2008 was a terrible year for NVIDIA. Last year there was a lot of talk about the NVIDIA chips being defective which resulted in reduced demand for its graphics chips. The problem is extremely complex and defies a simple explanation. It involves multiple poor choices, multiple engineering failures, and likely a few bad accounting choices. The company’s executives are now talking about how they plan to get their momentum back. The company’s long-term comeback plan is to trust in the engineers’ ability to deliver outstanding graphics chips. 
NVIDIA is now planning to launch another generation of high-end graphics chips this year. The chips are expected to be delivered for the personal computer market this year but no one knows exactly when. Jen-Hsun Huang, chief executive of Nvidia, said at the company’s analyst meeting in Santa Clara, Calif., that he would not comment on his next generation of graphics chips until they are available in computers. Upcoming games are also expected to exploit cool features of graphics chips, including much better physics simulations, which means that physical effects will accompany realistic graphics in games. You will see, for instance, that explosions will take out walls, which might throw up a cloud of smoke as they collapse on top of enemies.
Last year NVIDIA let Advanced Micro Devices get ahead of them in the graphics chips race. Nvidia’s partners also ran into reliability problems attaching its graphics chips to laptop system boards. The NVIDIA comeback plan also includes a push into new markets. David White, the company’s chief financial officer, said the company hopes to regain its historical gross margins above 40 percent (which is currently 32-34 percent) by selling a richer mix of high-end chips. Those include Tegra mobile chips, Tesla and Quadro heavy-duty computing products, and the new Ion chipset for netboo.
Microsoft will put windows 7 on stores and computer makers on October 22nd. The new chips ideally have to be ready by that time. Windows 7 is expected to see better demand out of the gate than Windows Vista, which was slow compared to Windows XP. Windows 7 will also have features such as touch-screen control and a new graphics standard, DirectX 11. The new graphics chips are important because they will delivers new graphics features that leading-edge consumers are likely to want. One feature is GPU Compute, which uses a graphics chip to perform non-graphics applications such as converting video from one format to another.
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