve as the core of the new venture. The company also acquired Prettygreat, an Australian studio, which fits into its initial strategy to build games in-house to showcase the platform.
  • Long-time console gaming leader, Sony, announced a partnership with Microsoft in May 2019. This came as a surprise for many, as both companies spent almost 15 years competing in the gaming console market. However, with little cloud capability, Sony is choosing a pragmatic approach by working with one of the cloud powerhouses despite the potential conflict of interest.
  • Tencent, with a huge userbase and investment in cloud infrastructure, will be a key player in China and likely other south Asian countries. Tencent Cloud unveiled its cloud gaming platform, ChinaJoy. However, replicating the same success outside China will be an uphill task. The south Asian and sub-continent market will be an initial testing ground for the company’s global expansion ambitions.
  • NVIDIA’s GeForce Now, cloud gaming platform currently in beta testing mode, will be available in North America and Europe in Mac, Windows and SHIELD TV controller. NVIDIA has partnered with Softbank and LG U+ to expand its regional coverage to Japan and Korea. It will also be made available on Android.

Cloud Gaming Startups

Source: Shadow cloud gaming

  • Blade, a French company, introduced its Shadow cloud gaming service which provides virtual access to cloud gaming PCs that currently provide eight-thread Intel Xeon CPUs, Nvidia Quadro P5000 GPU/GTX 1080 graphics cards, 12GB of RAM, and a 256GB solid-state drive.
  • Parsec developed offers virtual gaming PCs. Unlike Blade’s Shadow, Parsec provides AWS and Paperspace support for virtual gaming machines. The company recently teamed up with Samsung to develop a game streaming app (PlayGalaxy Link app) for Samsung Galaxy Note 10 series users.
  • LiquidSky is developing virtual gaming PCs (currently in closed beta) to bring high-end PC games like Fallout 4, Call of Duty, Witcher 3, Rocket League to Android smartphones users. The company’s data centers are located in San Jose, Dallas, Washington D.C., Frankfurt-Germany, London and Hong Kong.
  • RemoteMyApp launched a public beta for a cloud gaming service Vortex Cloud Gaming. The company’s cloud streaming app has been downloaded more than 10 million times.

With 5G Operators looking for a new revenue stream

  • The success of cloud gaming platforms will depend on their ability to build partnerships with key internet service providers and data compression technologies. Thus, operators will play key roles to build edge computing abilities for a latency-free experience. With the arrival of 5G and an increase in the penetration of fiber to the home (FTTH) broadband, cloud gaming will become a key source of data revenue for operators in the next five years and beyond.

Source: Hatch

  • Understanding the opportunity, NTT DoCoMo has invested in Finland-based cloud gaming company Hatch Entertainment Ltd.
  • Sprint has also teamed up with Hatch Entertainment to offer mobile cloud gaming services on Sprint’s 5G network in the U.S. The Sprint-Hatch deal will offer unlimited on-demand access to a curated portfolio of more than 100 premium mobile games, including exclusive Hatch Originals like Arkanoid Rising. It will also provide Hatch Kids, a segment for kids to create and learn environment without any advertising or in-game purchasing option.
  • Vodafone is also working with Hatch to bring 5G cloud gaming to UK and Italy customers.

Big game developers

  • Mobile will play a key role in democratizing cloud gaming in mobile-first developing countries. We are already seeing some large game developers adapting their hit games to be more mobile-player friendly.
  • Eventually, large game processing will be fully offloaded to the cloud. Following the Tencent PubG success, Call of Duty is likely coming to mobile this year and other big console games will likely follow a similar path.

Looking Forward

  • Cloud gaming platforms will need to develop close working relationships with major game developers. Bigger platforms will likely develop their long-term relationship with game developers to bring exclusive games to their platforms to increase their brand value and customer loyalty.
  • Operators have the opportunity to develop data compression and edge computing capabilities for faster data processing and create an additional value proposition. This infrastructure support further can be packaged as a different module for other areas including Smart Vehicles and IoT.
  • With the increase of cloud gaming platform penetration, the game publisher will have a bigger audience to serve globally. Esports will further gain popularity.
  • While Google and Microsoft could well get an early-mover advantage in the cloud gaming segment, Amazon is a potential competitor. It already owns Twitch, which streams live videos of gaming action. Along with Twitch, Amazon’s extensive AWS cloud platform positions the company well to compete with Google and Microsoft in the cloud gaming space. Longer-term, it’s likely to be a Google, Amazon, Microsoft triopoly in western developed markets, while Tencent and Alibaba will lead in the Asian market. Reliance Jio network and cloud infrastructure will be a key player in India.
  • Private game server providers for multiplayer games (like Hosthavoc, Voodooservers, Streamline-servers, Extravm, etc.) will likely take a hit. Some might even switch focus to cloud AI, deep learning and data processing for enterprises. Some of the platforms for competitive gaming like FACEIT, ESL will also likely lose out in the longer term.
  • We are seeing a Netflix moment for the gaming industry. We believe PC, mobile, console and cloud gaming will co-exist in the short term. With the broader availability of 5G wireless and FTTH broadband networks, cloud gaming will start getting mainstream by 2021 in developed countries.
  • DVD players have been almost entirely superseded by streamed content. Gaming hardware is likely to become similarly obsolete. Cloud infrastructure players with the right game publisher partnerships will likely win the lion’s share of gamers. The faster a cloud gaming platform gets the ecosystem right, the more likely it will lead the race for the long term.

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