Google (NASDAQ: WelfL) (NASDAQ: WelfL) announced on Tuesday a potentially breakthrough cloud game service, Stadia. As with other similar online services from Microsoft (MSFT) and Nvidia (NVDA), this service does not require users to buy dedicated game boxes or download new software. An introduction can be found on this Wikipedia page.
The service game is changing in that it is designed for a seamless user experience, and above all, offers an online gaming experience that is roughly comparable to the main stream (not high). PC-based gaming experience. Stadia claims to support streaming of games at 1080P resolution at a rate of 60 frames per second. This level of play is considered necessary by mainstream players.
Google's proprietary Wi-Fi controllers (pictured below) are another key element of the puzzle. These controllers use a very clever implementation from Google. Unlike traditional controllers that connect to the console, these WiFi-enabled connectors connect directly to the Google gaming servers in the cloud. Google servers store information about all active controllers and can associate each controller with a specific customer game stream. When the cloud gaming server receives an input from a particular controller, it is directed to the appropriate game stream. This approach is far superior to any other controller implementation we've seen so far. Connecting the Wi-Fi connection to the Google Cloud directly reduces controller latency, allowing Stadia to deliver low-latency services with less disruption.
From the customer's perspective, Chrome, Android, and YouTube is one of the application platforms that drive customers and visitors to the service.
The combination of cloud infrastructure, application infrastructure and the innovative controller is the secret that makes Google Stadia a compelling force, the Netflix (NFLX) for gamer comparisons.
Google's presentation suggests a sophisticated control architecture We first read that Stadia Massively enables high-quality multiplayer games that would enable an unprecedented genre of multiplayer games.
Above In addition, Google Assistant facilitates the provision of in-game services through Google Assistant – such as cheats for different levels of gaming – as we saw at Apple (NASDAQ: AAPL), in-game services for the service provider (Google) and game developers may be lucrative.
It is extremely difficult, if not impossible, for most other companies to duplicate this type of infrastructure. Microsoft XCloud and Amazon (AMZN) are notable exceptions and can pose a significant competitive risk. Both companies have a cloud and application infrastructure and have the hardware know-how to build a comparable controller. In particular, Microsoft has great prospects as its cloud infrastructure competes with Google's globally, and Microsoft also has the experience and the advantage of working in the game console business for years.
There are other players, mainly hardware-based, whose prospects are increasingly dubious in this new competitive environment. Sony (SNE), Nintendo and Nvidia are some of the names that fall into this bucket. The challenge for these vendors is that cloud gaming will change rapidly and these companies do not have a Google-like software background or infrastructure to compete on the order of magnitude.
Note that Stadia is just a service announcement and many are unanswered. Ask here what games will be available, how Google will calculate the service, and how developers can make money with this new business model. With the launch of Google in 2019, we may not have to wait long to get answers to some of these questions.
No matter what role Google ultimately plays in this online gambling market, the ultimate market for these gambling services could be much larger than the current gambling market, as the online nature of the games can bring many casual gamers into the group. We may hear more about "Binge Players" as we hear from Netflix "Binge Watchers" today. From an end-user perspective, this is another online entertainment path that can be accessed with multiple devices and applications. As a result, Google Stadia has the potential to significantly expand the market.
Impact on Semiconductor Manufacturers
One of the main advantages of Google's presentation was the need for an edge architecture to reduce system latency and achieve higher performance possible. According to Google's linked blog post, there were more than 7,500 edge nodes on Google in January 2018. This number is likely to increase as Google expands its service presence. While Google will not provide gambling services throughout the network in the initial stages, there should be little doubt that game instances will be deployed over time on the majority of these nodes.
It is likely that other cloud providers will be resorting to providing edge services to provide low-latency gaming services. This kind of edge deployment increases the need for Google and other players to implement a widespread implementation of cloud gaming hardware, so CPU and GPU needs can quickly increase, even with low online gaming penetration ,
Essentially, stadia and related services are expected to have a significant impact on the CPU and GPU markets. The semiconductor players AMD, Intel (NASDAQ: INTC) and Nvidia are likely to be affected:
Google announced that it has developed the cloud gaming GPU in collaboration with AMD – nothing was mentioned Nvidia or Intel. AMD now seems to be on the rank of catbird in online gambling. In addition to the acquisition by Google and Microsoft, AMD also seems to be in good shape on Amazon.
We believe that there are several reasons for AMD's success:
- AMD does not compete with these service providers, while Nvidia does. Of course, game providers are more likely to work with AMD than their competitors.
- AMD has close partnerships with Microsoft, Sony and now Google in the development of its gaming chips. This leads to convincing chip-level benefits for AMD.
- AMD has traditionally set its chip price lower than Nvidia, making AMD solutions more appealing for massive cloud scale deployments.
- AMD probably benefited from early adoption of technologies such as 7nm and PCIe 4.0. These technologies are making AMD increasingly competitive.
- And finally, not many investors know that AMD's Vega architecture can be a very energy-efficient data center architecture.
While the volume potential of this business is not yet fully understood, the edge architecture and potential for a Netflix-like growth curve has thrilled AMD investors. At the outset, it would seem that hundreds of millions, if not billions, of dollars of cloud gaming revenue in 2020 or 2021 are possible. .
Losing an Important Socket on Google Nvidia is probably the biggest loser in this Cloud Game . Nvidia already has its own cloud game service, and some argue that losing Google's socket is not so important. However, this would be an incomplete view of the situation.
The Nvidia GeForce Cloud service now has about 300,000 users after a year in beta – an insignificant fraction of hundreds of millions of hardcore gamers and even less than a billion. "Light" gamer. Nvidia is gradually bringing the solution to the cloud gaming market, but its own service is hampering Google's platforms and resources.
It will be difficult for Nvidia to compete with Google and other service providers when it comes to providing this kind of service. Nvidia does not have the infrastructure and product offerings to offer attractive alternatives to Google. Even to stay in the game, Nvidia would have to spend considerable resources. Aside from a miracle, Nvidia may eventually find it difficult to stay in the service business or retire back into the component business.
Nvidia is likely to internally outpace the cannibalization of discrete card sales to grow online gaming services. Note that other service providers like Google and hardware vendors like AMD have no such conflict.
Lately, Nvidia has rapidly lost market share of data centers to AMD, and the loss of cloud games to AMD is another big setback. We are pleased that the acquisition of Nvidia's Mellanox (MLNX) has very little strategic fit and is a defensive move, especially in view of this loss of core market share.
One of the big eyebrows There was no indication of Intel at the announcement of Google Stadia. Intel was not named as a CPU or GPU vendor and Intel in the list of partners. The CPU specifications released by Google do not make it clear whether the CPU belongs to Intel or AMD. These nuances raise the question of who has won the CPU aspect of Stadia.
Although we are not sure without confirmation, we think it's likely that Google is taking a two-pronged approach to the CPU front. Google is likely to use Intel-based hardware in the Alpha and Beta builds as Intel virtually locks Google's server business.
For Google, however, it may not make sense to use the Intel CPU for cloud gaming applications. Due to typical data center requirements, Google is likely to develop several high-density GPUs per rack instance. AMD EPYC offers significantly more PCI Express lanes than Intel Xeon alternatives. And from next-generation Rome, EPYC will also support PCIe 4.0 with higher throughput. It makes a lot of sense for Google to use the extra PCI lanes in EPYC (compared to Xeon) to pack more GPUs into one system and reduce overall power consumption, cost and footprint. Using AMD CPU is also incrementally advantageous, as AMD has previously stated that sharing AMD CPU and GPU can increase performance by a few percentage points due to proprietary optimizations.
Given this, it's likely that Google has started using Intel Xeon Server CPUs, but as soon as AMD Rome is in production, Google can switch to Rome CPUs with Vega . Or Google can choose between AMD and Intel CPUs as needed. If that's true, Intel will lose part of its CPU business on Google, and AMD will also have significant upside potential on the CPU front.
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