Why Nvidia sees a future in software and services: Recurring revenue
- Reference: 1646901248
- News link: https://www.theregister.co.uk/2022/03/10/nvidia_software_services/
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"Now we're entering into a new phase, a new phase that we are thinking about software, and a business model for software to sell separately," Colette Kress, chief financial officer of Nvidia, [1]told the Morgan Stanley Technology, Media and Telecom conference this week.
Things haven't been easy on the hardware side of Nvidia, with semiconductor supply shortages, unhappy gamers, and the failed Arm acquisition. Well, never mind that. The software side will offer a more predictable revenue stream, Kress said.
Not only does the hardware at the very beginning produce revenue, but software over the life of owning the car will
The CFO gave the example of how autonomous cars will drive a recurring software revenue. Mercedes-Benz, starting in 2024, and Jaguar Land Rover, starting in 2025, will ship self-driving vehicles with Nvidia's computers and DRIVE operating system.
"Their entire fleets will be operated with Nvidia software, and we will have the ability to share that software with those OEMs and monetize it over the life of the cars being on the road," Kress said, adding that she expected the number of such cars to reach about 10 million.
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Nvidia is working with Mercedes-Benz and Jaguar Land Rover to customize software for their vehicles. The GPU giant has been preaching the car-as-a-service model, in which automakers can remotely turn on car features, such as driver assistance, through subscription services. Nvidia could get a cut from such services delivered through its in-vehicle hardware.
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"We have the ability for the hardware to exist for the lifetime inside of the car [and] the software to be addressed each time with over-air updates. Not only does the hardware at the very beginning produce revenue, but software over the life of owning the car will," Kress said.
This is just the start of these kinds of opportunities, Kress said, adding: "The pipelines are growing for this and we'll look to provide metrics when the software is relevant."
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[8]Data stolen from Nvidia, blueprints leak threatened
Nvidia is also expecting software revenue from the emerging opportunity of metaverse, for which it is providing the plumbing in the form of its graphics cards. The biz ultimately wants to tap into a market of millions of makers who will need tools to create avatars as well as the 3D worlds in which they'll collaborate and communicate, Kress said. The chip titan already offers [9]Omniverse , which is a metaverse creation suite in which folks can build interactive virtual universes to work and play in. Kress didn't hesitate to put a potential dollar value on this opportunity.
"So for the 40 million different creatives that are out there, we can add about $1,000 a person per year ... That's one important piece," she said.
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Omniverse can also be used by engineers and manufacturers to create and simulate products and machinery in collaborative virtual spaces. "We've been able to do this by bringing both ray tracing to market, that is procuring real-time visual effects, but also bringing AI together and now simulating all of this together with just physics of those environments that they create," Kress said.
To that end, Nvidia is working on the necessary materials to design and simulate robots and cars in virtual-reality workshops. It's also making it possible to create interactive bots to answer people's queries in immersive 3D environments.
Creating that bot, creating that digital twin, could be approximately about $1,000 a year for each one of these
"This could be used for service centers, call centers, as they are using these bots to have more of an interactive discussion with our customers. Creating that bot, creating that digital twin, could be approximately about $1,000 a year for each one of these," Kress spitballed.
Nvidia CEO Jensen Huang is [11]expected to make more announcements about Omniverse and related software offerings at the company's upcoming GPU Technology Conference on March 22.
Nv is a full-stack company with tightly integrated hardware and software. The US giant's parallel computing suite CUDA is not exactly open to competitors, and Huang has reiterated he will not open source it, calling it the centerpiece of his software strategy. He is, however, theoretically open to third parties [12]designing chips tuned for CUDA.
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Nvidia is known for its software: from AI framework code to applications to development kits. You buy its hardware, the software comes with it. "Now we have an ability to monetize that separately," Kress said. ®
Get our [14]Tech Resources
[1] https://investor.nvidia.com/events-and-presentations/events-and-presentations/event-details/2022/Morgan-Stanley-Technology-Media--Telecom-Conference/default.aspx
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YinaWdicJMGoRiNJcysRYAAAAJU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YinaWdicJMGoRiNJcysRYAAAAJU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YinaWdicJMGoRiNJcysRYAAAAJU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2022/03/05/nvidia_stolen_certificate/
[6] https://www.theregister.com/2022/03/08/globalfoundries_gf_fotonix/
[7] https://www.theregister.com/2022/03/03/nvidia_apple_intel_ucie/
[8] https://www.theregister.com/2022/02/26/nvidia_security_breach/
[9] https://www.theregister.com/2022/01/05/nvidia_gpu_ces/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YinaWdicJMGoRiNJcysRYAAAAJU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.nvidia.com/gtc/keynote/?nvid=nv-int-bnr-109214
[12] https://www.theregister.com/2021/11/10/nvidia_cuda_silicon/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YinaWdicJMGoRiNJcysRYAAAAJU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://whitepapers.theregister.com/
Re: turn on car features, such as driver assistance, through subscription services.
Can you even buy a Car off the lot any more? I thought Showrooms were like Magratheian catalog rooms where you got to experience all that was currently popular in the world of fine motoring before you placed your order in, and got to chill 6-8 months before delivery.
Re: turn on car features, such as driver assistance, through subscription services.
@Neil - I agree with your sentiment, but it that approach hasn't worked for phones and PCs. I've got a few apps that I paid for which I no longer use because they switched over to a subscription model and I won't pay twice - e.g. a ToDo app that originally synched between my devices over my local network changed so that it would only synch using its proprietary cloud and they wanted a subscription to use it. I use Reminders now. I can't complain to Apple - the iPhone and Mac haven't changed. I could try to sue the app provider I guess but.....
What's to stop cars doing the same thing? You buy a car like a phone - with basic functionality and anything software - navigation, phone, media, cruise control, tracking, security, auto-park, etc - they farm out to a sister corporation in an app store. When you buy the car the contract says you are buying the platform and you're given a glossy brochure of all the soft add-ons and voucher for a few quid off the first couple you buy.
OK - it's probably very unlikely - safety and homologation issues alone might make it difficult - but I wouldn't discount it completely.
Re: turn on car features, such as driver assistance, through subscription services.
"But turn off any feature which my car has in the showroom when I *buy* it, and I'll see you in court."
Toyota has stated they are planning on doing just that. The most common two that I've heard bandied about are heated seats and remote start ... They plan on selling you the car with those options, and then after a couple years, they will turn them off unless you agree to pay a monthly "service fee". Apparently they are planning on doing this with cars already on the road.
Things / Ideas
Things can be bought. Ideas are licensed. Cars are things with software. In the past, you could buy a car and the car came with a license for the software. The software license could be transferred by selling the car. The camel is already half way in the tent: Some cars already have some software with a license that does not transfer with the sale of the vehicle, for example Tesla's "full self driving" (deleted huge rant about the misleading name).
A car manufacturer can legally license software as free for the first year followed by a monthly fee. I would like to think most people would read the small print and buy something else. In the real world most people make disappointing purchase decisions.
Re: Things / Ideas
"In the real world most people make disappointing purchase decisions."
Absolutely. However, as the family geek/nerd and resident gear-head, I am usually consulted prior to large purchases of anything vaguely technical being made, including personal transportation. Most of my friends also bounce questions off me for this kind of thing. I'm sure many others among ElReg's commentardariat hold a similar position of trust among friends and family.
This is one of those things where we should be passing the word early and often.
Read the fine print before signing anything, people. The word "contract" has a meaning in Law whether you like it or not.
Re: turn on car features, such as driver assistance, through subscription services.
" turn off any feature which my car has in the showroom when I *buy* it, and I'll see you in court "
Turning off a feature such as 'driver assist' while you're on the road could prevent you taking them to court - permanently. It might only need a glitch at the bank while processing your direct debit.
While success in business has always been down to hard noses, it's now reaching the point where the 'customer' is entirely expendable.
Subscription Services!!!
@Neil_Barnes
Subscription services!
(1) Intel's future includes "pay-to-upgrade" your CPU
(2) SAAS -- it's not even your software!
(3) Adobe -- it's not even your software!
(4) Apple -- your N-year-old licence won't run on the latest Mac -- you need to buy a new laptop AND a new licence (rinse and repeat!)
(5) Once upon a time you could buy a DVD -- now we have e.g. Netflix
(6) Your mobile contract used to be about ACTUAL PHONE CALLS....now the contract is much dearer because you need X-gigabytes per month....for Netflix!!
I suppose I could go on.....but I suppose I've made the point. Here at Linux Mansions we have tried not to get caught up in subscriptions:
(7) No car ownership (and especially absolutely no thought of a Jaguar/LandRover)
(8) Low end laptops (Intel N5000 and the like) running Linux (and especially no M$, no Apple)
(9) Pay-as-you-go 10 year old 2G mobiles configured as burners (so no so-called "smart" phones, no Netflix, etc. -- just phone calls!)
(10) No "cloud" -- our (Linux) server provides OUR OWN cloud (you know...ssh/sftp/sshd) -- a poor thing but my own!
As far as I can tell, I'm still living a reasonably fulfilled life without the help of "subscription services".
I know I can't avoid them all....but it's fun trying!!!
Someone here can explain how my life will be more fulfilled when I start spending more money on "modern" stuff!!!
Why would I want to subscribe to my Airconditioner, GPS Cassete F/A-M Radio, and Trip-domiter? Why does nVidia think I would pay though the "lifetime" of the Vehicle. while we're on that note. we have active lawsuits on-going in a few States as to why some "optional saftey" equippment.... Is still optional, never mind that this Option would add another 10k$ to the cost of this aforementiond Vehicle. Those People belive they have the right to sue the Manufacture of said Vehicles, and sadly the Courts have't exactly told those People to kindly go, and bugger off somewhere. Then there is the trust issue, we'ev seen how effective Tesla's self driving (into a Tree / Lamppost / Dumb Animal (of the 4 or 2 legged varity), are. So whats the point of a "self driving" Car that has to be constantly controlled? Ultmately who will be responsable for these accidents? Me or nVidia?
...the car-as-a-service model...
No sir, that road is currently not in your road package license. You are not allowed to turn here. Would you like me to check if your destination is currently in your road license package and accessible? Only $0.99 per lookup for your licensed road trip planner.
Funny how all the big guys think they can turn their hardware into a subscription service
Well they can't. If I'm paying upwards of €15000 for a vehicle, that vehicle is mine and mine for life.
If you think I'll be paying monthly for the right to drive my property I've got a bridge to sell you.
It has an additional per-usage fee as well.
Re: Funny how all the big guys think they can turn their hardware into a subscription service
I'm sure Mr. Musk would like to have a gentle word with you. As Tesla have been known to remove functions from second hand cars. Say for exapmple those originaly sold with Autopilot.
OTA updates?
Whatever could go wrong?
Keys cracked in 5,4,3....
Re: OTA updates?
And instantly void your warranty. Not advisable. Best not to buy into such a hair-brained scheme in the first place.
Re: OTA updates?
I was not necessarily referring to the owner licensee of the vehicle.
Bad actors might well be interested in 'updating' the code.
Re: OTA updates?
Again, it would be best not to buy into such a hair-brained scheme in the first place.
They already do it on their GPUs for virtualisation
There's a yearly licence fee to use a Nvidia GPU with citrix virtualisation for example, and it may not be expensive but if you've spent up to 10 grand on a card for a server having to pay a yearly fee is galling. They claim it's to allow their continued support and development for drivers etc, but I see it purely as money grabbing and wish we could dump them.
Re: They already do it on their GPUs for virtualisation
"but I see it purely as money grabbing and wish we could dump them."
Should have voted with your wallet. I did.
Re: They already do it on their GPUs for virtualisation
We'd already spent the cash before I got involved. We are unlikely to use them again however.
$1,000 a person per year ... That's one important piece
I know it's a company's job to try and make as much money as possible, but boasting to investors about just how severely you intend to milk your customers means those potential customers get to hear about it too, and in a world with any sense would choose not to be customers.
Hopefully this idea that people are going to drive home from work in their car-as-a-service, put on their VR-googles-as-a-service and fart about in the metaverse-as-a-service is too much overreaching and fails in a hugely expensive way for those whose common sense seems to have been evaporated by pure greed.
I mean, I've yet to hear a single person say that they want to actually be an avatar in a metaverse.
Leaves a bad taste
It was bad enough when they pulled this stuff with the data centre products, charging a massive premium for the hardware and then decided it was a great idea to start charging on top for you to actually use it. Puts you right off and makes you look for any possible alternatives. A bit like the reaction you have any time you get near Oracle.
I'd be happy if it was cost neutral somehow - others managed when their pure hardware play went to hardware plus subscription - but this stuff about $1000/user/year points away from that.
And $1000/year? They've started to believe the hype from their inflated GPU prices...
An interesting decision ...
I must admit I am not entirely convinced on the arguments, but then my spending on software is rather parsimonious at best, and I prefer to own things (like CD's) rather than pay-per-play.
I could see how it might work in the car-leasing model - where the software costs would all be rolled-up into the lease and would naturally expire at the end of the lease. I could see how it might work for those who routinely change cars every couple of years (e.g if the car price is fixed and the high-end features are costed appropriately) - but this does not give much of an assured life to the software income. It might work for very high-function software (such as self-drive) where a mandatory software update and maintenance cost might be incorporated into the servicing regimen.
My concerns include that hardware goes out of date pretty quickly compared with the lifetime of a typical car - so it seems likely that aging cars might be incapable of running the latest software releases to an acceptable standard. I am not convinced that those buying in the second-hand market would be happy paying premium software prices for poorly performing software.
I am also entirely unimpressed with the quality of in-car software (thanks Nissan) - the basic stuff like the engine management seems fine, but high-end stuff like the Sat-Nav and "entertainment" system are poor (the Sat Nav is just naff [e.g. can't bulk load POIs], the RDS traffic info does not work, the entertainment system has locked up a few times, and even the engine stop/start system has failed on at least 3 occassions - necessitating a full ignition turn off and back on again to get started [good job I was a software engineer].
Overall I do not see me being an early adopter - with the possible exception that I might lease my next car (as I expect to try EV and would want to be shot of it before any battery issues develop).
So an interesting and brave decision.
turn on car features, such as driver assistance, through subscription services.
Turning *on* features like that is fine, and good luck with it.
But turn off any feature which my car has in the showroom when I *buy* it, and I'll see you in court.