Nvidia's Tegra 3 plan: Superphones, Android tablets soon, Windows 8 later

Nvidia delivered about $360 million in annual sales for its Tegra 2 smartphone and tablet chip and is looking at least 50 percent growth in the year ahead.

Huang: Always optimistic about Android tablets

The bet for Nvidia is that its Tegra 3 sales will surge with superphone unveilings at the Mobile World Congress in a few weeks, followed by steady design wins leading up to the Windows 8 launch.

Related: Nvidia Q4 revenue beats lowered expectations, misses outlook

Nvidia's sales expectations for Tegra 3 were noted on the company's fourth quarter conference call. CEO Jen-Hsun Huang said:

Tegra 3 tablets are starting to ramp in the marketplace. But this quarter, we are expecting to announce and ship Tegra 3 based superphones. And rumors of them are starting to -- and excitement about them is starting to leak. But at Mobile World Congress is when we expect to announce these devices. And we'll expect to announce and ship them this quarter. And so we're expecting Q1 to be a sharp uptick in Tegra sales and shipments. Our expectation is Windows 8 is later in the year. And Microsoft has given their estimates about Windows 8, and our expectation is that there will be meaningful contributions from Windows 8 later in the year, starting probably in Q3.

The challenge for Nvidia's Tegra 3 plans are that the tablets are largely based on Android, an OS that hasn't dented Apple's iPad juggernaut, and Windows 8, which may not become a tablet superstar either.

Huang, however, noted that Windows 8 isn't expected to account for the vast majority of the company's growth rate in the year ahead. Those comments indicate that Huang things Android will lead a tablet charge. Huang added:

We have now three generations of Android operating systems and devices behind us. We have 10s and 10s of smartphones and 10s of tablets. We have engagements with nearly every single Tier 1 OEM in the world on the mobile side, as well as on the computing side. And so I think that, this was a pretty big year from that perspective. And because of that traction and because of that -- the success we've seen, we think it's really makes sense for us to double down on mobile computing, and go after it in a big way. And so we're going to have a lot more product this year than last. And you're going to see that we're going to have tablet devices, as well as tablet processors, as well as integrated processors with modems. So this is -- this is an aggressive investment surely, but it's a very big market opportunity as you know.

Overall, Huang sounded like he was focused on China for volume as well as a good reception for Windows 8 on ARM and Android Ice Cream Sandwich. The other elephant on Nvidia's conference call was the fact that the chipmaker's key partners don't include Apple and Samsung, two device makers running away with the mobile market.

Huang concluded:

Ice Cream Sandwich addressed a lot of the challenges that the tablet industry had, Android had last year, with fragmentation. But now with Ice Cream Sandwich, your phone is Ice Cream Sandwich, your tablet is Ice Cream Sandwich, all the applications that come off of the marketplace can work on both. So I think the unification, it is the only operating system that allows that today, and so that's -- that I think is a great advance for the tablet market. And then lastly, at $249, if we can bring a quad core, if we can bring Tegra 3 to $249. And for those people who have seen it and have touched it, that tablet's going to sell like hotcakes we believe, because it's the right price point, it's completely general purpose, and it's state-of-the=art. So we have reasons to believe that this tablet market is far from over, and that there's a lot of interesting opportunities and differentiation to be brought to this market yet.

The challenge for Huang is that we've heard these pronouncements from Nvidia before and things didn't exactly play out according to his script.