NVIDIA's Shield Threatens AMD and Nintendo

NVIDIA's Shield Threatens AMD and Nintendo

When it was released last year, NVIDIA's Shield was sort of a strange novelty, hardly worth its $299 asking price. While it saw some demand, the Shield was hobbled by its library -- it was only capable of playing Android games.

Owners of Nintendo's rival 3DS have access to exclusive high-quality titles including Pokemon and The Legend of Zelda -- NVIDIA's Shield, in contrast, could only offer up Angry Birds and other games easily accessible to just about anyone with an Android-powered smartphone.

But it's been nearly a year since the Shield debuted, and in that time, NVIDIA has made some remarkable improvements to its device. Next month, the Shield will get even better, and its continued improvement threatens both Nintendo and NVIDIA's longtime rival AMD .

The ultimate handheld console
Last October, NVIDIA updated the Shield, patching in a feature known as GameStream. As its name implies, GameStream works by beaming games from the owner's PC directly to their Shield. While the PC runs the game, the Shield receives it, allowing the tiny handheld to play even the most graphically demanding of games. PC gamers, tired of sitting at their desk, can play their games in any room of the house -- perhaps in the living room or lying in bed.

To some, the feature may sound superfluous, but there's obviously demand for it. Nintendo has been praised for offering something similar with the Wii U (Sony's PlayStation 4, paired with the Vita, also offers remote play).

But next month, GameStream will get much better -- NVIDIA plans to add a feature Nintendo's Wii U can't match. Soon, GameStream will work outside of the home, giving players the ability to access their PC games from literally anywhere.

Of course, there are some technical limitations, but with the ability to use GameStream outside of the home, NVIDIA's Shield is now a legitimate competitor to Nintendo's 3DS. With the Wii U falling far short of its expectations, Nintendo is relying on its handheld gaming business more now than ever before. While I wouldn't expect NVIDIA's Shield to completely cannibalize the market for Nintendo's handhelds (or even come close), it will put further pressure on a business that's already showing signs of weakness.

A killer feature AMD lacks
It's not just Nintendo that's threatened by NVIDIA's Shield -- AMD could be poised to sell fewer graphics cards if NVIDIA's handheld catches on. In order to use NVIDIA's GameStream technology, PC gamers need more than just the Shield -- they also need a an NVIDIA graphics card.

Collectively, AMD and NVIDIA control the market for PC graphics cards. NVIDIA has generally maintained a slight lead in terms of market share, but AMD has been working hard to take a larger chunk of the market. If the Shield becomes a popular piece of hardware, however, it could result in AMD selling fewer graphics cards -- gamers looking to take advantage of GameStream would have no choice but to purchase an NVIDIA card.

The limitations of streaming
But as I said, there are some technical limitations, and it's worth noting them before getting carried away.

Obviously, GameStream requires an Internet connection, but not just any connection will do: NVIDIA recommends gamers have a home broadband connection with at least a 5Mpbs upload (not download) speed. That's not rare, but it's far from common -- Comcast, for example, offers it, but only on its more expensive Internet packages. NVIDIA also encourages gamers to use the Shield with high-quality routers.

But even with its limitations, NVIDIA's Shield is an exciting product, one that stands to push the boundaries of PC gaming. If it catches on, it should be great for NVIDIA, but not so great for Nintendo and AMD.

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The article NVIDIA's Shield Threatens AMD and Nintendo originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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